Africa, 1 November 2025 - Africa’s multilateral lenders are quietly preparing for their biggest expansion in decades, one that could redefine the flow of development finance across the continent. A new S&P Global Ratings report indicates that Africa’s development banks are now in a position to increase lending capacity by up to $800 billion, thanks to stronger capital buffers, new hybrid funding tools, and tighter risk-management frameworks.
At the heart of this shift is the African Development Bank (AfDB), the continent’s largest lender, whose portfolio topped $27.3 billion in 2024. S&P says AfDB and its peers, including the East African Development Bank, Afreximbank, and the Arab Bank for Economic Development in Africa (BADEA), are benefiting from revised risk-adjusted capital models that reduce pressure on their credit ratings even as they lend more.
“We are seeing a maturing ecosystem of African multilateral institutions that can now take on more sovereign and private-sector risk,” said S&P senior director Ritu Bhandari in a statement. “Capital buffers have strengthened considerably, giving lenders more room to maneuver.”
Why Now?
The timing could not be more critical. As global interest rates remain high and commercial debt markets tighten, African governments are facing a financing squeeze. Many have turned to domestic taxes and austerity to plug fiscal gaps, but those measures often slow growth.
By expanding lending, Africa’s development banks are positioning themselves as the counter- cyclical anchors of the continent’s economy. The AfDB, for instance, plans to channel a larger share of its portfolio toward green infrastructure, digital transformation, and food security, echoing the continent’s Vision 2063 goals.
“This isn’t about charity, it’s about competitiveness,” said Dr. Akinwumi Adesina, AfDB President, during the 2025 Africa Investment Forum in Marrakech. “Every dollar we lend multiplies its impact by catalyzing private capital and empowering African entrepreneurs.”
Regional Impact: East Africa’s Share
East Africa, home to some of the region’s fastest-growing economies, stands to gain the most. The East African Development Bank (EADB) has been restructuring to align with Kenya’s infrastructure and digital-connectivity projects, while Afreximbank is scaling credit lines to support cross-border trade under the African Continental Free Trade Area (AfCFTA).
In Kenya alone, multilateral support has already financed projects such as the Nairobi–Mombasa Expressway, geothermal power expansion in Olkaria, and youth enterprise funds that blend concessional finance with innovation grants. Economists say that these moves could “reduce Africa’s dependency on eurobonds and short- term borrowing,” considering that over 20 African countries now spend more than 30% of revenue on debt servicing.
Challenges Ahead
But the surge in lending also brings fresh risks. Analysts warn that increasing exposure to fragile states and climate-vulnerable economies could test these banks’ resilience. Others caution that institutional reforms must keep pace with balance-sheet growth. S& P’s Bhandari echoed the sentiment: “Strong governance and transparency are non-negotiable. Expanding too fast without risk controls could reverse the progress made.”
To mitigate risks, AfDB and EADB are exploring exposure-exchange agreements with European and Asian partners, innovative instruments that distribute risk across borders. These could serve as blueprints for the next generation of African finance.
The Bigger Picture
This push aligns with Africa’s growing voice in global finance debates. As traditional donors reassess aid priorities, African lenders are stepping up, not just as borrowers, but as solution architects. If projections hold, the combined impact of stronger balance sheets, hybrid capital, and new lending instruments could see Africa’s development banks double their annual disbursements by 2030, funding everything from roads to renewables and reshaping how the world invests in Africa’s future.
