African Caucus: Banjul 2026
Theme: Transforming Africa’s Economies Through Investment, Innovation, And Inclusion
Preamble
The 2026 African Caucus to be hosted by The Gambia, under the theme “Transforming Africa’s Economies through Investment, Innovation, and Inclusion” convenes at a pivotal moment for the African continent. Profound global economic uncertainty, tightening financial conditions and significant structural shifts, exert mounting pressures on African economies’ fiscal space, growth and resilience. At the same time, Africa ‘s demographic dynamism, deepening regional integration, natural resource endowments and rapid technological change present vast opportunities to advance economic transformation.
Against this background, African Governors will engage in forward‑looking discussions on strategies to unlock the continent’s potential by addressing persistent financing gaps, maintain good governance, strengthening domestic capacities, and accelerating structural transformation across priority sectors. Deliberations will be organized under two sub‑themes, namely “unlocking financing to drive Africa’s structural transformation’, and ‘leveraging Africa’s natural resource endowments for quality jobs and inclusive growth”. The objective is to consider how engagement with the Bretton Woods Institutions (BWIs) can be strengthened to support these priorities in a more coherent, responsive, and well-sequenced manner.
SUB-THEME 1: UNLOCKING FINANCING TO DRIVE AFRICA’S STRUCTURAL TRANSFORMATION FOR INCLUSIVE GROWTH
Context
- Africa’s ability to accelerate structural transformation hinges on effective mobilization of predictable, sustainable, and diversified sources of financing. Despite important strides made, many economies still face shallow and uneven domestic financial markets, limited fiscal space, and financing conditions vulnerable to global shocks, constraining governments’ capacity to finance long‑term development priorities, strengthen resilience, and create an enabling environment for productive investment. At the same time, digital innovation, demographic dynamism, and deepening regional integration, offer new avenues to expand access to finance and channel resources toward sectors with the greatest potential for inclusive growth. This sub theme provides Governors a platform to examine how countries are broadening financing options, strengthening domestic institutions and markets, and supporting business growth, while reflecting on how cooperation with international partners, particularly the Bretton Woods Institutions, can continue to evolve in ways that respond to Africa’s priorities and reinforce the foundations for resilient, inclusive, and long‑term development.
Topic 1: Restoring Fiscal Space by Strengthening Revenue Systems
- Most African countries face increasingly tight fiscal constraints driven by rising debt vulnerabilities, declining overseas development assistance, mounting expenditure pressures, recurrent external shocks, and weak domestic revenue mobilization. Average tax-to-GDP ratios are among the lowest globally, revenue systems remain constrained by narrow tax bases, widespread exemptions, high informality, limited institutional capacity, and administrative inefficiencies, intensifying reliance on costly external borrowing and reinforcing elevated debt service burdens. The growing cost and risks of non-concessional financing further limits capacity to advance national development priorities.
- While expenditure rationalization remains important, rebuilding fiscal space ultimately depends on strengthening domestic revenue systems to support a robust tax base, macroeconomic stability, long-term resilience, and inclusive growth. Across the continent, countries are pursuing reforms to broaden tax bases, rationalize tax expenditures, improve VAT performance, modernize income taxation, strengthen customs, and expand digitalization to enhance transparency and efficiency. These efforts, including the development of Medium‑Term Revenue Strategies, underscore the central role of domestic revenue mobilization in reducing reliance on costly external borrowing, laying the foundation for sustainable financing and long-term structural transformation and highlight the institutional, technical and economic challenges that shape reform outcomes across national contexts. Discussions could focus on strengthening domestic revenue mobilization as a central pillar for restoring fiscal space, reducing debt vulnerabilities, and financing Africa’s long term development priorities.
Topic 2: Deepening Domestic Capital Markets to Unlock Africa’s Investment Potential
- Africa’s financing deficits continue to constrain infrastructure development, industrialization, and sustained economic growth. A well-functioning domestic capital market can bridge this gap by mobilizing long-term financing, fostering public-private partnerships, enhancing financial inclusion, and supporting wealth creation. Whereas progress has been made in legal and regulatory reforms, the establishment of stock exchanges, and the introduction of new products, African capital markets remain fragmented, shallow, and in some cases underutilized, fraught with high transaction costs, dominance of government securities and short-term instruments. With market capitalization below 20 percent of continental GDP, strengthening domestic capital markets is essential to mobilizing local currency resources, reducing vulnerability to exchange‑rate risk, and channeling long‑term financing toward productive sectors, to enable governments, firms, and households to participate fully in Africa’s development agenda.
