• FERDI urges African nations to strengthen state-backed deposit institutions to mobilize savings
  
• Report cites a $1.6 trillion SDG financing gap and declining foreign funding
  
• Stronger governance, trust-building, and simple savings products seen as key solutions

African countries can reinforce the role of their state-backed deposit institutions in mobilizing domestic private capital. Achieving this depends on restoring public trust, creating simple and appealing savings products, and tightening regulatory and governance frameworks. This conclusion appears in a report released Tuesday, December 2, by the Foundation for Studies and Research on International Development (FERDI).

Rising Financing Needs Outpace Traditional Funding Channels

FERDI’s report, titled “Le rôle des Caisses de dépôt dans la mobilisation des ressources privées nationales pour le financement du développement,” highlights that the financing needs linked to achieving the Sustainable Development Goals (SDGs) and to ongoing demographic, energy and ecological transitions far exceed public funding capacities. In sub-Saharan Africa, the annual SDG financing gap is expected to reach 1.6 trillion dollars by 2030.

Traditional financing sources are increasingly constrained. Official development assistance (ODA) and concessional loans are declining and cover only about 3 percent of GDP in sub-Saharan Africa. Foreign direct investment and cross-border flows remain volatile and concentrated in a few sectors. Illicit financial flows result in annual losses estimated at 3 to 5 percent of African GDP, a level comparable to the combined inflows of ODA and FDI.

Domestic private resources remain underutilized despite their strategic importance. Domestic savings amount to about 15 percent of GDP in sub-Saharan Africa, but only 39 percent are held in formal deposits, compared with more than 60 percent in other regions. Diaspora remittances reached 54 billion dollars in 2023. These resources offer two advantages: they provide funding in local currency and they align more closely with national development priorities.

Deposit Institutions Gain Ground but Face Persistent Obstacles

According to FERDI, several structural barriers limit the mobilization of domestic private resources. Only 35 percent of households save through formal channels. Banks remain cautious about long-term financing and savings products often fail to match the needs of local populations.

State-backed deposit institutions, which are publicly owned entities tasked with securing specific types of deposits and channeling them into long-term investments, offer a practical tool to address these gaps. After decades of limited activity, the creation of such institutions has accelerated in the past twenty years, particularly in Francophone countries. Senegal launched a modern deposit institution in 2006, followed by Gabon in 2010, Mauritania and Tunisia in 2011, Niger in 2016, Benin and Côte d’Ivoire in 2018, Cameroon in 2023, Burkina Faso in 2024 and most recently Congo. New institutions are planned in Mali and the Democratic Republic of Congo in 2025, and countries such as Togo, Burundi, Chad, Guinea and Equatorial Guinea have expressed interest.

These institutions rely on several resource streams that include state equity contributions, consignments held on behalf of individuals or entities, mandatory regulated deposits, regulated savings and borrowing. Consignments may include funds belonging to minors and legally incapacitated persons, earnings of prisoners, disputed amounts and unclaimed balances. Mandatory regulated deposits include funds handled by notaries, bailiffs or court-appointed administrators, as well as resources originating from liquidated public companies or compensation schemes.

FERDI notes that many deposit institutions still rely mainly on consignments and regulated deposits and often limit their activities to taking equity stakes in strategic companies. This narrow focus prevents them from fully realizing their potential. Persistent mistrust also restricts their access to the resources that they are legally entitled to receive. Several institutions struggle to demonstrate their reliability to governments, financial institutions and depositors, partly due to limited communication about how they operate.

The report urges broader outreach efforts to explain their mission, the safeguards protecting deposits and the development impact of their investments. It also stresses the need for a clear and durable legal framework. Ideally, these institutions should be established by parliamentary legislation rather than presidential decree to reinforce legitimacy and credibility.

Strengthening Governance and Expanding the Deposit Base

Another major challenge is the effective collection of deposits. Although some institutions have exclusive rights over specific types of deposits, transfers are not always complete. FERDI recommends a detailed assessment of all potential resources followed by a structured collection plan prepared in cooperation with notaries, bailiffs and public administrations. Greater integration of commercial banks is also recommended in order to expand the deposit base, especially in underserved and rural areas.

To reach a broader audience, deposit institutions need to diversify their resources. FERDI highlights the potential for simple, secure and profitable savings products adapted to local populations and to the diaspora. Models inspired by regulated postal savings systems, such as France’s Livret A, could be adapted and distributed through channels suited to national contexts. Financial literacy campaigns would support the adoption of these products, particularly among low-income households.

The report also calls for stronger governance. This includes an oversight board responsible for strategic direction and monitoring, supported by a professional management team in charge of daily operations. Transparency and accountability should be reinforced through regular publication of financial data and clear reporting on investments.

Walid Kéfi