Debt interest exceeds health, education spending in four-fifths of African countries, World Bank says

Sub-Saharan African governments are spending more on interest payments than on healthcare or education in nearly four-fifths of countries in the region, leaving less money for essential services and infrastructure, according to the World Bank’s October 2026 Africa Economic Update.

The report highlights how the rising cost of servicing public debt is limiting governments’ ability to invest in development, even as fiscal deficits narrow and efforts to raise revenue begin to improve public finances.

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Between 2023 and 2026, interest payments averaged between 2.9 percent and 3.2 percent of gross domestic product (GDP) across sub-Saharan Africa, placing sustained pressure on government budgets.

“In nearly four-fifths of the countries in the region, interest payments exceed public spending on health and/or education,” the World Bank said.

The findings point to a growing challenge for African governments: improving their fiscal positions while finding enough money to fund public services, infrastructure and programmes aimed at reducing poverty.

Smaller deficits leave little room for spending

The World Bank projects that sub-Saharan Africa’s overall fiscal deficit will fall from 5.6 percent of GDP in 2020 to 3.5 percent in 2026, before narrowing further to an average of 3.1 percent in 2027 and 2028.

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The primary deficit, which excludes interest payments, has also declined from 3.1 percent of GDP in 2020 to a projected 0.5 percent in 2025. The report expects government fiscal balances to approach equilibrium by 2028.

However, narrower deficits do not necessarily mean governments have more money available for development. Interest payments continue to absorb a significant share of public revenue, limiting the funds left for other priorities.

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

Of that spending increase, only 0.4 percentage point is expected to go towards non-interest expenditure. This suggests that much of the additional fiscal capacity is being absorbed by debt-related costs rather than new spending on public services and investment.

The figures underline the difference between improving headline fiscal indicators and creating room in government budgets to meet development needs.

Domestic borrowing adds to debt costs

The region’s debt challenge is also being shaped by how governments raise money.

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The median general government gross debt ratio reached 57 percent of GDP in 2025, nearly twice the 29 percent recorded in 2012. Although the ratio has eased from a peak of 60 percent in 2023, countries continue to face different levels of debt pressure depending on their borrowing costs and fiscal positions.

Domestic borrowing has become the main source of government financing since 2021, accounting for more than half of total public debt.

Borrowing from local markets can reduce reliance on external lenders, but domestic loans often carry higher interest rates and shorter repayment periods than concessional external financing. Governments may therefore face larger interest bills and need to refinance their obligations more frequently.

This means debt pressure can persist even where the overall debt ratio stabilises or begins to fall. The cost and terms of borrowing can be just as important as the amount owed.

For governments already spending a large share of revenue on debt service, higher financing costs can further restrict their ability to respond to economic shocks or fund long-term projects.

Debt payments threaten development spending

The pressure on public finances has consequences beyond annual budget management. As interest payments take up more revenue, governments have less flexibility to invest in roads, electricity, schools, hospitals and social protection.

The World Bank warned that the shift away from productive spending could weaken economic growth and poverty reduction.

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

Lower investment in infrastructure and essential services can also make it harder for countries to improve productivity and create the conditions for sustained economic growth.

The report’s findings suggest that debt sustainability will require more than limiting new borrowing. Governments must also manage financing costs, strengthen revenue collection and improve the terms and maturity of their debt.

For sub-Saharan African economies seeking faster development, the central challenge is to meet existing debt obligations without sacrificing the public investment needed to support future growth.