Over US$1 trillion in African pension assets sits largely invested outside the region, and the African Development Bank wants that money home. Under president Sidi Ould Tah, who took office in 2025, the bank is pursuing one core economic proposition: the continent must rely less on external development finance and more on its own pools of capital. Redirecting even part of those pension assets toward domestic development would reshape who funds, owns and profits from African growth.
The old funding model is under strain. Aid cuts, natural and war-related shocks, unstable geopolitics, rapidly growing young populations and high external debt levels are pushing African leaders toward new development paths. International development cooperation, meaning external financial and technical support for lower-income countries, is shifting fast worldwide, and nowhere faster than in Africa. Relying more on home-grown resources is no easy fix, but it reduces dependence on fickle, hard-currency external financing. It also signals that African countries want a growth model that is genuinely “country owned”.
The bank’s decades-long trajectory, its mix of African and external government ownership, and its active engagement across the continent give it the standing to drive this agenda. Tah’s flagship initiative is the New African Financial Architecture for Development, supported at the African Union summit in February 2026 and at the Africa Forward Summit in Nairobi in May, then adopted by the bank later that month. Its ambition is a shared, continent-wide framework for reorganising how capital and risk are mobilised, structured and deployed across Africa’s financial ecosystem, grounded in subsidiarity, complementarity, coordination and risk transformation.
Whether that translates into returns depends on execution. Early signs are positive. The bank is launching several practical initiatives to build up other African development finance institutions, a logical first step toward joining up the regional financial system more broadly.
Sub-Saharan Africa has had a diverse set of multilateral development finance institutions since the 1970s, with the African Development Bank acting as a shareholder in several and a provider of credit lines for on-lending. Most have historically been modest in scale, but several have grown rapidly in recent years, including the Africa Finance Corporation, the West African Development Bank, the African Trade Insurance Agency, Africa Export-Import Bank (Afreximbank) and the Trade and Development Bank. The African Development Bank is now ramping up engagement with these institutions, aiming to accelerate their growth, strengthen their ability to mobilise domestic capital, and encourage greater collaboration.
Concrete deals are already in place. An agreement with the Development Bank of Central African States provides technical support, sub-market credit lines and backing to reinforce its capital base. The bank has joined the Ecowas Bank for Investment and Development as a shareholder and approved a US$70 million credit line to it, a move quickly followed by a one-notch bond rating upgrade from Moody’s in August, showing the value of backing from an AAA-rated institution. The African Development Bank has also raised its capital share in the African Trade Insurance Agency to 14 percent of the total, up from 3 percent in 2025, and encouraged Germany and France to become shareholders. The goal is for the agency to de-risk African investments for domestic and overseas institutional investors such as pension funds and sovereign wealth funds.
Meanwhile, a programme starting by the end of 2026 will invest in hybrid capital issued by multilateral development finance institutions and potentially some national development banks in the region. Hybrid capital resembles a regular bond but carries attributes that allow it to be counted as equity capital by development finance institutions and rating agencies. Its appeal is financial: less risky than regular equity, a reliable income stream, no governance implications since it offers no voting rights, and substantial room to expand given its novelty.
Another initiative is a cross-institution securitisation platform with the Development Bank of Southern Africa. Securitisation, turning non-liquid assets like loans into tradeable securities, would let multilateral development banks originate loans and shift them off the balance sheet to willing investors, clearing space for more lending. That could help banks recycle risk capital into new projects faster, make deals more attractive to investors and potentially bring down costs.
The economic logic of the development finance institution model is sustainability: a well-run, well-capitalised institution can channel commercial investment into development without regular budget injections from member governments. The hope is that other major multilateral institutions take equity stakes and buy into hybrids. The European Bank for Reconstruction and Development, only now starting to move into sub-Saharan Africa, would be a strong candidate, and joining forces systematically with African institutions would strengthen its regional strategy. The Development Bank of Latin America shows what is possible: founded in 1970 as a small bank reliant on aid agency largesse, it now holds a AA+ rating, issues bonds in 23 currencies and lends more in its countries of operation than either the World Bank or the Inter-American Development Bank in most years. The same trajectory is possible for Africa’s development finance institutions.
A full version of this article, AfDB and the new African financial architecture, was first published by ODI Global, and the original piece appeared at https://theconversation.com/africas-funding-focus-needs-to-change-the-african-development-bank-has-plans-to-make-that-happen-295782