- There is, however, considerable scope to deepen and broaden capital markets across the continent. Discussions could cover emerging instruments such as green diaspora and infrastructure bonds, sovereign wealth and pension funds, advances in fintech, blockchain and AI‑enabled solutions, which are opening new avenues for mobilizing investment and expanding market access. Efforts to strengthen liquidity and scale through further regional financial integration under the African Continental Free Trade Area (AfCFTA), including more harmonized regulations and increased cross‑border activity, could be explored. These evolving opportunities provide a basis to reflect on how African countries are approaching capital‑market development, the broader solutions to address challenges and support more effective mobilization of long‑term financing.
Topic 3: Enhancing MSME’s Access to Finance
- Micro, Small, and Medium Enterprises (MSMEs) account for nearly four-fifths of all jobs in developing countries and are central to Africa’s growth and employment landscape. MSMEs absorb a large share of the labor force—particularly women and youth, and contribute significantly to GDP, inclusive growth, and poverty Despite their central role, access to finance remains weak, due to large and acute finance gaps that limit access to affordable and appropriate financial services, leaving much of the sector’s potential untapped. The International Finance Corporation (IFC) estimates the finance gap for formal MSMEs in Africa to be over USD330 billion in 2017, with informal and women-owned enterprises disproportionately affected. This, amid underdeveloped credit information systems, collateral constraints, macroeconomic instability, and shallow financial markets, constrains business expansion, technological upgrading, job creation, and integration into regional and global value chains.
- African countries are making significant efforts to build a more robust, productive, and formal MSME sector. This requires a coordinated, multipronged, and stakeholder-driven approach that tackles supply-side bottlenecks, strengthens demand-side capabilities, and improves the enabling ecosystem. The topic invites participants to reflect on the conditions essential for unlocking MSMEs’ contribution to inclusive growth and structural transformation. Discussions could explore different avenues through which national and regional initiatives, as well as partnerships with the BWIs, may evolve to better support financial infrastructure development, technology adoption, business capability building, and deepened market linkages.
SUB-THEME 2: LEVERAGING AFRICA’S NATURAL RESOURCE ENDOWMENTS FOR QUALITY JOBS AND INCLUSIVE GROWTH
Context
8. Africa’s natural resource endowments remain a critical asset for advancing structural transformation, quality job creation, and inclusive growth, yet their development impact of has been constrained by continued reliance on raw commodity exports, persistent skills gaps, weak domestic and regional value chains, and limited integration of the commodity sector with the broader economy. Consequently, resource wealth has not consistently translated into productivity gains, economic diversification, or sustained employment opportunities. Leveraging these endowments effectively requires a decisive shift toward value addition and competitive regional industrialization. This should be supported by deeper regional integration, scaled investment in energy, transport, logistics, and digital infrastructure, as well targeted human capital development to address skills gaps and enable inclusive participation in higher‑value sectors of resource‑based value chains. Against this backdrop, this sub‑theme provides a basis for Governors to examine how Africa can invest in value‑chain development, enabling infrastructure, and skills development in a coherent and mutually reinforcing manner to transform Africa’s natural resource wealth into an engine of job‑rich inclusive growth.
Topic 1: Scaling Value Addition and Competitive Regional Value Chains through Industrialization
9. Africa’s growth model remains heavily reliant on the export of unprocessed raw materials, limiting domestic value addition, job creation, and economic resilience, despite substantial natural endowments. Many economies remain at the lower end of regional and global value chains due to persistent infrastructure gaps, fragmented markets, limited access to long‑term finance, and skills shortages, vulnerabilities that have been heightened by recent global shocks. This exposes the Continent’s high import dependence and intensifies balance‑of‑payments pressures and growth volatility. In 2023, Africa recorded merchandise imports of approximately USD699 billion against exports of USD614 billion, with the latter dominated by primary commodities; intra‑African trade remains low at 16–17 percent of total exports, while Africa accounts for only about 2.7 percent of global value‑added trade, reflecting limited participation in higher‑value production sectors. Accelerating value addition and industrialization through a shift from extraction to processing and manufacturing, is therefore central to strengthening domestic value capture, expanding exports, creating higher‑quality jobs, and reducing vulnerability to external shocks. Moreover, addressing structural constraints, related to energy, transport, logistics, skills, technology and digital infrastructure, tariff and non‑tariff barriers, access to finance, particularly for MSMEs and the incomplete implementation of the African Continental Free Trade Area (AfCFTA) is imperative.
