To get more capital, Africa needs more data

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Subscribe to enjoy similar stories. “The concept of risk is completely invented to ensure that investment doesn’t come to Africa," Gagan Gupta told an audience of investors and entrepreneurs earlier this year, to resounding applause. Mr Gupta, whose firm works on logistics and utilities across Africa, is optimistic about the continent and scathing about outsiders’ ability to assess it.

Philippe Valahu, the boss of PIDG, an infrastructure-finance group, echoes the sentiment: “I spend a huge amount of my time dispelling risk perceptions," he says. Aubrey Hruby, who advises investors on entering Africa, recalls that “one thing [Americans] always say is, what about corruption? I’m like, how many mayors in America are serving jail time right now for corruption?" The view that African firms and governments pay a higher cost of capital than is necessary to compensate investors in debt and equity for the risks they assume is widespread on the continent. Regional policymakers even plan to launch an Africa-based credit-rating agency in 2025 to counter the scores of global rating agencies, which they say are plagued by bias.

“We are basically given a higher risk profile unfairly. One of the reasons that this is happening is because our balance sheets and economies are not valued correctly," Hakainde Hichilema, the president of Zambia, said earlier this year. Is he right? How much the continent pays for capital is a matter of urgency.

One reason is that governments’ interest bills are soaring as countries labour under a massive pile of debt. Government debt across sub-Saharan Africa reached 60% of GDP in 2023, with two dozen countries’ debt burdens widely considered unsustainable. Three—Zambia, Ghana and Ethiopia—have defaulted