Fortune News | Oct 27,2024
Brazzaville - Congo
Few institutional metaphors are less flattering than the “spaghetti bowl.” For Didier Acouetey (PhD), special advisor to the President of the African Development Bank (AfDB), it captures what Africa’s new financial doctrine confronts in overlapping mandates, duplicated agencies, trapped capital and blurred accountability.
It has national development banks, regional lenders, pension funds, insurers, guarantee agencies, sovereign wealth funds, central banks, commercial banks, private equity vehicles and multilateral financiers.
“The continent is not short of institutions,” he told Fortune, in an exclusive interview, on the sidelines of the Bank’s annual meeting opened this week in Brazzaville, Republic of Congo. “Nor is it short of ambition. What it lacks is a financial operating system capable of turning scattered savings, fragmented mandates and underprepared projects into bankable investments.”
That operating system is the idea behind the New African Financial Architecture for Development (NAFAD), which emerged from the Abidjan Consensus made in April this year.
Hailed by its architects as a systemic approach to addressing Africa's financing gap by unlocking domestic savings, NAFAD aspires to reorganise the deployment of capital and risk to strengthen financial sovereignty. Its advocates call it “a framework,” mindfully, and not another institution, secretariat or acronym, to make existing actors behave like a functioning capital chain.
For observers within the continent and beyond, Africa’s development problem has rarely been the absence of plans but the execution. Panellists from the myriad continental financial institutions speaking at the large forums and conferences often complain that viable projects remain scarce, capital markets are shallow, regulation is uneven, and political risk is mispriced.
Pension funds and insurers hold close to one trillion dollars in long-term money but struggle to allocate it to weakly structured assets.
“If you even manage to get a 20pc of that money for the continent, do you see the picture that it makes?” quipped the Special Advisor.
The African Economic Outlook, released this week at AfDB’s annual meeting in Brazzaville sharpens the debate. It declared Africa is not poor, but rich in underused fiscal, natural, financial, business and human capital. With deep and properly sequenced reforms, it estimates the continent could mobilise an additional 1.43 trillion dollars in domestic resources, more than the estimated 1.3 trillion dollars a year required to achieve the Sustainable Development Goals (SDGs) in four years’ time.
Sidi Ould Tah, the AfDB’s president, elected last year, framed the argument before delegates.
“Africa represents about 18pc of the world’s population, holds more than 30pc of global mineral resources and possesses more than 60pc of the planet’s uncultivated arable land,” he said.
However, the continent accounts for about three percent of global trade and between three percent and four percent of global GDP. For him, the paradox is not potential but conversion in turning assets into investment, production, jobs, and economic power.
Ould Tah’s other paradox is Africa’s annual financing needs of more than 400 billion dollars for structural transformation. But, it is believed to have over four trillion dollars in domestic savings and assets held across banks, pension funds, insurers, sovereign funds and other financial institutions. Infrastructure alone requires 130 billion dollars to 170 billion dollars a year, with a financing gap of 68 billion dollars to 108 billion dollars annually.
For several regulars at such events and venues, money exists in one place, and projects remain unfunded in another. NAFAD’s authors argue it is designed to narrow the gap through “coordination, complementarity and subsidiarity.”
“Coordination is meant to reduce duplication. Complementarity is meant to ensure that institutions play distinct but mutually reinforcing roles,” Acouetey told Fortune.
Acouetey’s early career helps explain his systems view. In the early 1990s, in French advertising and packaging, he saw Western corporations expanding into Africa while highly educated African diaspora professionals remained marooned in Europe. That irony fed his work in talent, enterprise development and policy design.
“Subsidiarity is meant to push financing closer to the ground, allowing national institutions to originate and serve projects while regional and continental institutions use their scale, ratings and credibility to mobilise capital and absorb risk.”
According to Acouetey, a graduate of the Arts et Métiers school in Paris, the AfDB does not intend to replace national or regional financiers.
“It sits above and behind them as a catalytic institution,” he said. “National development banks may know domestic SMEs, women entrepreneurs, industrial corridors or municipal infrastructure better. Regional lenders may have the balance sheet and cross-border mandate to support several national institutions. The AfDB can provide guarantees, co-financing, risk-sharing instruments and credibility to strengthen the chain.”
He sees the “framework” as a practical link to a project originating nationally, being refinanced regionally, de-risked by a guarantee agency and attracting domestic institutional investors if its structure, currency treatment and risk allocation are credible.
“The Bank’s role is to make those links credible enough that capital begins to move,” Acouetey said.
