There’s a noticeable paradox in South Africa’s credit market that illustrates a challenge across the continent. South African banks hold liquidity and capital well above what regulators require of them, comfortably putting them in a position to extend enough credit to customers. Yet in the second quarter of 2025, consumers submitted 18.5 million credit applications, of which 67% were declined. The problem, then, was not that there was too little money in the system. It was that the institutions holding it could not confidently underwrite a large enough share of the market demanding it. The pattern is the same across most of Africa to date.
The International Finance Corporation estimates that $331 billion in SME financing demand goes unmet in Sub-Saharan Africa each year. Having spent years building alternative credit infrastructure, I’d argue the reason is the same one playing out in South Africa: there is more capital available to disburse as credit, but only a fraction of that demand falls within the addressable market of formal lenders today.
For many Africans, building a home is a years-long exercise in accumulation: one room at a time, as enough cash becomes available to add the next. It is a practical response to a financing system that cannot always bring future purchasing power forward into the present. The same pattern appears across the entire economy. Businesses grow one inventory cycle at a time, expansion waits for retained earnings, and productive investment often happens only when enough cash has already been accumulated to fund it.
