Private Capital Report: Capital alone won’t decide how much more lenders can lend.

In this newsletter

• Top story: Africa’s development lenders have capital, but each faces a different limit.
• Market Intel: Ethiopia’s shift to digital banking gives foreign banks a way past the branch giants.
• Recent Transactions

Africa’s development lenders have capital, but each faces a different limit

Africa’s development lenders still have capital to keep lending, but each faces a different limit. EBID’s capital adequacy ratio fell from 50.6% in 2021 to 36.1% at the end of 2025 as lending grew faster than capital. It is still above its 25% minimum, while its non-performing loans rose from 4.1% to 5.8%. Afreximbank can still raise money, and its 2 billion dollar syndicated loan in March 2026 drew 2.36 billion dollars in commitments. The concern is its loan book, since Fitch put its non-performing loans at 7.1% against the bank’s own 2.3%, after counting exposures to Ghana, South Sudan and Zambia that the bank leaves out. AfDB has the most room, having used only 43.4% of its risk capital against a 90% ceiling. That room is less flexible than it looks, because no single country can take more than 15% of its risk capital, and its concessional fund is kept apart from regular lending. These pressures are also connected, because when lenders fund one another or share the same markets, strain at one can limit what the others can lend.

Ethiopia’s shift to digital banking gives foreign banks a way past the branch giants

Ethiopians are moving their money onto their phones quickly. Digital transaction values passed 18.5 trillion Birr in the year to June 2025, nearly double the year before and almost four times the 4.7 trillion Birr held in assets across the whole banking sector. Now that the market is open to foreign banks, this shift matters because it gives newcomers a realistic way to compete. Taking on Commercial Bank of Ethiopia the traditional way would be very hard, since it holds about half the sector and has spent decades building a huge branch network. A newcomer with a strong mobile app and automated lending tools, however, can reach the same customers without opening a single branch. Large lenders are already backing this model, with FirstRand buying a stake in Optasia, a digital lender operating in Ethiopia, for about 277 million dollars in 2025, and a group of South African banks following up with a 330 million dollar loan package in 2026. The existing banks also have a growing cost problem, because sector expenses have reached 526 billion Birr against 646 billion Birr in income, and much of that is tied up in running branches. The main thing for a digital entrant to watch is security, as more money flowing through mobile channels also opens more room for fraud and cybercrime, which means spending heavily on protection from the start.

Reports you should read

• Net-Asset-Value Lending offers African GPs an alternative path to liquidity →
• Copper Mining in Southern Africa – Business Model, Growth, Competition (June 2026) →
• Bank recapitalisations have expanded African Investment Banking →
• Sukuk financing is becoming a recurring banking mandate in West Africa →
• VC Liquidity is better measured by Buyer quality, not Exit volume →

Recent transactions

• Proparco invests EUR 5 million in SOGUIPAL's operations in Guinea →
• Edge Growth’s Ignite Fund invests R3.5 million in uNotho Holdings' operations in South Africa →

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