African companies have raised just $220 billion in equity over the past 25 years, accounting for only 1% of global equity issuance and about 0.5% of the continent’s combined GDP, according to new data.
The figures are contained in the Africa Capital Markets Report 2025 published by the Organisation for Economic Co-operation and Development (OECD).
The international body promoting policies to improve economic growth, financial stability, and living standards across countries, highlighted the persistent underdevelopment of Africa’s capital markets despite two decades of reforms.
The report warned that weak and shallow markets are constraining growth, worsening debt pressures, and undermining the continent’s climate ambitions.
What they are saying:
The OECD made up of 38 countries, is saying that Africa’s economy has outgrown its financial markets, leaving companies and governments without the depth of funding needed to support long-term development.
The organisation, which acts as a policy think tank and standard-setting forum, argues that capital markets on the continent are too small, too shallow, and too concentrated to play their expected role.
- “Capital markets in Africa are not yet playing their expected role as engines of growth and shock absorbers,” the OECD said, adding that their current scale is insufficient for the continent’s development needs.
The OECD concludes that without deeper and more inclusive markets, Africa will struggle to finance growth, manage rising debt sustainably, and meet its climate commitments.
More insights:
While Africa accounts for about 3% of global GDP, its presence in global capital markets remains disproportionately small.
The OECD estimates that the continent represents barely 1% of global equity market capitalisation and a similar share of global corporate and sovereign bond markets.
- African firms raised just $220 billion in equity over 25 years, representing only 1% of global equity issuance.
- Equity financing over that period amounted to roughly 0.5% of Africa’s combined GDP.
- Businesses remain heavily dependent on bank financing rather than long-term market funding.
- High borrowing costs and limited access to patient capital constrain expansion and innovation.
This mismatch, the report notes, helps explain why many African companies struggle to scale and why investment-led growth remains elusive.
Backstory
Over the past two decades, African governments and regulators have pursued reforms aimed at deepening equity and debt markets, including new exchanges, listing rules, and market infrastructure upgrades. Despite these efforts, progress has been uneven and limited in scale.
Capital raising remains heavily concentrated in a handful of countries.
- South Africa, Egypt, and Nigeria account for over 80% of all capital raised on the continent.
- Four countries—South Africa, Egypt, Nigeria, and Mauritius—make up around 60% of Africa’s corporate debt market.
Most other exchanges remain illiquid and dominated by a few large firms.
As a result, many African economies remain effectively shut out of market-based financing, particularly small and medium-sized enterprises.
Why this matters:
The OECD links weak capital markets directly to Africa’s debt and financing challenges, noting that shallow local markets push governments and businesses toward costly foreign borrowing. This exposure heightens vulnerability to external shocks.
- About 80% of rated African countries are classified as high-risk or worse due to rising debt vulnerabilities.
- Local-currency bonds offer real yields of about 5%, while United States dollar-denominated African bonds carry nominal yields of roughly 9%.
- High sovereign yields spill over into the private sector, raising corporate borrowing costs.
- Infrastructure and long-term projects have become more expensive and harder to finance.
The report also warns that underdeveloped capital markets are becoming a major bottleneck to Africa’s climate and energy transition goals.
What you should know
The OECD’s warning carries significant implications for businesses, governments, and investors across the continent. Weak capital markets affect nearly every aspect of economic development.
- Businesses struggle to access long-term funding, relying instead on short-term and expensive bank loans that limit expansion, innovation, and job creation.
- Governments are forced to borrow at high costs, often in foreign currency, increasing refinancing and foreign exchange risks.
- Africa remains highly exposed to external shocks as global risk-off events can trigger capital flight, currency weakness, and inflation.
Climate and infrastructure ambitions face a financing gap, as banks cannot fund 20–30-year projects at scale, and capital markets are underutilized.
The OECD’s stark warning is if Africa’s capital markets remain this small and concentrated, growth will stay fragile, debt will remain expensive, and development goals will continue to go unfunded, turning the financing gap into a binding constraint on the continent’s economic future.
