Investing in Resilience: Urgency for Africa and Europe

As oil prices surge following the latest escalation between the United States and Iran, and uncertainty surrounding the Strait of Hormuz once again rattles global markets, one lesson is becoming impossible to ignore: economic resilience has become inseparable from the sustainable transition. The knock-on effects from higher shipping and fuel costs to inflationary pressures and disrupted supply chain are being felt across Africa and Europe alike.

The challenge is no longer simply responding to the latest geopolitical crisis. It is building economies capable of withstanding the next one. Sustainable finance is therefore no longer just a climate imperative; it has become a cornerstone of economic security. Investments in affordable, reliable and clean energy strengthen resilience, underpin food and health systems, support industrial competitiveness and reduce exposure to future shocks.

For Africa and Europe alike, the priority must now shift from short-term crisis management to long-term resilience. Three reforms stand out.

First, reducing the cost of capital. African economies continue to face disproportionately high borrowing costs despite enormous investment opportunities in renewable energy, critical minerals, infrastructure and sustainable agriculture.
This mismatch not only constrains growth; it also slows the global energy transition by limiting investment where it is needed most. Fairer risk assessments expanded blended and concessional finance, stronger guarantee and insurance instruments, and reforms linked to the G20 Compact with Africa 2.0, the Common African Position on Debt and ongoing multilateral development bank reviews are essential.

Second, reducing exposure to currency volatility and external financial shocks.
Thirty-one African currencies have depreciated since the onset of the Gulf crisis, while several governments face more than US$11 billion in debt maturities next year. Expanding local-currency financing, strengthening domestic capital markets and reinforcing regional financial systems will be critical to sustaining long-term investment in resilient infrastructure and clean energy.

Third, strengthening domestic resource mobilisation. International tax cooperation and stronger public financial systems offer greater long-term impact than marginal increases in aid.
Better mobilisation of domestic savings, combined with targeted European de-risking instruments and closer alignment between African and European financial institutions on green bonds, blended finance and sustainable investment platforms, could help narrow Africa's annual SDG financing gap - estimated at between US$670 billion and US$848 billion - while accelerating investment in climate adaptation, resilient infrastructure, industrial decarbonisation and sustainable food and energy systems.

As supply chains fragment and strategic dependencies become more visible, Africa's ambitions for industrial transformation, energy access and job creation increasingly align with Europe's search for resilient value chains, clean industrial competitiveness and diversified supplies of critical minerals. Green industrialisation is no longer solely an environmental objective; it is rapidly becoming a shared economic strategy.

What is needed now is a partnership built on co-investment and mutual economic security. Africa and Europe already possess many of the building blocks. The challenge is no longer agreeing on the destination, but mobilising finance at the speed and scale required.

The Ministerial Declaration adopted at this year's High-level Political Forum confirms that governments are increasingly converging around the same priorities. Scaling up public and private investment, improving access to affordable finance, reforming the international financial system and strengthening support from multilateral development banks are no longer seen as separate agendas, but as essential conditions for sustainable growth. It also recognises that energy security and industrial resilience will depend on far greater investment in clean energy, electricity access and resilient infrastructure. The challenge now is turning that consensus into action.

The geopolitical turbulence unfolding across the Gulf, in Ukraine and throughout global supply chains is unlikely to prove exceptional. It is becoming the defining condition of the twenty-first century. If resilience is to be more than a political slogan, it must be financed before - not after - the next shock arrives.

This OP-ED was first published on Financial Afrik.