Why financing government is more rewarding in Africa than financing enterprise and the threat to economic integration

The gradual implementation of the African Continental Free Trade Area has brought greater focus on the advantages of significantly increasing intra-African trade from the current 16%–17%. It is recognised that Africa's economic integration will make it more rewarding to produce, invest and trade, boosting growth, jobs and shared prosperity across Africa and her 1.5 billion-strong population.

The campaign now, and rightly so, is about getting African governments to enable two low-hanging key drivers of intra-African trade: visa-free travel and connected payment systems that allow Africans to move freely, buy and sell across borders using simply their mobile money wallets. This is because, according to the research desk of the Africa Prosperity Network (APN), these two moves alone can increase intra-African trade to more than 25% within the first five years of implementation.

Once a tailor or seamstress in Bamako can promote his or her clothes on Instagram, a customer in Maputo can buy instantly online using her mobile money wallet in Mozambican meticais, her local currency, and the seller can receive payment right then in West African CFA francs, opening that commercial highway will create the incentive for investors and financiers to put money into the transport and logistics that will ensure that goods sold across borders in Africa get to buyers in no time.

It is through this lens that I welcome the statement from Ghana's President, John Dramani Mahama, in Moscow on 29 October 2026. His call for local-currency trade settlements and integrated digital payments, alongside greater local processing of Africa's mineral and agricultural resources, brings together two priorities too often discussed separately: producing more value in Africa and making it easier to trade that value across Africa.

But, fundamentally, Africa's single market must make it more rewarding to produce, invest and trade. Removing visa restrictions and connecting payment systems are essential: Africans should be able to travel across the continent and buy and sell across borders using their mobile money wallets. But easier movement and payments will achieve far more if the businesses expected to serve that market can also access affordable finance.

This brings us to a damaging incentive in many African economies, which is that financing government can be more rewarding than financing enterprise. When governments borrow heavily at high interest rates, banks and investors can earn attractive returns from Treasury bills and bonds, with fewer operational demands than investing in production, the real economy.

Manufacturers need machinery, reliable electricity and skilled workers; agribusinesses face weather risks and seasonal cash flows. These enterprises create jobs, yet they struggle to attract capital or even borrow from the banks when government securities offer compelling returns.

High nominal yields do not necessarily mean high real returns: inflation and currency depreciation can erode them. Government bonds can also finance infrastructure that enables enterprise. The problem arises when persistent deficits absorb scarce savings and push up borrowing costs for businesses.

America offers a warning from a different stage of development. Its relative decline in manufacturing dominance, particularly against China, is often attributed partly to financialization, which is the growing influence of financial returns and shareholder valuations over business decisions. Critics argue that maximising share prices and short-term payouts can take precedence over expanding productive capacity.

In Africa, the danger is that financing government becomes more rewarding than financing enterprise. In America, it is that maximising financial valuations becomes more important than expanding productive capacity. The mechanisms differ, but the common danger is finance becoming detached from the production that sustains prosperity. America built a formidable industrial base before these concerns emerged. Africa, however, has yet to industrialise at the scale our population demands. We cannot afford to starve production of capital before building that foundation.

This is why affordable finance belongs at the heart of Africa's integration agenda. A functioning single market serving some 1.5 billion people would strengthen the commercial case for factories, agricultural processing and regional supply chains. But market access alone cannot finance machinery or fulfil an order. Without stronger African production, we risk integrating markets largely for goods made elsewhere.

This is also why we at the Africa Prosperity Network welcome the Africa Credit Rating Agency. Its inaugural CEO, Dr Sifiso Falala, brings experience from challenging established rating practices through his work at Plus 94. AfCRA will help institutionalise and tackle the issue of how African risks are assessed and, ultimately, how productive investment can secure affordable finance.

Integration and sound economic management must therefore advance together. Low, stable inflation makes long-term investment easier to plan. Credible public finances and sustainable government borrowing reduce competition for scarce savings. Reliable electricity, predictable taxation and enforceable contracts improve the prospects of productive enterprise. Simply ordering interest rates down cannot substitute for these foundations.

The objective for our continent is a connected economic system: a larger market makes investment more attractive; affordable, patient capital makes production possible; and efficient transport and payments help businesses reach customers and get paid. Our focus now at APN, with the support of our partners, is to go for these two quick wins of cross-border digital payments interoperability and visa-free travel.

Local processing requires investment. Investment needs viable markets. Those markets need practical ways to move people, goods and money. President Mahama's call at the Russia-Africa Summit thus speaks directly to the challenge of making African enterprise more competitive and rewarding. Its promise will be fully realised when national economic policies support the producers whom continental integration is intended to empower.

His reaffirmation of Nkrumah's vision of African unity is encouraging. His anticipated African Union chairmanship in 2027, coinciding with Ghana's 70th independence anniversary, would offer an opportunity to rally fellow leaders behind this practical economic Pan-Africanism.

Africa Prosperity Dialogues 2027 provides a timely platform to translate that ambition into proposals for action. Its theme, “The Borderless Africa We Want: Move Freely. Pay Seamlessly. Trade More,” captures the connections between mobility, payments and commerce. The financing argument gives that agenda its productive foundation, which is that African businesses must be able to make what this larger market needs.

Hosted by President Mahama in Ghana on 13–15 January 2027, with strategic partners including AfDB, Afreximbank, BADEA, AUDA-NEPAD and major African multinational companies, the Dialogues, fifth in the annual series, will bring private sector and civil society perspectives into the deliberations preceding the 40th AU Summit.

More so because its focus connects directly with the AU's 2027 theme, “AU at the Dawn of its 25th Anniversary: Leveraging the Full Potential of SAATM and New Technologies for Continental Integration.” The Single African Air Transport Market and new technologies can help connect businesses and consumers across our fragmented continent. Alongside freer movement and interoperable payments, they can make the single market more accessible to those expected to build it.

APD 2027 must help turn these connections into a coherent agenda for our leaders: remove barriers to trade while improving the conditions for production. The experiences of those who invest, employ and trade should inform the policies intended to serve them.

The measure of success will be more African savings financing African enterprises, more resources processed locally and more young people finding worthwhile work. Our single market will, thus, fulfil its promise when it makes it pay to produce right here in Africa.

The author is the Founder and Executive Chairman of the Africa Prosperity Network, organisers of Africa Prosperity Dialogues 2027. To register, visit www.apd2027.africaprosperitynetwork.com