Africa's capital must stay home to power a new continental financing architecture

For decades, Africa has been the continent that saves its funds abroad at near zero or negative returns. African central banks, sovereign wealth funds and pension managers have been exporting their reserve capital to be managed by Europe and the United States institutions which are perceived to be safe and liquid. On the contrary, it is technically the same institutional investors that are channelling the same capital back to Africa at astronomical costs, purchasing high yielding bonds. African capital is providing cheap liquidity to wealthy nations, paying them back in costly interest for its own development financing. This needs to change. In February last year, the African Union adopted a historic Declaration to redirect all its reserves currently held overseas back into the continent. This represents a landmark but long-overdue correction in the stewardship of Africa's financial resources. It is more than an investment policy shift. It is a bold declaration of confidence in Africa's own institutions and financial markets.