Nigeria and Ghana are among the West African countries where interest payments on external debt rival or exceed public health spending, highlighting the growing strain debt servicing is placing on government finances, according to the African Development Bank (AfDB).
The AfDB disclosed this in its 2026 Regional Economic Outlook for West Africa, warning that rising debt-service costs are squeezing the fiscal space available for healthcare, infrastructure and other development priorities.
According to the report, debt servicing is absorbing an increasing share of public resources as African governments contend with rising external debt obligations.
“Debt service is absorbing a rising share of public resources,” the AfDB said, warning that the crowding-out effect becomes particularly significant when compared with spending on essential social services.
The bank said 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 economies where external debt-interest payments rival or exceed public health expenditure as a share of gross domestic product.
The AfDB said the trend underscores the extent to which rising debt-service costs can displace spending on development and social services.
It stressed that stronger domestic revenue mobilisation and effective debt and liability management would be increasingly important to preserve fiscal space.
The report showed that the proportion of government revenue devoted to external debt service across Africa rose from 23.7 per cent in 2017 to 31 per cent in 2024.
The increase has been particularly pronounced in several West African economies.
In Cabo Verde, 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.
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 increased as a share of government revenue in most West African economies, putting additional pressure on governments to improve revenue generation and manage their liabilities more effectively.
Beyond its impact on government spending, the AfDB linked high public debt to weaker economic productivity.
The bank estimated that a 1 per cent increase in public debt is associated with a 4.9 per cent decline in labour productivity and a 4.6 per cent decline in total factor productivity.
According to the report, the relationship is partly driven by large interest payments that reduce the funds available for infrastructure, social services and public institutions.
Heavy government borrowing can also raise financing costs for businesses and other private-sector borrowers, further constraining economic activity.
Nigeria continues to face significant debt-service obligations despite a decline in external debt servicing during the first quarter of 2026.
The country spent $954.06 million servicing external debt in Q1 2026, down 31.5% from the $1.39 billion recorded in the corresponding period of 2025.
However, the cost of servicing domestic debt increased during the period.
Nigeria spent N3.14 trillion on domestic debt servicing in Q1 2026, representing a 20.3 per cent increase from the N2.61 trillion recorded in Q1 2025.
The figures highlight the complex nature of Nigeria’s debt challenge, with lower external debt-service payments occurring alongside rising domestic financing costs.
The AfDB said governments across West Africa must ensure that borrowing translates into productive investment and stronger economic outcomes.
It also stressed that improved public-investment efficiency, stronger revenue mobilisation and effective liability management are essential to preserving fiscal space for healthcare, infrastructure and other development priorities.
