A debate this week between South African President Cyril Ramaphosa and Nigerian industrialist Aliko Dangote has highlighted a fundamental challenge facing major infrastructure and industrial projects across Africa: whether the continent’s largest projects can be financed locally without exposing businesses to prohibitive borrowing costs and currency risks.
The exchange took place during a panel session at the Sustainable Infrastructure Development Symposium South Africa (SIDSSA) in Cape Town.
Ramaphosa argued that African countries have substantial pools of capital available within their domestic financial markets, provided projects are structured appropriately and demonstrate commercial viability.
“Our experience has been that the money is there in the local market,” Ramaphosa said. “It really revolves around the bankability of the project.”
He maintained that well-designed projects should be capable of attracting funding from domestic banks, arguing that the central issue is not necessarily a shortage of capital, but whether projects are structured in a manner that gives financial institutions sufficient confidence to lend.
“If the project is innovatively well structured, and it’s bankable, banks in the local market can fund it. There is always money there,” he said.
Dangote, however, challenged this argument by pointing to the realities faced by businesses operating in African markets, particularly high domestic interest rates and volatile currencies.
The billionaire businessman argued that access to local capital does not automatically make domestic borrowing attractive or sustainable for large-scale projects.
Dangote also warned against financing projects with foreign-currency debt when revenues are generated predominantly in a weaker local currency.
“And it is very dangerous for you to go and borrow money in dollars while your own generating machine is in Kwacha,” he said, using Zambia’s currency as an example.
The disagreement underscores a broader financing dilemma confronting African businesses and governments.
Domestic financial markets can provide an important source of capital and reduce exposure to foreign-exchange movements. However, high interest rates can significantly increase financing costs, particularly for infrastructure, manufacturing, energy and other capital-intensive projects that require extended repayment periods.
Foreign-currency borrowing can provide access to deeper and potentially less expensive pools of capital, but it introduces another significant risk. If the local currency depreciates sharply against the dollar or euro, debt-servicing costs can rise substantially, even when the underlying project continues to generate revenue.
The contrasting positions of Ramaphosa and Dangote therefore illustrate two sides of Africa’s investment equation.
For Ramaphosa, the priority is to develop projects that are sufficiently bankable to unlock capital already available in African financial markets.
For Dangote, the challenge is more fundamental: the cost and currency denomination of that capital are just as important as its availability.
The debate is particularly relevant as African countries seek to accelerate investment in electricity, transport, manufacturing, digital infrastructure and other sectors essential to economic growth.
Ultimately, addressing Africa’s financing challenge may require both approaches to work together: stronger project preparation and bankability, alongside deeper domestic capital markets, more competitive interest rates and improved mechanisms for managing currency risk.
The message for project developers is clear: a compelling idea alone is not sufficient. Projects require credible revenue models, robust financial structures and carefully managed currency exposure to attract sustainable, long-term financing.
