Nigeria and Ghana are among the West African economies where debt-interest payments rival or exceed public health spending, highlighting the growing pressure debt servicing is placing on government resources, according to the African Development Bank (AfDB).
The AfDB disclosed this in its Regional Economic Outlook (REO) 2026 for West Africa, which examined the rising share of government revenue being committed to external debt service across the continent.
The report warned that rising debt-service costs are narrowing the fiscal space available for infrastructure, healthcare and other development priorities, with Nigeria and Ghana among the starkest cases in the region.
The AfDB said debt service was absorbing an increasing share of public resources as governments face higher external debt-servicing costs.
“Debt service is absorbing a rising share of public resources,” the bank stated.
It added that the “crowding-out is starkest when set against social spending,” noting that 25 of 51 African countries with available data spent more on external-debt interest payments than on healthcare between 2021 and 2023.
The bank identified Nigeria and Ghana among the West African economies where interest payments rival or exceed public health expenditure as a share of gross domestic product.
According to the AfDB, the trend illustrates how rising debt-service costs can displace spending on development and underscores the importance of stronger revenue mobilisation and effective liability management.
The report noted that the share of government revenue devoted to external debt service across Africa increased from 23.7 per cent in 2017 to 31 per cent in 2024.
The increase in debt-service pressure has been particularly pronounced across several West African economies.
Cabo Verde’s external debt service as a share of government revenue increased from an average of 10 per cent between 2015 and 2019 to 16.7 per cent between 2020 and 2023.
Benin also recorded an increase, from 7.7 per cent to 16.5 per cent over the same periods.
The AfDB said external debt service had increased as a share of government revenue in most West African economies.
The bank also linked high public debt to weaker productivity, saying a one per cent increase in public debt is associated with declines of 4.9 per cent in labour productivity and 4.6 per cent in total factor productivity.
According to the AfDB, the relationship is partly explained by large interest bills crowding out public investment in infrastructure, social services and institutions.
It added that heavy government borrowing could also increase financing costs for the private sector.
Nigeria’s debt-service burden has remained significant, with both external and domestic obligations requiring substantial government resources in the first quarter of 2026.
Nigeria spent $954.06 million servicing its external debt obligations in the first quarter of 2026, representing a 31.5 per cent decline from the $1.39 billion recorded in the corresponding period of 2025.
However, domestic debt-service costs increased during the period.
Nigeria spent N3.14 trillion servicing its domestic debt obligations in the first quarter of 2026, representing a 20.3 per cent increase from the N2.61 trillion recorded in the first quarter of 2025.
The AfDB said the rising debt-service ratios across West Africa reinforced the need for governments to match borrowing with improvements in public investment efficiency.
The bank also stressed that stronger revenue mobilisation and effective liability management would remain central to preserving fiscal space and ensuring governments can continue to fund critical development priorities.
