- Africa Must Mobilise Its Own Savings to Reduce Dependence on Costly Foreign Capital — Sir Sam Jonah
African economies are caught in a costly financing paradox in which domestic savings are invested conservatively or effectively exported while governments and businesses continue to depend on expensive foreign capital to finance infrastructure, industry and corporate expansion, according to Ghanaian business leader Sir Sam Jonah.
The veteran mining executive is calling for a fundamental rethink of how Africa mobilises and deploys its own financial resources, arguing that the continent cannot sustainably finance its transformation while pension funds and other institutional investors remain concentrated largely in short-term, low-risk assets.
“Africa exports its savings and imports expensive capital,” Sir Sam said, describing what he sees as one of the continent’s most persistent structural weaknesses.
At the centre of the problem is the mismatch between Africa’s growing pools of pension, insurance and institutional savings and its continuing dependence on international capital markets to fund long-term development.
The contradiction is particularly costly for governments that face substantial sovereign risk premiums when borrowing abroad.
African countries routinely confront higher borrowing costs reflecting concerns over currency volatility, debt sustainability, political risk, relatively shallow domestic markets and perceptions of institutional weakness.
The result is a financing structure in which African savings can ultimately find their way into lower-risk international assets while governments and companies on the continent return to global markets to borrow at considerably higher rates.
Sir Sam argues that reversing that cycle will require institutional investors, particularly pension funds, to become more important sources of patient domestic capital.
Pension funds are inherently suited to long-term investment because their liabilities stretch across decades. Yet institutional portfolios across much of Africa remain heavily weighted towards government securities and relatively liquid instruments rather than infrastructure, private equity, manufacturing and other productive investments.
Weak capital markets, regulatory restrictions, governance concerns and a shortage of well-prepared bankable projects have encouraged fund managers to prioritise liquidity and preservation of capital.
Africa faces enormous financing requirements for electricity generation, transmission systems, roads, railways, ports, housing, telecommunications and water infrastructure. At the same time, African companies frequently struggle to obtain the long-term financing required to expand production and compete across borders.
Sir Sam’s argument is therefore not simply that pension funds should take greater risks.
It is that African economies need investment structures capable of converting domestic savings into long-term productive capital without compromising the fiduciary responsibility of institutions managing retirement assets.
That would require stronger project preparation, transparent procurement, credible governance, deeper capital markets and financial vehicles capable of distributing risk appropriately among governments, institutional investors and private developers.
The underlying challenge is ultimately confidence. “Capital follows conviction,” Sir Sam said.
His argument draws partly from his experience building Ashanti Goldfields into an internationally recognised African mining company.
The lesson, he suggested, is that African businesses can attract substantial capital when investors are presented with credible management, strong governance and commercially compelling opportunities.
That experience also challenges the assumption that Africa’s largest enterprises must depend predominantly on foreign ownership or external financing.
For structural transformation to occur, Sir Sam argues that the continent needs more indigenous businesses capable of operating at scale across national borders.
Those companies must emerge not only in natural resources but in agribusiness, financial services, energy, manufacturing and technology, allowing Africa to retain a greater share of profits, skills and intellectual capital generated from its own economic activity.
That objective is becoming more important as governments seek to diversify economies that remain heavily depThe country recorded merchandise exports of about US$32.00 billion in 2025 against imports of approximately US$20.50 billion, producing a substantial trade surplus.
Yet gold, cocoa and petroleum accounted for about 85.90% of exports, highlighting the economy’s continuing dependence on a narrow group of commodities.
The deeper question is whether African countries can convert the wealth they generate, and the savings accumulated by their citizens and institutions, into productive investment capable of creating internationally competitive businesses.
Ghana’s recent experience with external borrowing reinforces the concern. Government has acknowledged that Eurobond borrowing between 2018 and 2021 to support foreign-exchange reserve accumulation generated roughly US$2.50 billion in interest costs alone.
It has also pointed to emergency borrowing during the economic crisis at interest rates above 9.00% as evidence of the cost associated with excessive dependence on foreign financing.
Foreign capital will remain necessary because Africa’s infrastructure and industrialisation requirements are too large to be met exclusively from domestic resources.
Foreign direct investment, multilateral development finance and international capital markets will continue to play important roles.
Sir Sam’s argument, however, is that foreign financing should complement African capital rather than substitute for it.
Countries capable of mobilising substantial domestic financing are less vulnerable to sudden shifts in global interest rates, investor sentiment and exchange rates. They may also negotiate with international investors from a stronger position because development projects are not wholly dependent on external funding.
Building that capacity will require governments to address some of the weaknesses that have historically discouraged long-term domestic investment, including policy instability, weak corporate governance, underdeveloped financial markets and insufficiently robust institutions.
It will also require a different approach to pension and institutional savings. The objective cannot be to force retirement funds into risky or politically selected projects.
Instead, policymakers must create credible investable assets that meet institutional return and risk requirements while directing an appropriate share of long-term savings towards infrastructure and productive enterprise.
That will demand independent investment decisions, strong governance and clear safeguards protecting beneficiaries.
For Sir Sam Jonah, the broader objective is not financial nationalism or the rejection of global capital. It is to ensure Africa develops the capacity to finance a greater share of its own ambitions.
The continent may not suffer from an absolute shortage of savings as much as from a shortage of institutions, investment vehicles and credible projects capable of putting those savings to productive use.
Until that architecture improves, Africa risks remaining trapped in the paradox he identifies: accumulating capital domestically, deploying too little of it towards transformation, and then returning to international markets to borrow capital back at a premium.
