AfDB: Nigeria, Ghana spend more on external debt interest payment than public health
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 post AfDB: Nigeria, Ghana spend more on external debt interest payment than public health appeared first on Nairametrics .
The African Development Bank (AfDB) has highlighted that Nigeria and Ghana are among West African economies where spending on external debt interest payments is at par with or surpasses public health expenditure. This finding, part of the AfDB's Regional Economic Outlook (REO) 2026 for West Africa, emphasizes the strain that debt servicing is placing on government resources in the region.
According to the report, the growing amount of government revenue allocated to external debt service is curtailing the fiscal space available for crucial sectors such as infrastructure, healthcare, and other developmental initiatives. Nigeria and Ghana are identified as prime examples in the region, where interest payments consume a significant share of public resources, on par with or exceeding public health expenditure as a percentage of GDP.
The AfDB warns that as governments grapple with higher external debt-servicing costs, debt service is encroaching on budgetary allocations meant for development spending. The report underscores the shifting of funds from development to debt servicing, indicating that revenue mobilisation and liability management are becoming ever more critical.
Over the past seven years, the share of government revenue dedicated to external debt service has risen from 23.7% in 2017 to 31% in 2024. The AfDB attributes the increase in debt-service costs across Africa to the rising share of public debt, which in turn weakens productivity with a 1% increase in public debt linked to declines of 4.9% in labour productivity and 4.6% in total factor productivity.
The bank notes that this relationship is partly due to the fact that substantial interest payments crowd out investments in infrastructure, social services, and institutions, while extensive borrowing can also escalate private financing costs. In the Nigerian context, the AfDB notes that the debt-service burden has remained substantial, with both external and domestic obligations consuming considerable government resources in the first quarter of 2026.
The bank stresses that the rising debt-service ratios across West Africa highlight the necessity for borrowing to be accompanied by enhancements in public investment efficiency, alongside stronger revenue mobilisation and effective liability management to preserve fiscal space.
Written by urgent.news from Nairametrics's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
