We often talk about the end of the aid era. But what does that truly mean for Africa?
Published on: 15/07/2025
Last week, I came across a compelling piece in The Continent by Lydia Namubiru, exploring Africa’s financing outlook ahead of the #FfD4 Summit, following discussions at the 2025 Ibrahim Governance Weekend.
I want to thank Lydia Namubiru, The Continent, and the Mo Ibrahim Foundation for advancing this critical conversation. It is a timely and important contribution, not only because it quantifies potential sources of domestic financing for Africa’s development, but also because it exposes the reality of a world shifting away from aid and multilateral solidarity, pushing Africa to rethink how to finance its future.
We often talk about the end of the aid era. But what does that truly mean for Africa? To me, it means we must confront a fundamental reality: Africa’s future depends on our ability to build credible systems that can mobilise and responsibly manage domestic and international resources.
If our public institutions cannot convince even the managers of our own pension funds to invest in our economies, how can we expect international investors and markets to trust us with their capital?
Financial credibility is not a buzzword. It is the bedrock of development financing. It requires discipline, rigour, professionalism, and efficiency in managing public resources. Without this, all the theoretical discussions about the potential of Africa’s pension funds, domestic taxes, or untapped wealth will remain wishful thinking.
In a recent paper I published on “Financial Credibility and Systemic Transformation” (available here), I argue that credibility is not simply about credit ratings or macroeconomic indicators; it is about building systems that investors—domestic and international—can trust because they are transparent, effective, and able to deliver results.
Without credible systems, neither domestic funds such as pension schemes nor international financing will engage at the scale needed to transform Africa’s development trajectory.
Health and education are not profitable sectors, and they should not be. They are social sectors that states must finance to protect and empower their citizens. The real debate is not whether pension funds should finance schools or hospitals but how they can finance productive, high-value sectors that will expand the fiscal base, allowing states to sustainably fund health and education through budget revenues.
Investing in sectors like energy, digital infrastructure, modern agriculture, and meso-finance can create the wealth Africa needs, provided these investments are well-structured, transparent, and efficient.
Continental estimates are useful for framing advocacy, but real transformation happens at the country level. Each African country must conduct its own strategic analysis to identify the reforms needed to unlock its potential for mobilising domestic resources responsibly. This is where the intellectual community and partners like the Mo Ibrahim Foundation can play a catalytic role, supporting pilot countries with the right conditions for short-term impact.
There is, however, a risk of a vicious cycle: financial credibility is a prerequisite to attracting resources, but building this credibility requires resources and action. How do we break this cycle in countries where institutions are weak?
We need transition mechanisms such as trust funds, structured public-private partnerships (PPPs) with third-party supervision, and digital transparency tools to progressively engage domestic resources while building credibility. This approach will require creativity, bold leadership, and a commitment to long-term reforms.
Productive sectors that pension funds could finance have long payback periods. It is essential to articulate the short-term need to protect retirees, the medium-term need to generate returns, and the long-term goal of expanding the tax base to finance social services sustainably. Without this clear alignment, discussions around using domestic resources may hit political and regulatory roadblocks.
Taxing Africa’s ultra-wealthy or tackling illicit financial flows requires regional and global coordination. Africa currently lacks concrete tools for effective fiscal and financial coordination across the continent. A progressive approach, leveraging regional economic communities like UEMOA, CEMAC, EAC, and SADC, may be more realistic than waiting for a pan-African system that may take decades to materialise.
We must move away from the simplistic view of targeting wealthy individuals and businesses as mere sources of cash for public good. Instead, we should build a pact of co-responsibility between the state, social leaders, intellectuals, and the private sector to align economic transformation with social progress.
As I argue in my recent paper on “The African Pact for Social Progress” (available here), this co-responsibility is not a theoretical ideal; it is a practical pathway to ensure that social and economic objectives are pursued jointly, creating the trust and alignment necessary to finance Africa’s development sustainably.
Sustainable development financing requires coherence, synergy, and a shared vision that connects economic development with social objectives. Only with credible, efficient systems can Africa finance its own future.
As we continue to rethink development financing in Africa, I invite you to join us at the All Systems Symposium Africa: Transformational Leadership for Water and Sanitation, 2026. There, we will translate these reflections into practical solutions, using the water sector as a testbed for system-wide transformation, building credible frameworks, and showcasing how domestic resources can be mobilised sustainably to finance Africa’s development.
If you care about building the systems Africa needs to finance its future, let’s continue this conversation in Kigali.
At IRC we have strong opinions and we value honest and frank discussion, so you won't be surprised to hear that not all the opinions on this site represent our official policy.
Africa's future depends on our ability to build credible systems that can mobilise and responsibly manage domestic and international resources.
we should build a pact of co-responsibility between the state, social leaders, intellectuals, and the private sector to align economic transformation with social progress
