The World Bank has said that Nigeria and other countries in Sub-saharan Africa will pay a total of $20 billion as interests on debts to their external creditors, three-quarters of which is owed to private creditors, and China.
In its latest publication: “Improving Governance and Delivering for People in Africa”, the 31st edition in the ‘Africa’s Pulse’ Series, the World Bank however stated that economic growth in Sub-Saharan Africa was showing some resilience, despite uncertainty in the global economy and restricted fiscal space.
The global bank stated that economic growth is expected to reach 3.5 per cent in 2025 and further accelerate to 4.3 per cent in 2026-2027, mainly due to increased private consumption and investments as inflation cools down and currencies stabilise, despite a drag caused by the continent’s big economies, including Nigeria’s, Angola’s and South Africa’s.
In addition, the World Bank said growth is still not strong enough to significantly reduce poverty and meet people’s aspirations as real income per capita in 2025 is expected to be approximately 2 per cent below its most recent peak in 2015.
“The changing composition of external creditors has led to rising interest payments and principal repayments. By 2025, Sub-Saharan Africa is projected to pay about $20 billion in interest on outstanding Public and Publicly Guaranteed (PPG) external debt—of which nearly three-quarters is owed to private creditors, and China’s official and private lenders.
“At the same time, principal repayments on the PPG external debt have increased at a faster pace than disbursements since 2016—thus leading to a sharp decline in net financial flows into the region. Net external debt flows into Sub-Saharan Africa have dropped dramatically, from an average annual amount of $37.7 billion in 2016–19 to $18.4 billion in 2023,” the World Bank report added.
The report provided policy recommendations for African governments to maintain growth and rebuild trust in a volatile context, faced with high debt and declining global aid.
“There is a growing gap between people’s aspirations for good jobs and functioning public services and often sub-optimal markets and institutions,” said Andrew Dabalen, World Bank Chief Economist for the Africa Region.
“Urgent reforms, backed by more competition, transparency and accountability, will be key to attract private investments, increase public revenue, and create more economic opportunity for millions of Africans entering the workforce each year,” Dabalen added.
As inflation cools down and converges to targets, and (global and domestic) financial conditions remain accommodative, the bank stated that it is expected that household consumption and investment will support the region’s growth acceleration.
“The region’s economic performance is still dragged down by some of its largest countries—namely, Angola, Nigeria, and South Africa. Excluding these countries, the rest of the subcontinent is expected to grow at 4.6 per cent in 2025 and speed up to 5.7 per cent in 2026–27. This outlook is subject to heightened risks arising from global policy uncertainty,” the World Bank pointed out.
According to the bank, the contribution of government consumption will remain modest as the public sector continues to balance revenues and expenditures while managing painful trade-offs between servicing the debt burden and investing in social and physical infrastructure.
Across sectors of economic activity, the contribution of services is expected to remain robust in 2025–27, the bank said, primarily driven by recoveries in information and communications technology, the financial sector, and tourism.
In agriculture, the world bank said that Sub-saharan is expected to pick up from its lows in 2023–24, thanks to improved climate conditions, infrastructure, and technology.
“Despite the baseline forecasts of growth acceleration in the region during 2025–27, risks to the outlook remain tilted to the downside. Sub-Saharan African economies will navigate an uncertain landscape amid greater policy uncertainty, which may lead to changes in the world trade order,” it maintained.
In per capita terms, the report stated that the growth in the region has been inadequate to yield significant reductions in extreme poverty, with real income per capita in 2025 expected expected to be around 2 per cent its most recent peak in 2015.
“Forecasts indicate that after reaching a peak of 43.9 per cent in 2025, poverty, measured at $2.15 per capita per day in 2017 international purchasing power parity, will drop to 43.2 per cent in 2027.
“ Limited investments in income-generating sectors for the poor, lingering effects of past inflation, and the probable reduction of donor aid budgets worldwide pose a challenge for poverty reduction,” it explained.
According to the bank, a deceleration of inflation was recorded by about 70 percent of the countries in the region in 2024, with the drop for most countries explained by the gradual easing of supply chain pressures, the effects of contractionary monetary and fiscal policy, as well as greater currency stability.
“However, the variability of inflation across countries remains high: of 47 countries in the region, 14 still have inflation rates of two digits or more—including Angola, Ethiopia, Ghana, Malawi, Nigeria, Sudan, and Zimbabwe, among others.
“By 2027, the number of countries with two-digit or higher inflation rates is expected to fall to six. The monetary policy stance remains differentiated across Sub-Saharan African countries, although most central banks have started to cut interest rates or have paused their hiking cycle for several months,” the global financial institution posited.
Emmanuel Addeh
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