02 JUN 2025

Reparations as economic justice

by Paul Terna Gbahabo: A postdoctoral researcher at Stellenbosch Business School and a development finance expert focusing on innovative financing, structural transformation, and inclusive growth in Africa.

As Africa marks Africa Day 2025 under the African Union’s theme, “Justice for Africans and People of African Descent through Reparations”, the conversation must evolve beyond apologies, acknowledgements and symbolism.

The moral case for reparations is long established. Centuries of slavery, colonialism, and racial extraction built Western wealth while impoverishing the African continent by dispossessing Africa of its people, land and wealth. These were not passive injustices, but deliberate systems of economic exploitation. The legacies remain: weakened institutions, broken infrastructure and intergenerational poverty.

Reparations are not charity. They are overdue investments in rebuilding what was systematically plundered.

The African Union’s proposal to establish a Global Reparations Fund is a visionary step toward shifting the conversation from grievance to economic strategy. But good intentions are not enough. The fund must be anchored in a robust development finance strategy - one that mobilises diverse, large-scale, sustainable, and catalytic capital.

There are already a wide range of development finance tools at Africa’s disposal. Bond guarantees, for instance, can help African governments and municipalities issue development-focused bonds - green, social, or sustainability-linked - on favourable terms. By mitigating country risk, guarantees backed by the Reparations Fund can unlock billions in long-term capital for underserved communities, reducing dependence on foreign aid and reframing reparations as opportunity rather than charity.

Blended finance, which mixes public, private, and philanthropic capital can de-risk investment in sectors long excluded from global markets: Black-owned businesses, climate adaptation and affordable housing. By targeting historically disadvantaged communities, blended finance brings justice and development into the same conversation.

The Fund must also utilise private loan instruments. Private loans, through project finance, trade credit, and loan syndication, can support transformational infrastructure projects - transport, energy, water - connecting neglected regions to growth. Letters of credit and soft commodity finance can open global markets to African exporters.

Credit enhancement tools like partial credit guarantees and partial risk guarantees can be deployed to lower risk and attract private capital - covering political and commercial risk, improving credit ratings, and reducing borrowing costs. And equity and quasi-equity instruments - including mezzanine and preferred shares - can help scale African enterprises in health, agriculture, technology and affordable housing.

But finance without capacity is fragile. Building resilient institutions and local capacity is essential to ensure funds are used effectively. Reparations must deliver not just infrastructure, but institutional transformation. Technical assistance - from feasibility studies to procurement systems - is essential. Strong institutions, especially at the local level, are the bedrock of sustainable development. Reparative justice must build capacity, not just capital stock.

The success of this effort hinges on governance. The AU Reparations Fund must be more than a symbol. It must be transparent, accountable and community driven. It must prioritise outcomes over optics - financing schools, not statues, businesses, not bureaucracies.

This is also a matter of reframing. Reparations are not just about redress - they are about building a fairer future. Properly structured, reparative finance aligns with global priorities: sustainable development, climate resilience and inclusive growth. These are not African issues alone. They are universal imperatives.

Critics often argue reparations are impractical. Yet trillions have been mobilised for war, pandemics, and financial bailouts. The real barrier is not scarcity of funds, but scarcity of political will.

Reparations framed as economic justice shift the debate from grievance to strategy. They are not about guilt, but growth. Not about the past, but the future. Africa doesn’t need another roundtable of apologies. It needs capital that builds schools, not just statues; funds businesses, not just ceremonies; and finances dignity - not tokenism.

The African Union’s reparations initiative can be that turning point - if it draws boldly from the development finance toolbox, grounded in accountability and moral clarity.

Justice without capital is just conversation. It’s time to finance Africa’s future and with it, a fairer world.

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