LONDON, Sept 8 – Africa’s private credit market is positioned for further expansion as businesses and infrastructure developers increasingly seek financing beyond traditional banks, according to a new report from Moody’s.
The continent’s private credit assets under management reached $5.6 billion at the end of 2025, up sharply from $1.8 billion in 2020, highlighting the rapid development of an industry that remains relatively small by global standards.
Despite that growth, Africa represented only 0.3% of the global private credit market, which Moody’s estimates at a minimum of $1.8 trillion.
The ratings agency expects demand for private credit across the continent to remain supported by a persistent financing deficit, relatively underdeveloped capital markets and constraints on banks’ capacity and willingness to provide long-term funding.
The financing challenge is particularly pronounced for infrastructure projects, medium-sized businesses and small enterprises, where conventional bank lending may not adequately match the size or duration of capital requirements.
Development Finance Institutions Key to Scaling
Development finance institutions are expected to remain important to the development of Africa’s private credit industry, particularly by helping attract international investors through credit-enhanced and blended-finance structures.
According to Moody’s, these mechanisms could support highly rated senior loan tranches, potentially making African private credit more attractive to institutional investors such as pension funds and insurance companies.
Blended finance could therefore play a critical role in bridging the gap between the risk profile of African investments and the return and credit-quality requirements of large institutional pools of capital.
For investors, the opportunity is significant, but so are the risks. Moody’s said the industry will need to establish a record of consistent returns competitive with alternative investment opportunities if it is to attract substantial additional capital.
That challenge is particularly relevant given persistent investor concerns around frontier-market risk and the mixed historical performance of Africa-focused private investment funds.
Complementing Rather Than Replacing Banks
Private credit is unlikely to emerge as a direct replacement for African banks, Moody’s said. Instead, private credit funds frequently work alongside banks, either providing financing through banking relationships or participating in transactions alongside traditional lenders. This is particularly relevant for infrastructure, where the continent’s financing requirements remain substantial.
The growing private credit industry could therefore become another layer within Africa’s financial system, expanding the pool of available capital without necessarily displacing conventional lenders.
Its development is also closely connected to the weakness of African capital markets. Stock market capitalisation across the continent stood at approximately 33% of GDP in 2024, according to Moody’s, compared with 61% for emerging markets and 113% globally.
That gap underscores the limited depth of equity markets available to companies seeking to raise long-term capital and helps explain why alternative financing channels are gaining importance.
A Large Market Opportunity, but Execution Matters
Africa’s private credit market has grown more than threefold since 2020, but its tiny share of the global industry shows how early the sector remains. Closing that gap will depend not only on the continent’s substantial financing needs but also on whether fund managers can demonstrate strong risk management, reliable returns and sufficient transparency to attract global institutional capital.
Development finance institutions could help accelerate that process by absorbing part of the risk associated with African investments and structuring transactions in ways that meet the requirements of larger investors.
For African companies and infrastructure developers, the expansion of private credit could provide access to longer-term financing at a time when traditional funding channels remain constrained.
For international investors, meanwhile, the sector presents an opportunity to gain exposure to Africa’s infrastructure and corporate financing needs through a market that remains small relative to its underlying demand.
The central challenge will be converting Africa’s enormous financing gap into an investable asset class capable of delivering scale, liquidity and consistent risk-adjusted returns.
