The International Finance Corporation’s $22 billion private capital mobilisation across Africa in fiscal 2026, up nearly 150 per cent from about $9 billion in FY22, is running up against the continent’s shallow capital markets, which limit the ability of development lenders to crowd in commercial capital at scale.Development lenders, governments and regulators need to deepen African markets so that every dollar they deploy can attract $10 more of commercial capital, an official at the World Bank’s private-sector arm said, with IFC Managing Director Makhtar Diop identifying six major constraints confronting African businesses: inadequate long-term debt, limited equity financing, currency mismatches, underdeveloped capital markets, policy uncertainty, and weak public-sector support for private enterprise.
IFC’s FY26 commitments to Sub-Saharan Africa reached $12.2 billion, up 9 per cent from $11.2 billion in FY25, with long-term core mobilisation representing $7.8 billion and own-account investment $4.4 billion, while Africa accounts for approximately 25 per cent of IFC’s overall commitments. The corporation’s global FY26 performance saw total financial commitments reach $70.4 billion, a 25 per cent increase from $56.1 billion in FY25, with private capital mobilisation surging from $35 billion in FY22 to $112 billion in FY26.
The $22 billion private capital mobilisation across Africa represents a significant scaling of IFC’s catalytic role on the continent, with the corporation seeking to increase its mobilisation capacity and attract more international institutional investors. IFC’s capital mobilisation ratio has risen to 3.4 times, meaning it now mobilises an additional $3.40 for every dollar it invests, with the institution targeting a 5-to-1 ratio in the coming years.
Africa’s capital market development is heavily geographically concentrated, with South Africa accounting for a disproportionate share, while in most other countries the market capitalisation of listed domestic companies represents less than 20 per cent of GDP, indicating shallow equity markets, limited firm participation, low liquidity, high taxation, and dispersed ownership structures. These conditions raise the cost of capital and limit access to long-term finance, with shallow capital markets also tending to be more sensitive to external shocks, so periods of global financial tightening or risk aversion quickly translate into funding constraints for African firms.
The promise of financial integration has often been blunted by insufficient macroeconomic buffers, shallow financial systems, and institutional weaknesses, factors that have amplified external shocks, curbed investment accelerations, and slowed productivity gains, particularly during episodes of tighter global financial conditions and trade fragmentation. As a result, the gap in per capita income between frontier markets and larger emerging markets has widened since 2000, underscoring the structural nature of the challenge.
IFC helps develop local capital markets by structuring first-of-their-kind transactions, supporting new financing instruments, mobilising private capital, and expanding its originate-to-distribute programme, with the corporation’s local-currency support, including mobilisation, reaching more than $13 billion in FY26, up from $10 billion in FY25. IFC’s expanded support for micro, small and medium-sized enterprises includes complementing traditional bank lending with non-bank financial institutions and fintech companies, and moving away from collateral-based lending towards financing models that assess businesses using their cash flows and data.
The corporation is also expanding its support for African financial institutions, with equity financing set to become a central part of IFC’s interventions alongside increased local-currency lending, guarantees and support for African financial institutions, while the institution plans to increase its local-currency lending, which currently represents about 35 per cent of its portfolio, to reduce currency mismatches confronting businesses operating in volatile foreign-exchange markets. The challenge now is to convert the commitments and partnerships announced at the 2026 Africa Financial Summit in Luanda into deeper capital markets that can absorb and multiply the capital IFC and its partners are deploying.
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