African firms have raised just $220 billion in equity over 25 years, representing barely 1% of global issuance.
Meanwhile, despite Africa’s rapid economic growth, its financial markets remain small, shallow, and heavily concentrated, the OECD reports.
African Firms Struggle For Capital
As a result, many businesses rely on short-term, expensive bank loans, which limit expansion and innovation.
“Capital markets in Africa do not yet perform as engines of growth,” the OECD explains.
For example, South Africa, Egypt, and Nigeria dominate equity issuance, while a few other countries control most corporate debt markets.
Consequently, most other exchanges remain illiquid, dominated by a few large firms, leaving small companies without access.
Moreover, businesses struggle to secure patient capital for long-term investments and sustainable growth initiatives.
Debt Pressures And High Costs
In addition, shallow markets push governments toward costly foreign borrowing, increasing exposure to currency swings and external shocks.
Local bonds deliver modest returns, while dollar-denominated bonds carry high yields, which raise private sector borrowing costs.
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Furthermore, infrastructure and long-term projects, such as energy and climate initiatives, face difficulties attracting affordable funding.
Over the past two decades, governments introduced new exchanges, upgraded rules, and improved market infrastructure, yet results remain uneven.
Consequently, high borrowing costs and limited market access keep many African economies dependent on banks rather than capital markets.
Unlocking Africa’s Potential
The OECD warns that weak markets constrain growth, exacerbate debt pressures, and undermine climate and energy ambitions.
Despite Africa’s talent, ambition, and economic growth, its capital markets continue to block progress.
Without deeper, more inclusive markets, the continent risks fragile growth, expensive debt, and underfunded development goals.
Finally, the report concludes that reforming capital markets will unlock Africa’s economic and climate potential.
