GCB Bank MD pushes for stronger risk-sharing models to drive Africa’s growth

Farihan Alhassan, the Managing Director of GCB Bank PLC, has called for a strategic shift in Africa's economic development, asserting that the continent's financing hurdles are primarily rooted in the absence of robust risk-sharing models rather than a lack of capital. Speaking at the African Business Leaders Awards in London, Alhassan argued that attracting sustainable, long-term investment hinges on effective collaboration among governments, financial institutions, and development partners to mitigate risks and foster predictable investment climates.

Alhassan pointed to the significant annual infrastructure financing gap in Africa, estimated between $68 billion and $108 billion, and a growing climate finance deficit. He identified the "Africa risk premium" – a perception that leads to higher borrowing costs for African nations despite lower actual default rates on infrastructure investments compared to other regions – as a major barrier. "The challenge is not always the absence of capital. Often, it is the structure of risk and the confidence needed to attract private capital at scale," he stated.

To address these issues, Alhassan proposed practical mechanisms such as blended finance and partial credit guarantees as effective tools for bridging the gap between global capital and African growth opportunities. He cited the African Development Bank's guarantee structures as an example of how strategic partnerships can reduce risk and enhance investor confidence, having mobilized billions in private sector investment. Furthermore, he recognized the African Continental Free Trade Area (AfCFTA) as a crucial catalyst for investment convergence, creating an integrated market that strengthens the foundation for industrialization, regional trade, and long-term capital flows.

Beyond attracting foreign capital, Alhassan urged African policymakers and financial institutions to prioritize the mobilization of domestic institutional capital. He noted that pension funds, sovereign wealth funds, and insurance assets across the continent collectively hold over $2 trillion. Unlocking even a small portion of these funds for infrastructure and private sector development could significantly transform Africa's investment landscape and lessen its dependence on external funding.

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The challenge is not always the absence of capital. Often, it is the structure of risk and the confidence needed to attract private capital at scale.