By Faith Eze
Nigeria and Ghana are facing growing pressure from debt-service costs, with the African Development Bank (AfDB) warning that interest payments are taking up resources that could otherwise support healthcare and other important areas of development. The warning was contained in the AfDB’s 2026 economic outlook for Africa and West Africa. According to the report, the rising cost of servicing public debt is reducing the amount of money governments have available for healthcare, infrastructure, education and other social services. The issue is important for Nigerians and Ghanaians because government debt is not only an economic subject. When a government spends a large part of its revenue paying interest and repaying loans, there may be less money available for hospitals, schools, roads, electricity, jobs and other services that directly affect citizens.
AfDB Raises Concern Over Debt-Service Costs
The African Development Bank says Nigeria and Ghana are among the West African economies where interest payments on public debt rival or exceed public health expenditure as a share of Gross Domestic Product (GDP). The AfDB’s warning is part of a wider concern about debt across Africa. The bank reported that 25 out of 51 African countries with available data spent more on external-debt interest payments than on healthcare between 2021 and 2023. This does not mean that Nigeria or Ghana has stopped spending money on healthcare. Rather, it shows how debt-related payments can become large enough to compete with important public services for limited government resources. The situation is commonly described as fiscal pressure or a crowding-out effect. In simple terms, when too much government money goes toward debt costs, there is less room for other spending.
What Does Debt Service Mean?
Debt service is the money a government pays to meet its debt obligations. It can include interest payments as well as repayment of the amount borrowed, depending on the measure being discussed. Governments borrow money for different reasons. Borrowing can be used to build roads, railways, power projects, schools, hospitals and other infrastructure. It can also help governments respond to economic emergencies or finance budget deficits. Borrowing itself is not necessarily bad. The major concern is whether the money borrowed is used effectively and whether the government can comfortably repay the debt without putting too much pressure on its revenue. If a government borrows money to finance projects that increase economic activity and government revenue, the borrowing may contribute to long-term growth. However, if borrowing continues to increase while revenue remains weak and the cost of loans rises, debt servicing can become a major burden.
Nigeria’s Debt-Service Challenge
Nigeria has faced significant debt-service pressures in recent years, particularly because government revenue remains relatively limited compared with the size of the country’s economy and population. The latest report cited by Arise News said Nigeria spent $954.06 million servicing its external debt obligations in the first quarter of 2026. This was lower than the $1.39 billion recorded during the same period in 2025. However, the reduction in external debt service did not mean that Nigeria’s overall debt burden disappeared. Domestic debt-service costs increased during the same period. Nigeria reportedly spent N3.14 trillion servicing domestic debt in the first quarter of 2026, compared with N2.61 trillion in the first quarter of 2025. This shows why looking only at external debt can give an incomplete picture. Governments can owe money to foreign lenders as well as domestic lenders, and both can create pressure on public finances.
Why Healthcare Is a Major Concern
Healthcare is one of the areas that can be affected when governments have limited fiscal space. Governments need money to pay healthcare workers, maintain hospitals, purchase medicines and medical equipment, provide public health programmes and respond to emergencies. When debt payments take a large portion of available revenue, governments may find it harder to increase healthcare spending at the level required to meet growing needs. The AfDB highlighted this problem across Africa. Its 2026 economic outlook found that 25 of the 51 countries with available data spent more on external-debt interest than on healthcare between 2021 and 2023. For countries with large populations and significant healthcare needs, this creates an important policy challenge: how to meet debt obligations while also investing in the wellbeing of citizens.
Ghana Is Also Under Pressure
Ghana is another West African country highlighted in the AfDB’s assessment. However, Ghana’s recent economic situation also shows that debt challenges can change when governments implement fiscal reforms and restructuring measures. The AfDB’s country outlook says Ghana’s public debt declined from 61% of GDP to 45.5% in 2025, while its fiscal deficit also narrowed significantly. The bank projects economic growth of 5% for Ghana in 2026. Despite these improvements, the AfDB says Ghana still needs to strengthen domestic revenue mobilisation, broaden its tax base and develop local financial markets to reduce dependence on external borrowing. This is an important lesson for other African countries. Reducing debt pressure is not only about borrowing less. Governments also need stronger revenue systems and better management of existing liabilities.
Africa’s Wider Debt Problem
The problem extends beyond Nigeria and Ghana. According to the AfDB, the share of government revenue allocated to external debt service across Africa increased from 23.7% in 2017 to 31% in 2024. This means governments across the continent are devoting an increasingly large portion of their revenues to servicing external debt. The bank also said African countries spent about $87 billion on interest payments between 2022 and 2024. The increasing cost of borrowing has been linked to several factors, including higher interest rates, changes in the structure of government debt and greater reliance on commercial borrowing. Commercial loans can sometimes be more expensive than concessional financing, meaning governments may eventually have to spend more money servicing them.
What Can Nigeria Do?
The AfDB has called for stronger domestic revenue mobilisation and better debt and liability management. For Nigeria, increasing government revenue without putting unnecessary pressure on households and businesses will be important. Nigeria has a large economy and population, but the government has historically struggled with revenue collection. Improving tax administration, reducing leakages, expanding productive economic activity and making public spending more efficient could help create additional fiscal space. The government must also ensure that borrowed money produces measurable economic benefits. If loans are used for productive infrastructure, power, transportation, agriculture, technology and other areas capable of supporting economic growth, they may help increase future revenue and employment. But borrowing without strong accountability can leave future governments and citizens with repayment obligations without corresponding economic benefits.
The Need for Responsible Borrowing
The AfDB’s warning should not be interpreted as saying that Nigeria and Ghana should stop borrowing completely. Developing countries often need financing to build infrastructure and improve living standards. The real question is how much they borrow, the cost of the borrowing, what the money is used for and whether they can repay it sustainably. The AfDB has also linked high public debt with weaker productivity. Its analysis found an association between rising public debt and lower labour and total-factor productivity, while warning that large interest bills can crowd out investment in infrastructure, social services and institutions. For Nigeria and Ghana, the message is therefore clear: debt management must go together with economic growth, stronger revenue collection and efficient public spending.
Conclusion
The African Development Bank’s warning about Nigeria and Ghana highlights a serious challenge facing many African economies. Rising debt-service costs can reduce the money available for healthcare, education, infrastructure and other areas that citizens depend on. Nigeria’s recent figures show that even when external debt-service payments decline, domestic debt costs can continue to put pressure on government finances. Ghana, meanwhile, has made progress through fiscal consolidation and debt restructuring, but still needs to strengthen its revenue base and reduce reliance on expensive borrowing. The solution is not simply to stop borrowing. Governments need to borrow responsibly, invest borrowed funds in productive projects, increase revenue fairly, control unnecessary spending and ensure that every major loan delivers value.
For ordinary citizens, the debate over public debt ultimately comes down to a simple question:
Is government spending enough money on the things that improve people’s lives, or is too much of the nation’s revenue going toward paying yesterday’s debts?
The AfDB’s latest warning shows why that question deserves serious attention.
