South Africa, through its leadership of the G20’s B20 Finance and Infrastructure Taskforce, is calling for a revision of Basel III capital requirements to allow banks more room to invest in large-scale infrastructure projects across Africa.
The move is seen as essential to closing the continent’s infrastructure financing gap and reigniting regional economic integration.
Co-chaired by Sim Tshabalala, chief executive officer of Standard Bank, the B20 SA taskforce argues that strict Basel III rules—particularly those related to risk-weighted asset calculations—discourage long-term lending to infrastructure projects due to the high capital buffers banks are required to hold. By easing these requirements for certain types of development-linked investments, banks could channel more funds into sectors critical to Africa’s growth, including transport, energy, and telecommunications.
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Speaking at the Africa Unlocked Summit, Tshabalala highlighted the continent’s vast infrastructure deficit. “Africa needs about $170bn a year in infrastructure investment but is currently only able to raise $85bn,” he said. “Basel III rules need to change so that the risk‑weighted assets result in banks holding less capital. If banks can hold less capital, they’ll be able to fund more projects.”
Reforming global finance
The B20’s recommendations come at a pivotal moment as global leaders prepare for the upcoming G20 summit. In a joint statement with the International Chamber of Commerce and Business at OECD, B20 South Africa called for targeted reforms that would improve capital access, reduce risk premiums on infrastructure investment, and promote more flexible banking regulations tailored to development goals.
The proposals include revising prudential rules that unintentionally penalise long-term infrastructure lending, especially in emerging markets. The B20 also advocates for stronger risk-sharing mechanisms, improved project preparation support, and public-private collaboration.
While critics caution against compromising financial stability, proponents argue that smarter calibration of capital requirements—rather than wholesale relaxation—could unlock billions in private-sector investment without undermining regulatory safeguards.
The push reflects a broader effort to align global financial rules with sustainable development and inclusive economic growth. If successful, the reforms could mark a turning point for Africa’s infrastructure ambitions—and set a precedent for regulatory reform that prioritises both financial soundness and real-world impact.