Pension funds are central to this test because the money belongs to workers, retirees and policyholders. Trustees need predictable cash flows, clear regulation, enforceable contracts, credible sponsors, transparent procurement and manageable currency risk. They are not idle because managers are “unpatriotic.” They are cautious because too many schemes arrive at financing conferences without feasibility studies, permits, revenue models, procurement discipline or contracts.
“The thing is not to force people to invest in projects, and it isn’t mandatory,” said Acouetey. “It’s because the projects are valuable, and the returns on investments are assured.”
The “spaghetti bowl” will not be untangled by communiqués. It will be untangled by term sheets. The AfDB’s emphasis on guarantees and risk-sharing platforms, including the Africa Trade & Investment Development Insurance (ATIDI), to give NAFAD credibility beyond speeches, on whether Africa can industrialise.
“Reducing the cost of capital in Africa can’t be achieved by complaint alone,” Acouetey said. “Viable projects remain unfunded not only because investors misunderstand Africa, but because risks are often insufficiently mitigated.”
A first-loss layer, a political-risk guarantee, a currency hedge, a stronger sponsor, or better procurement can change the calculation.
“Investors don’t invest in intentions,” he said. “They invest in instruments.”
Still, the risk-perception argument holds. African officials complain that rating agencies and investors price the continent too broadly.
“Botswana shouldn’t be priced as Ethiopia because Ethiopia faces conflict,” Acouetey said. “Senegal shouldn’t carry the automatic premium of Mali or Burkina Faso; Kenya isn’t South Africa; Malawi isn’t Djibouti.”
But risk may sometimes be exaggerated, not invented. Investors have seen opaque debt contracts, arrears, exchange-rate distortions, weak tax mobilisation, political instability, shallow markets and erratic policy signals.
The AfDB outlook identifies institutions, economic governance and the rule of law as indispensable to making Africa’s capital work. Transparent public financial management, secured property rights and predictable legal systems are investment infrastructure. Countries seeking cheaper capital and fairer treatment are required to offer credible statistics, transparent accounts, stronger debt management, consistent regulation, enforceable contracts and macroeconomic policies.
“Money does not like noise,” Acouetey said.
The Bank’s posture is about convening, structuring and execution, not rhetorical confrontation. Its claim is that Africa can gain leverage by demanding fairer treatment abroad while building deeper capital markets, linked development banks, guarantee institutions, investable project pipelines and domestic investors able to participate at scale.
The task is a systems-engineering problem visible among SMEs trapped in the “missing middle”. While too large for microfinance, they are too small or risky for commercial banks and too understructured for institutional investors.
“This is why the AfDB’s new emphasis on ecosystems matters,” Acouetey said. “Infrastructure, energy, finance, skills, logistics, digital connectivity and industrial clusters can’t be treated as separate policy boxes. They’re mutually dependent. Without power, there is no industrial base. Without industry, Africa continues importing the machinery, technology and manufactured inputs that deepen foreignexchange pressure. Without stronger firms, there are fewer bankable projects. Without bankable projects, domestic savings remain trapped in low-risk instruments. Without domestic savings mobilised productively, the continent remains dependent on external finance as aid becomes less reliable.”
However, mobilising domestic savings does not remove hard-currency exposure. Large infrastructure, energy and industrial projects often need imported equipment priced in dollars or euros, while earning local-currency revenues.
According to the Special Advisor, hedging can help, and common-currency zones and regional projects can reduce some mismatch. For him, the deeper answer is industrialisation.
“Africa must produce more of what it imports if it wants to reduce the foreignexchange vulnerability embedded in its development model,” he told Fortune.
Africa’s growth outlook remains resilient but fragile. The AfDB projects growth of 3.9pc in 2025 and four percent in 2026, after downgrades from tariff shocks and global uncertainty. Aid cuts are tightening finance, while debt service is getting heavier. Exchange-rate pressures have eased in some countries but remain a persistent risk.
This makes domestic capital mobilisation urgent, and discipline more important. Experts argue that Africa cannot replace external dependency with domestic financial repression. Pension funds should not finance weak public projects, development banks should not become political cheque books, and guarantees should not disguise subsidies for unreformed borrowers.
Yet, Acouetey’s use of metaphor carries a warning. Spaghetti is tangled because every strand is soft, a reminder that untangling Africa’s financial ecosystem will require firmer lines over who originates projects, who prepares them, who lends, who guarantees, who regulates, who monitors, who absorbs losses and who is accountable when things fail.
Acouetey’s portfolio is centred on the private sector and the financial architecture. The promise is that the AfDB can become its catalytic centre, not by dominating African finance, but by making existing institutions more effective. The danger is that coordination without authority becomes another polished continental vocabulary, admired in official conference halls in Brazzaville this week and weakened in implementation.
PUBLISHED ON
May 28,2026 [ VOL
27 , NO
1361]
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