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Nigeria and Ghana are among several West African economies where the rising cost of servicing external debt is competing with public health spending, according to the African Development Bank (AfDB).
The warning was contained in the AfDB’s Regional Economic Outlook 2026 for West Africa, which examined the growing proportion of government resources being committed to external debt obligations across the continent.
The report highlights a widening fiscal challenge for African governments as higher debt-servicing costs reduce the funds available for healthcare, infrastructure and other development priorities.
Debt Service Crowds Out Social Spending
The AfDB said external debt payments are absorbing an increasing share of government resources, with the pressure becoming particularly visible when compared with spending on essential social services.
According to the report, 25 of 51 African countries with available data spent more on external-debt interest payments than on healthcare between 2021 and 2023.
Nigeria and Ghana were identified among the West African countries where external debt-interest payments rival or exceed public health expenditure when measured as a share of GDP.
The AfDB warned that the trend could constrain governments’ ability to finance programmes capable of improving living standards and supporting long-term economic development.
Africa’s Debt-Service Burden Rises
The report showed that the proportion of government revenue devoted to external debt service across Africa increased from 23.7% in 2017 to 31% in 2024.
The increase has also been pronounced across several West African economies.
For example, Cabo Verde’s external debt service as a share of government revenue rose from an average of 10% between 2015 and 2019 to 16.7% between 2020 and 2023.
Similarly, Benin’s ratio increased from 7.7% to 16.5% over the two periods.
The AfDB said external debt-service pressures had increased as a share of government revenue in most West African economies, reinforcing the need for stronger fiscal management.
Nigeria’s Debt Obligations Remain Significant
Nigeria’s debt-service position illustrates the broader pressure identified by the AfDB.
The country spent $954.06 million servicing external debt obligations in the first quarter of 2026, down 31.5% from the $1.39 billion recorded during the same period in 2025.
Despite the decline in external debt-service payments, Nigeria’s domestic debt burden moved in the opposite direction.
The Federal Government spent ₦3.14 trillion servicing domestic debt in Q1 2026, representing a 20.3% increase from the ₦2.61 trillion recorded in Q1 2025.
The figures underline the continuing pressure debt obligations place on government finances even as the country seeks to improve revenue generation and manage its fiscal position.
High Debt Can Weaken Productivity
Beyond the immediate pressure on government budgets, the AfDB linked high public debt to weaker economic productivity.
Its analysis found that a 1% increase in public debt is associated with a 4.9% decline in labour productivity and a 4.6% decline in total factor productivity.
The bank attributed part of the relationship to the effect of large interest payments on public investment.
When more government resources are committed to servicing debt, fewer funds may be available for infrastructure, social services and institutions that support economic activity.
Heavy government borrowing can also increase financing costs for private businesses, potentially limiting investment and reducing productivity across the wider economy.
Revenue Mobilisation Becomes Critical
The AfDB said African governments need to strengthen domestic revenue mobilisation and improve liability management to protect their limited fiscal space.
The bank also stressed that new borrowing should be accompanied by improvements in the efficiency of public investment.
For countries facing high debt-service obligations, simply raising additional funds may not be sufficient if borrowed resources do not generate enough economic and social returns to support future repayment.
West Africa Faces a Difficult Fiscal Balance
The debt challenge comes despite signs of economic resilience across West Africa.
The region recorded estimated growth of about 4.8% in 2025, even as several economies continued to deal with elevated public debt and tight fiscal conditions.
Nigeria’s public debt was reported at more than ₦152 trillion during 2025, while Ghana continued managing its debt position through restructuring efforts.
Other economies, including Côte d’Ivoire and Senegal, have remained engaged with international lenders while implementing fiscal reforms aimed at containing debt pressures.
Protecting Development Spending
The AfDB’s findings highlight the difficult choices facing governments across the region.
As debt-service obligations rise, governments must balance the need to honour existing commitments with the equally important requirement to fund healthcare, infrastructure, education and other programmes that support economic development.
For Nigeria, the challenge extends beyond reducing individual debt payments. Strengthening revenue collection, improving spending efficiency and ensuring that new borrowing supports productive investment will be critical to preserving fiscal space.
The AfDB therefore argues that better debt management must go hand in hand with stronger public-sector efficiency and revenue mobilisation if West African economies are to avoid allowing debt-service costs to crowd out the investments needed for sustainable growth.
