Nearly four-fifths of sub-Saharan African countries spend more on public debt interest than on healthcare or education, leaving governments with fewer resources for essential services and infrastructure, according to the World Bank’s October 2026 Africa Economic Update.
The report highlights the pressure that rising borrowing costs are placing on public finances, even as governments work to narrow budget deficits and increase revenue.
Between 2023 and 2026, interest payments averaged between 2.9 per cent and 3.2 per cent of gross domestic product (GDP) across sub-Saharan Africa.
The findings raise concerns about governments’ ability to fund public services, reduce poverty and invest in long-term economic growth while meeting their existing debt obligations.
Smaller Budget Deficits Leave Limited Room for Development
The World Bank projects that sub-Saharan Africa’s fiscal deficit will decline from 5.6 per cent of GDP in 2020 to 3.5 per cent in 2026. The deficit is expected to narrow further to an average of 3.1 per cent in 2027 and 2028.
However, lower deficits do not necessarily mean governments have more money available for development.
Government revenue is projected to increase by 2.6 percentage points of GDP between 2024 and 2026, while total expenditure is expected to rise by 2.3 percentage points.
Only 0.4 percentage point of the increase in expenditure is expected to go towards non-interest spending, indicating that debt-related costs continue to absorb much of the additional fiscal capacity.
This leaves governments with limited room to expand investment in healthcare, education, infrastructure and social protection.
Domestic Borrowing Adds to Debt Costs
The region’s debt burden has also been shaped by a growing reliance on domestic borrowing.
The median general government debt ratio reached 57 per cent of GDP in 2025, nearly double the 29 per cent recorded in 2012. Although the ratio has declined from its 60 per cent peak in 2023, financing costs remain a major concern.
Since 2021, domestic borrowing has accounted for more than half of total public debt across the region.
Local borrowing can reduce dependence on foreign lenders, but it often comes with higher interest rates and shorter repayment periods than concessional external loans. This can increase governments’ interest bills and force them to refinance debts more frequently.
As a result, debt pressures can persist even when overall debt levels stabilise or begin to decline.
Debt Payments Threaten Essential Services
High interest payments can restrict government spending on roads, electricity, schools, hospitals and programmes designed to protect vulnerable households.
The World Bank warned that reduced investment in productive sectors could slow capital accumulation, weaken productivity growth and undermine poverty reduction.
Lower spending on infrastructure and public services can also make it harder for businesses to operate efficiently, limiting job creation and long-term economic development.
For countries already allocating substantial revenue to debt payments, rising borrowing costs could further reduce their ability to respond to economic shocks.
World Bank Calls for Better Debt Management
The report indicates that managing Africa’s debt challenges will require more than limiting new borrowing.
Governments will need to strengthen revenue collection, improve borrowing terms, extend debt maturities where possible and manage financing costs more effectively.
Greater transparency in public borrowing and more efficient use of government revenue could also help ensure that available resources support development priorities.
For sub-Saharan African countries, the challenge is to meet existing debt obligations without sacrificing the public investment needed to improve living standards and support future economic growth.
The findings underline the importance of sustainable borrowing strategies that balance fiscal stability with adequate funding for essential services.
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