Nigeria and other developing economies could collectively save as much as $500 billion every year if they were able to access financing at the same interest rates enjoyed by advanced economies, according to a new report by the United Nations Conference on Trade and Development (UNCTAD).
The report, titled “Financing Development: External Flows of Financial Capital to Developing Countries and Their Cost,” highlights the growing burden of debt servicing on developing nations and the significant economic and social gains that could result from lower borrowing costs.
As one of the countries classified as a developing economy under the United Nations’ development framework, Nigeria continues to face relatively high financing costs that consume resources which could otherwise be invested in critical sectors such as education, healthcare, infrastructure, and food security.
According to UNCTAD, a large number of developing countries continue to face borrowing costs that are more than double those paid by advanced economies.
The report revealed that the weighted average effective interest rate paid by developed countries stood at 2.2 per cent in 2024.
In contrast, approximately three-quarters of developing countries, representing 94 nations, paid an average effective interest rate of 5.5 per cent during the same period.
UNCTAD estimates that if these countries were able to borrow at the same average rate as advanced economies, they would collectively save around $500 billion annually in interest payments.
The remaining quarter of developing countries already benefit from borrowing costs that are equal to or lower than the 2.2 per cent benchmark.
According to the report, reducing financing costs would immediately free up substantial fiscal resources for development priorities without requiring additional external assistance.
UNCTAD noted that the potential savings from lower debt-servicing obligations could dramatically expand investments in education, healthcare, transport infrastructure, renewable energy, and nutrition programmes across the developing world.
The report cited a recent debt swap arrangement in Côte d’Ivoire, backed by a World Bank policy guarantee, as an example of how debt relief and lower financing costs can create room for social investments.
The initiative is expected to generate net present value savings of €60 million, with €40 million allocated to the construction of 30 schools serving approximately 30,000 students.
Using similar cost estimates, UNCTAD calculated that annual savings of $500 billion could finance the construction of about 375,000 schools every year, potentially providing learning opportunities for as many as 375 million students.
The report emphasised that the benefits of lower borrowing costs extend far beyond education.
According to UNCTAD’s projections, the annual savings could finance minimum dietary diversity programmes for more than 1.63 billion children, helping to combat malnutrition and improve health outcomes across developing regions.
The funds could also support the establishment of more than 1.29 million primary healthcare centres annually, significantly expanding access to healthcare services.
In infrastructure, the savings could finance approximately 65,590 kilometres of dual-lane rural roads every year, improving connectivity and economic activity in underserved communities.
Similarly, the report estimates that the resources would be sufficient to construct about 23,737 kilometres of high-speed railway lines annually and install roughly 923,124 megawatts of solar power generation capacity.
UNCTAD argued that reducing financing costs remains one of the most effective tools available for accelerating economic development and improving living standards in emerging economies.
The organisation maintained that access to affordable capital is essential for countries seeking to close infrastructure gaps, improve social services, stimulate industrial growth, and achieve sustainable development goals.
The report comes amid growing concerns over rising debt burdens across developing nations, including Nigeria, where borrowing costs have remained elevated.
Recently, UNCTAD also warned that Least Developed Countries (LDCs) are losing nearly 10 per cent of their exports to G20 economies due to difficulties complying with increasingly complex non-tariff trade measures.
In Nigeria, concerns about financing costs have intensified following recent increases in borrowing rates at Federal Government bond auctions conducted by the Debt Management Office (DMO), underscoring the broader challenge of accessing affordable capital in developing economies.
For countries such as Nigeria, the report suggests that lower borrowing costs could unlock substantial resources needed to fund economic growth, improve public services, and accelerate long-term development.
