Keypoints:
- Private credit assets reach $5.6bn
- Infrastructure drives demand for alternatives
- Africa holds just 0.3 percent globally
AFRICA’S private credit market has more than tripled in five years to $5.6bn as businesses and infrastructure developers increasingly seek long-term financing beyond conventional bank lending, according to figures attributed to Moody’s Ratings in reporting published on September 8.
The expansion points to a potentially important shift in how African growth is financed. Private lenders are beginning to occupy gaps left by constrained banks and shallow capital markets, offering another route to capital for infrastructure projects, medium-sized companies and businesses unable to secure suitable long-term funding.
Private lending gathers momentum
Assets under management in Africa-focused private credit reached $5.6bn at the end of 2025, up from $1.8bn in 2020, according to figures attributed to Moody’s.
The increase is significant, but it comes from a low base.
Africa still accounts for only about 0.3 percent of a global private credit market estimated at at least $1.8tn.
That contrast captures both the opportunity and the scale of the challenge.
Demand is being driven by persistent financing shortages, underdeveloped capital markets and limits on the ability or willingness of banks to extend long-term loans.
Infrastructure is particularly exposed.
Power plants, transport systems, data infrastructure, industrial facilities and other major projects often require financing over periods significantly longer than the lending horizons preferred by commercial banks.
Medium-sized businesses can face similar obstacles, particularly where banks demand substantial collateral or favour shorter-term lending.
Private credit offers an alternative by allowing borrowers to negotiate directly with investment funds, specialist lenders and other capital providers. Financing can often be structured around individual projects, cash flows and repayment requirements.
Capital markets remain too shallow
The growth of private credit comes as Africa’s public capital markets remain significantly less developed than those in most other regions.
Figures attributed to Moody’s put African stock market capitalisation at around 33 percent of GDP in 2024, compared with 61 percent across emerging markets and 113 percent globally.
The OECD’s Africa Capital Markets Report 2025 reinforces that picture.
Outstanding African corporate debt through bonds and syndicated loans declined from about $230bn in 2020 to roughly $180bn in 2024, according to the OECD.
That represented only about 1 percent of global corporate debt and 5 percent of emerging-market corporate debt.
South Africa, Egypt, Nigeria and Mauritius accounted for roughly 60 percent of the continental total.
The OECD also found that corporate debt remained below 15 percent of GDP in all but one of the 15 African markets it examined, compared with 52 percent globally.
For many African businesses, the result is a difficult financing middle ground: bank loans may not match long-term requirements, while public bond markets remain inaccessible to all but relatively large and established borrowers.
Africa has capital but cannot deploy enough
The private credit expansion also highlights a wider problem across African finance.
The continent has substantial pools of savings, but much of that money remains poorly connected to productive investment.
As Africa Briefing has reported, more than $2tn in non-bank capital is available across Africa, with pension and insurance assets alone exceeding $1tn.
Large portions remain concentrated in government securities and other relatively low-risk assets rather than infrastructure and private-sector investment.
The issue is therefore increasingly one of financial intermediation: how to connect available African capital with credible businesses and bankable projects.
Continental initiatives are already seeking to unlock an estimated $2.5tn pool of institutional capital for infrastructure, including pension funds, insurers, sovereign wealth funds and regional financial institutions.
Private credit could become one of the channels through which some of that capital reaches productive assets.
DFIs remain crucial
Africa’s private credit market differs markedly from the much larger industries operating in the United States and Europe.
Development finance institutions and multilateral lenders remain central to the sector.
Moody’s is reported to expect DFIs to continue supporting private credit and helping attract international capital through blended-finance and credit-enhancement structures.
Such arrangements can distribute risk between different investors.
A development institution might absorb part of a transaction’s higher-risk exposure, for example, allowing senior portions of a loan to achieve stronger credit characteristics and become more attractive to pension funds, insurers and other institutional investors.
The OECD has similarly found that African private credit remains heavily supported by multilateral development banks and DFIs, while participation from conventional institutional investors is still relatively limited.
That could change as funds establish longer performance records and develop structures that satisfy institutional risk requirements.
Banks remain part of the equation
Private credit is unlikely to displace African banks.
Instead, alternative lenders and banks are expected to work increasingly alongside one another, particularly on infrastructure transactions where financing requirements are too large for a single institution.
Private funds can participate in syndicated loans, co-finance projects or provide additional layers of capital.
That pattern is also visible in mining finance. African banks and domestic investors are assuming larger roles in mining projects, frequently alongside development institutions and international capital.
Africa’s financing requirements are large enough to accommodate several sources of funding.
The central issue is therefore not whether private lenders defeat banks, but whether Africa can build enough credible financing channels to meet growing demand.
Growth faces an investor test
Rapid expansion does not guarantee that private credit will achieve scale.
Investors will want evidence that African private debt can generate consistent returns while compensating for currency volatility, political risk, legal uncertainty in some jurisdictions and the wider challenges associated with frontier markets.
The OECD has identified an important warning sign.
More than half of the increase in assets under management by Africa-focused private credit funds between 2021 and 2024 consisted of undeployed capital, commonly known as ‘dry powder’.
That means raising money is only part of the challenge.
Fund managers must still find enough borrowers and projects capable of meeting investment standards.
Africa’s wider investment market demonstrates the same difficulty. Disclosed investment reached $16.1bn in the first quarter of 2026, but much of the capital was concentrated in a small number of major infrastructure and energy deals.
Private credit could help broaden that financing landscape, particularly if more capital reaches mid-sized companies rather than clustering around mega projects.
At $5.6bn, Africa’s private credit market remains tiny by global standards.
Its significance lies in what the growth reveals: companies need longer-term financing, infrastructure requires far more capital and Africa’s financial system is being forced to create new ways of connecting investors with businesses and projects that conventional funding channels have struggled to serve.
