Southern Africa must mobilize greater financial resources to support its development and turn its still fragile economic recovery into inclusive growth.
This is the main message of the 2026 Regional Economic Outlook for Southern Africa, published on Tuesday by the African Development Bank (AfDB) Group.
The institution forecasts that regional growth will increase from 2.1% in 2026 to 2.7% in 2027, driven mainly by household consumption and the services sector. However, this improvement continues to be constrained by limited economic diversification, low agricultural productivity, inadequate infrastructure, and insufficient domestic resource mobilization.
According to the AfDB, the region's main challenge is not a lack of capital, but rather its mobilization and effective use. "The challenge is not simply a lack of money, but the ability to mobilize and deploy available resources at scale," said Kennedy Mbekeani, the Bank's Director General for Southern Africa.
The report warns of an annual financing gap estimated at $55 billion by 2030, amid tighter international financial conditions and declining concessional financing. The investment rate, which fell to 18.6% of GDP in 2025, remains below the level required to support genuine economic transformation.
On the macroeconomic front, the AfDB notes a significant decline in inflation, which dropped from 26.1% in 2024 to 12.3% in 2025 and is projected to reach 8.4% in 2026. Despite this improvement, the region continues to face persistent budget deficits, rising debt, unemployment, social inequalities, and the effects of climate shocks.
To bridge the financing gap, the institution recommends strengthening public financial management, combating illicit financial flows, expanding public-private partnerships, and better mobilizing institutional investors, including pension funds, insurance companies, and sovereign wealth funds. It also calls for the development of capital markets and accelerated digitalization to broaden the tax base.
The report also highlights significant underutilized resources, including diaspora remittances, financial markets, and wealth generated from natural resources.