World Bank: Debt interest swallows health, education budgets in 80% of African countries

Interest payments on public debt exceed government spending on health and/or education in nearly four-fifths of sub-Saharan African countries, as high debt-servicing costs continue to constrain public finances across the region, according to the World Bank.

In its October 2026 Africa Economic Update, the World Bank said interest payments averaged between 2.9% and 3.2% of gross domestic product (GDP) across the region between 2023 and 2026, putting sustained pressure on government budgets.

The report also examined the region’s fiscal outlook, including projections for government deficits, revenues and expenditure as countries contend with elevated debt-servicing costs.

Debt costs constrain public spending

According to the World Bank, the region’s overall fiscal deficit is projected to decline from 5.6% of GDP in 2020 to 3.5% in 2026.

The report projects a further narrowing to an average of 3.1% in 2027 and 2028, although debt-servicing costs continue to limit the resources available for other government priorities.

• The region’s primary deficit, which excludes interest payments, narrowed from 3.1% of GDP in 2020 to a projected 0.5% in 2025. The report expects fiscal accounts to approach balance by 2028.
• Despite the improving fiscal outlook, debt interest continues to compete with essential public spending.
• “In nearly four-fifths of the countries in the region, interest payments exceed public spending on health and/or education,” the report stated.

Government revenues are projected to rise by 2.6 percentage points of GDP between 2024 and 2026, compared with a projected 2.3-percentage-point increase in total expenditure.

However, only 0.4 percentage point of the increase in spending is expected to come from non-interest expenditure, limiting the scope for expanding public services.

Debt vulnerabilities remain elevated

The World Bank said the debt challenge in sub-Saharan Africa is increasingly defined by the cost of servicing existing debt, rather than simply the accumulation of additional borrowing.

• The median country in the region entered 2025 with general government gross debt equivalent to 57% of GDP, nearly double the 29% recorded in 2012. Although debt ratios have declined modestly from their 2023 peak of 60% of GDP, the report said the apparent stabilisation masks significant differences between countries and a deterioration in the structure of public debt.

Domestic borrowing has become the dominant source of government financing since 2021, accounting for more than half of total public debt. However, domestic debt typically carries higher interest rates and shorter maturities than concessional external financing, leaving governments more exposed to refinancing pressures.

The report warned that debt-service obligations are absorbing a larger share of public revenues, reducing the fiscal space available for infrastructure, human capital and social protection.

• “Crowding out productive expenditure can slow capital accumulation, weaken productivity growth, and hinder poverty reduction,” the report stated.

Nigeria’s debt-service burden

Nigeria’s own debt-service costs provide a national perspective on the World Bank’s findings, with rising interest payments competing with other public spending priorities.

• Nairametrics reported that Nigeria spent approximately N16 trillion servicing its debt in 2025, up 22.9% from N13.02 trillion in 2024, according to an analysis of Debt Management Office (DMO) data.
• In August 2026, Nairametrics reported that Nigeria incurred N10.61 trillion in additional debt-service costs between June 2023 and December 2025, exceeding the N6.47 trillion spent on strategic infrastructure development over the same period. The additional costs were attributed to exchange-rate depreciation and higher domestic interest rates.

The African Development Bank (AfDB) identified Nigeria and Ghana among West African economies where external debt-interest payments rival or exceed public health spending as a share of GDP. Separately, Nigeria spent N3.14 trillion servicing domestic debt in the first quarter of 2026, up 20.3% from the corresponding period of 2025. Read more.