10. Key discussion issues under this topic could include promoting value addition and industrialization while maintaining macroeconomic stability by aligning WBG investments and IMF programs to support export diversification, reduce import dependence, and strengthen external balances through targeted reforms. Governors may also reflect on upscaling infrastructure— including reliable energy, transport corridors, logistics platforms, and technology, to reduce costs and connect production across borders and expand support for value‑added manufacturing in job‑rich sectors aligned with comparative advantage. Additionally, the discussion could be expanded to consider how regional corridors, power interconnections, and mineral geospatial mapping could be developed to crowd in private investment.
Topic 2: Transforming Natural Wealth Through Energy, Transport and Digital Infrastructure Development
11. Africa is one of the most resource-rich continents in the world, with abundant mineral, oil and natural gas, agricultural, forest, water, fertile land, and renewable energy resources. According to a recent analysis by Agence Francaise de Development (AFD), the mining sector contributes about 10 percent of Africa’s overall GDP, and accounts for an average of 25 percent of total continental exports, with significant variations across countries. Additionally, a study by Camillo Atampugre suggests that oil and gas sector accounts for approximately 20 percent of Africa’s GDP, with significant country level variations. Despite Africa’s role as a significant global supplier of natural resources, a vast majority of its countries continue to have limited local industrial processing and refining capacities, a challenge exacerbated by acute energy, transport, and digital infrastructure constraints.
12. This section will discuss the role of infrastructure as an integrated system—combining energy, transport, logistics, industrial platforms, and digital networks— in enabling value chains to operate efficiently and at scale. Discussions will center on how infrastructure investments can be deliberately sequenced and aligned with priority value chains, ensuring that upstream extraction, midstream processing, downstream manufacturing, distribution, and recycling activities are supported in a coordinated and mutually reinforcing manner. Emphasis will be placed on value‑chain localization across all phases, moving beyond isolated projects toward integrated industrial ecosystems. The discussion will also examine how industrial corridors, special economic zones, and multimodal transport networks can be used to mobilize private investment at scale, reduce production and logistics costs, and crowd in long‑term financing, thereby anchoring competitive industrial development, job creation, and resilient growth across African economies.
Topic 3: Developing Human Capital and Skills for a Future-Ready, Inclusive Workforce.
13. By 2050, Africa’s working-age population will reach 1.6 billion, yet the region’s Human Capital Index stands at 0.40, reflecting low productivity and limited workforce quality that undermines the continent’s ability to harness its demographic dividend and create high quality jobs. Despite increased access to education, persistent mismatches between available skills and labor market requirements remain, with significant gaps in foundational, technical, and soft skills. Although rapid technological change, digitalization, and the green transition are reshaping global labor demand, curricula remain disconnected from market needs, with only 9 percent of young people enrolled in technical or vocational programs. As rapid technological change, digitalization, and the green transition reshape global labor demand, Africa’s growth potential increasingly depends on strengthening relevant and future ready skills, enabling the transition from an exporter of raw materials to a leader in value addition and processed goods, in line with Agenda 2063 objectives for developing a skilled and innovative workforce.
14. Discussions could focus on modernizing education and skills systems to better align human capital development with current and future labor‑market needs, particularly in resource‑based and emerging sectors. This includes curriculum reform, strengthened teacher training, and the integration of digital, technical and soft skills, alongside reforms to TVET and tertiary institutions to ensure demand driven, competency-based training, including through Centres of Excellence and industry‑linked programs. Discussions could also explore deeper private sector engagement to strengthen partnerships, leverage private investment, and promote South‑South knowledge exchange.
Language Information
Interpretation services will be available for all official sessions.
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