Windhoek, Namibia, 13 November 2026 (ECA) – Policymakers, development institutions, financial sector leaders and private sector representatives at the Joint Session of the Intergovernmental Committee of Senior Officials and Experts (ICSOE) for Eastern and Southern Africa have called for reforms to channel more financing toward productive sectors of the economy and reduce the cost of credit for businesses.
The discussion, held under the theme “From Profitable Banking to Productive Finance: Reducing the Cost of Credit for Investment in Eastern and Southern Africa,” focused on the persistent challenge of limited access to affordable finance despite the strong profitability of many African banking sectors.
Presenting the Eastern and southern Africa perspective, Andrew Mold, Director of the ECA Office for Eastern Africa and Ricardo Gottschalk, Senior Economist in the United Nations Resident Coordinator's Office in South Africa noted that access to affordable finance remains one of the biggest obstacles to industrialization and structural transformation.
Research presented during the session showed that private sector credit in African countries stands at only 18 per cent of GDP, compared with 34 per cent in comparable developing economies elsewhere. Meanwhile, banks generate average returns on equity of 19.2 per cent, among the highest in the world.
“We need to do whatever it takes to increase credit to the private sector if we want a thriving private sector,” said Mold, emphasizing the importance of productive finance for job creation and economic transformation.
Evidence presented at the meeting showed that banking systems across Eastern and Southern Africa remain highly profitable. Among Africa's top 100 banks in African Business magazine’s ranking, 25 banks from Eastern and Southern Africa recorded returns on equity above 20 per cent.
At the same time, credit allocation remains concentrated in households, trade and construction rather than in manufacturing or higher value-added services.. In Kenya, for example, personal and household loans account for 27.1 per cent of total bank lending, while agriculture receives only 4.6 per cent. Similar patterns were observed across Uganda, Rwanda and Tanzania.
According to Sonia Essobmadje, Chief of Innovative Finance and Capital Markets at ECA, Africa's institutional investors collectively manage approximately US$4.5 trillion in assets, including US$2.5 trillion held by commercial banks, even as the continent faces major financing gaps for infrastructure and industrial development.
“The issue is not profitability. We want profitable banks. The challenge is ensuring that profitable banks also play a stronger role in financing Africa’s transformation,” she said.
Representatives of the private sector argued that small and medium-sized enterprises (SMEs) continue to face high borrowing costs, stringent collateral requirements and limited access to credit despite their role as key drivers of employment and economic growth.
"Banks often give money to those who already have money," observed Gilbert Ewehmeh,
CEO of Accelerate Africa, highlighting the difficulties many start-ups and emerging businesses face when seeking financing.
The session also explored the role of digital finance in expanding access to credit. Kato Mukasa Kimbugwe, Associate Professor at Africa School of Governance highlighted the success of Rwanda’s eKash interoperability platform, which now serves 3.2 million active users, connects 23 financial service providers, and processes 14.8 million transactions per quarter.
Participants agreed that strengthening payment systems, expanding capital markets, supporting development finance institutions and mobilizing domestic resources will be essential for accelerating industrialization, regional integration and implementation of the African Continental Free Trade Area.
The discussion formed part of ICSOE 2026, which brought together delegates from 25 countries to explore practical solutions for strengthening connectivity, trade and investment between Eastern and Southern Africa.
Issued by:
Offices for Eastern and Southern Africa
United Nations Economic Commission for Africa
