Africa Must Deepen Its Domestic Financial Markets to Achieve the SDGs

Africa’s journey towards meeting the Sustainable Development Goals (SDGs) hinges on developing effective domestic financial markets that provide affordable finance. 

Yes, international aid and donor funding still play a role. But for the continent to experience real, lasting change, it must be able to fund its own future. That means building deeper, more inclusive, and resilient financial systems that support sustainable growth from within.

Africa’s reliance on foreign capital exposes economies to exchange rate risks and global financial shocks. Strengthening local financial systems will support long-term investments, enhance economic resilience, and safeguard economic sovereignty.

The African Exchange Linkage Project (AELP) notes that the in-depth development of domestic financial markets can reduce dependency on foreign capital and the risks associated with exchange rate fluctuations.

By strengthening local financial systems, African countries can support long-term investments, improve economic resilience, and enhance economic sovereignty, according to the AELP which underscored that local currency financing is a buffer against global financial shocks, by reducing exposure to external debt obligations in foreign currencies.

“By developing domestic financial markets, African countries can reduce dependence on volatile foreign capital and manage capital flows more effectively.”

Financial markets across many African countries still remain shallow and fragmented. Capital markets are underdeveloped, access to credit is limited, and the savings rate is worryingly low. According to the African Development Bank, fewer than 20% of Africans have access to formal financial services. There’s however some good news as fintech platforms are making strides. 

Mobile money platforms like M-Pesa in Kenya have revolutionised access to financial services. Digital lending, savings apps, and even blockchain tools are opening new doors. In fact, the Absa Africa Financial Markets Index, published by Absa Group, reveals that Africa’s financial markets have experienced their fastest growth since 2017, driven by the broader economic recovery following recent global disruptions.

But innovation alone isn’t enough. These tools need supportive policies, better digital infrastructure, and consumer protection to truly scale.

Absa notes in the report that policy-makers, regulators and exchanges have been busy across the continent. New financial products continue to be introduced, like those focused on environmental, social and governance criteria or Islamic finance. 

Bottomline is, for the continent to truly deepen its financial markets, so many things need to change. This includes having stronger financial regulations that promote transparency and better regional integration. 

There’s also a need to massively invest in financial literacy to help people, especially the young to save and invest as well digital transformation of financial systems, especially in rural areas.

“In a continent where over $1.1 trillion in domestic capital sits largely untapped, the real opportunity lies in mobilizing these resources to fund Africa’s own growth ambitions — transforming idle assets into engines for sustainable development,” notes Terence Hove, Senior Financial Markets Strategist at Exness.

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