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Gulf investment is rising, but Africa needs long-term solutions to close a huge infrastructure financing gap.
Africa harbors grand aspirations. In the continent’s long-term development blueprint, Agenda 2063, “world-class” infrastructure is one of the goals under Aspiration 2.
Realizing the goal of linking the continent by rail, road, sea, and air, as well as energy and ICT, to specifically unleash regional and international trade is proving herculean. The reason is financing constraints. Annually, Africa wrestles with an infrastructure financing gap of more than $80 billion, according to the Africa Development Bank.
For decades, China was the blue-eyed boy, helping Africa address infrastructure bottlenecks. In recent years, however, Gulf states have emerged as strategic partners.
Dubai-based DP World is among Gulf companies investing billions in Africa’s infrastructure. The conglomerate’s latest foray is in Kenya, where it is investing $100 million in a mega special economic zone (SEZ). The complex is expected to integrate Kenyan companies into regional and global supply chains.
While Gulf partners are at the forefront of helping Africa meet infrastructure needs, the huge funding gap is forcing the continent to innovate in mobilizing long-term financing at scale. In this context, digital bonds are the latest capital-raising solution.
Africa Finance Corporation (AFC) became the first African institution to issue the asset class, raising 350 million Swiss francs ($427.4 million) through a five-year digital bond, structured as a tokenized security on a Distributed Ledger Technology (DLT) platform and priced at a 1.4925% coupon.
As the largest ever issuance in the Swiss Franc market, it attracted unprecedented interest from high-quality investors, including banks, asset managers, and hedge funds.
“Digital bonds have the ability to resolve frictions that characterize traditional bond issuances, making them ideal for investors with a different kind of risk appetite,” said Eric Musau, Head, Research & Sustainable Finance at Kenya’s Standard Investment Bank.
Fragmentation, exorbitant costs, slow and manual processes, and a complex web of intermediaries are among the friction points digital bonds can resolve.
As debt securities issued and recorded on DLT or blockchain, digital bonds are gaining traction. In 2025, global DLT fixed-income issuance totaled €4.8 billion ($5.5 billion), a 48% increase from €3.2 billion in 2024, according to the Association for Financial Markets in Europe.
Asia remains the epicenter of issuances, with €3.8 billion issued in 2025, representing 78% of the world’s total.
AFC has identified inadequate infrastructure as the primary threat to Africa’s long-term growth. The institution, which has disbursed $19 billion to finance numerous projects across 36 countries, believes the new capital pool will help accelerate financing for critical sectors, including transport, power, natural resources, heavy industry, and telecommunications.
Transport, SEZs, and industrial parks are often cited as being central to the success of the African Continental Free Trade Area (AfCFTA). In transport, for instance, traffic flows are expected to increase significantly across all modes.
Maritime is a case in point. According to the Economic Commission for Africa, freight is projected to double from 58 million tonnes to 131.5 million tonnes by 2030 under the AfCFTA.
John Njiraini is a contributing writer based in Kenya.
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Government bond markets remain under pressure as rising energy prices revive inflation concerns and increase expectations that major central banks will keep interest rates higher for longer.
The benchmark 10-year US Treasury yield briefly touched 5.011% on Monday, according to Dow Jones Market Data, before falling back below 5%. The level was the highest since October 2023.
The yield crossed the psychologically important 5% threshold as higher government borrowing, resilient economic growth and heavy corporate debt issuance linked to artificial intelligence investment compounded pressure on US bonds. Yields move inversely to bond prices.
Rising Treasury yields can feed through to mortgages, corporate loans and other forms of credit, potentially slowing economic growth. They can also make bonds more attractive relative to highly valued equities.
The latest rise followed the US Treasury’s previously announced expansion of its bond-buyback programme. Last week, it offered to purchase up to $6 billion of debt maturing in 10 to 20 years – three times the previous operation’s size.
The yield on the 30-year US Treasury bond, meanwhile, remained close to its highest level since 2007.
The sell-off has also spread across Europe. France’s 10-year government bond yield rose to 4.50% on Monday, while the equivalent Italian yield reached around 4.40%.
Germany’s benchmark 10-year Bund yield climbed as high as 3.538%, according to Dow Jones Market Data, its highest level in 15 years.
Energy prices are a major source of pressure. Brent crude rose to around $107 a barrel on Tuesday morning, while US West Texas Intermediate traded close to $103, as attacks on Saudi energy infrastructure and shipping in the Gulf intensified concerns about supplies through the Strait of Hormuz.
The European Central Bank raised its deposit rate by 25 basis points to 2.5% last week and warned that inflation could remain above its target for an extended period. Markets are pricing in at least one further ECB increase this year.
Attention now turns to three major central-bank decisions. The US Federal Reserve announces its decision on Wednesday, followed by the Bank of England on Thursday and the Bank of Japan on Friday.
A Reuters poll found that 85% of economists expected the Fed to raise rates by 25 basis points, while money markets placed the probability of an increase at around 93%.
The BoE is widely expected to leave rates unchanged. Economists surveyed by Reuters unanimously forecast no change, although some analysts have warned that a surprise increase cannot be ruled out. The BoJ is widely expected to raise borrowing costs.
Lately a hotspot for sustainable finance, MENA states could face lower demand in the wake of the Gulf conflict.
This article appears in the September 2026 issue of Global Finance Magazine.
Investors abhor uncertainty but are not afraid of risks. That dictum is being tested in the Middle East and North Africa (MENA), which has emerged as a hotspot for sustainable finance in recent years, driven by economies transitioning toward renewable energy, low-carbon infrastructure, and water efficiency, among other goals.
Sustainable bond issuance in the region has expanded sevenfold since 2020 and reached $35.1 billion in 2025, according to Bloomberg Intelligence.
Last year, MENA issuance rose despite global markets recording a 21% decline.
But the buzz is cooling. The Gulf conflict that has dragged on since the U.S. and Israel attacked Iran in February, accompanied by higher energy prices, rising bond yields, weaker growth, and tighter financial conditions, saw sustainable bond offerings decline by 24% in the first half of this year, according to S&P Global.
Sustainable issues started the year on a high, with deals worth $5 billion in the first quarter and $4 billion logged in January alone. The effect of the U.S.-Iran war has been flat growth in volumes, however, while values plunged to $7 billion in the first half of 2026 compared to $10 billion in the same period last year.
That reality has prompted S&P Global to cut its 2026 forecast, projecting issuances of $15 billion to $20 billion, down from its earlier projection of $20 billion to $25 billion. Also cooling is sustainable sukuk issuance, which totaled $2.1 billion in the first half, down from $5.1 billion in the same period last year.
Critically, a large chunk of MENA sustainable bond issuance is denominated in local currencies, an indication of both the competitiveness of the region’s capital markets and its rising status as a haven for value-driven dealmaking.
Despite the decline, investor confidence has not been dampened, said Patrice Cochelin, managing director, Sustainability Methodology and Research at S&P Global: “Medium-term demand-drivers remain positive and are fueled by energy-transition strategies and a significant pipeline of upcoming maturities.”
That investors are hanging on is evident. Early last month, the International Finance Corp. said it was among the principal investors in Jordan Kuwait Bank’s (JKB) second green bond issuance with a $100 million investment.
Notably, banks are spearheading the expansion of sustainable finance in the Middle East. In 2025, they were involved in some of the largest regional issuances and accounted for 80% of total value; in the first half of this year, they accounted for 87% by volume. Saudi Arabia and the United Arab Emirates remain the epicenter, accounting for 98% by value and 73% by volume.
John Njiraini is a contributing writer based in Kenya.