Onome Amuge
Africa requires more than $800 billion annually to drive transformative economic growth, the African Development Bank (AfDB) has warned, highlighting persistent financing gaps that threaten the continent’s development ambitions. The worrisome figures were presented by Abdul Kamara, AfDB’s director general for Nigeria, at the 2025 Nigerian Economic Society conference in Abuja on Thursday.
Kamara framed the challenge in stark terms, noting that to accelerate structural transformation, African economies need an estimated $811.1 billion per year, yet face a financing shortfall of roughly $680.3 billion. The gaps are particularly concerning in what the Bank classifies as “transition states”;countries beset by fragility, conflict, weak institutions, and limited revenue mobilisation. These 24 economies require around $210 billion annually, but confront a funding deficit of $188.1 billion, according to AfDB.
“These challenges are not insurmountable. We have the innate capabilities in Africa to find solutions to our problems. What is needed is sustained investment in infrastructure, energy access, education, and technology – particularly soft skills and capacity development,” Kamara said.
The AfDB’s assessment underscores a broader tension. While Africa has one of the fastest-growing populations in the world, its capacity to translate demographic potential into sustained economic growth is constrained by persistent institutional and structural weaknesses. Transition states such as South Sudan, for example, have suffered extreme economic contractions; the country’s GDP fell by 26.4 percent following the conflict in Sudan, which disrupted its oil exports.
Eric Ogunleye, director of the African Development Institute, said that fragility and conflicts directly undermine the continent’s progress toward the Sustainable Development Goals (SDGs) and the Africa Agenda 2063. “Over 250 million Africans are directly affected by fragility and conflict,” he noted. Ogunleye stressed that achieving transformative GDP growth would require a consistent economic expansion of 7 percent per year and per capita GDP growth of 3.5 percent over four to five decades, underpinned by high productivity in key sectors and inclusive, environmentally sustainable policies.
The financing challenge is compounded by systemic gaps in domestic revenue mobilisation. Adeyemi Dipeolu, consultant at the African Centre for Economic Transformation, highlighted that improving tax-to-GDP ratios, plugging illicit financial flows, and leveraging diaspora remittances are critical. Africa loses nearly $90 billion annually to commercial illicit flows, he said, while sovereign debt spreads remain almost double those of other emerging markets, sharply raising borrowing costs.
“While aid dependency is unsustainable, developed nations have a moral obligation to support vulnerable African states, particularly in health, education, and humanitarian needs,” Dipeolu added.
To address these gaps, the AfDB said it has established dedicated funding windows for transition states, targeting capacity building and knowledge management across infrastructure, energy, and technology. Kamara emphasised that these interventions are designed not only to meet immediate development needs but also to build the institutional and human capital required for long-term transformation.
Analysts note that closing Africa’s financing gap will require a multifaceted approach. These include mobilising domestic resources, attracting foreign direct investment, scaling private sector participation, and implementing innovative financial instruments. Green bonds, blended finance structures, and regional development funds are increasingly seen as critical tools to bridge the continent’s investment shortfall.
“Transition states account for a smaller share of Africa’s total financing gap in absolute terms, but their relative deficit is significant, amounting to $225.5 per capita and 42.7 percent of GDP,” Kamara said. He added that strengthening governance and expanding domestic revenue collection in these economies could catalyse broader continental growth.
