• Puts Africa’s annual development financing gap at $1.3 trillion
•Debt hits $1.9tn as external shocks worsen
•Says continent must grow by 7% annually to reduce poverty
Emmanuel Addeh in Abuja
The African Development Bank (AfDB) has projected that Nigeria’s economy will grow by 4.1 per cent in 2026 despite mounting geopolitical tensions, rising inflation, worsening global trade fragmentation and persistent supply chain disruptions threatening economies across Africa.
In its flagship African Economic Outlook 2026 report titled: “Mobilising Africa’s Development Financing at Scale in a Fragmented World”, the continental lender however warned that Nigeria’s growth is expected to slow to 3.7 per cent in 2027 as global shocks continue to pressure oil-importing economies, financial markets and trade flows.
The report painted a mixed outlook for Nigeria, forecasting inflation at 16.2 per cent in 2026 before easing slightly to 13 per cent in 2027, while projecting a current account surplus of 5.8 per cent of GDP in 2026 and 4.1 per cent in 2027. Nigeria’s fiscal deficit was projected at 2.3 per cent of GDP in 2026 and 2.5 per cent in 2027.
“Growth in Nigeria, the region’s largest economy, is projected to increase marginally from an estimated 4.0 percent in 2025 to 4.1 percent in 2026, supported by increasing oil prices and production, growth in the services sector, and increased public investment on electricity, transport, and logistics.
“In 2027, growth is projected to decelerate to 3.7 percent on account of the anticipated easing of global oil prices and thus reduced external revenue in flows,” the report emphasised.
The AfDB noted that although Africa remained one of the world’s fastest-growing regions, the continent was increasingly vulnerable to geopolitical fragmentation, conflict in the Middle East, declining aid flows, elevated debt burdens and tightening financial conditions.
According to the report, Africa’s average real GDP growth rose to 4.4 per cent in 2025 from 3.5 per cent in 2024, placing the continent among the fastest-growing regions globally.
“In 2025, economic growth improved in Africa, despite heightened trade and geopolitical tensions. Average real gross domestic product growth accelerated to an estimated 4.4 per cent in 2025, up from 3.5 per cent in 2024,” the report stated.
The bank projected continental growth at 4.2 per cent in 2026 before recovering to 4.4 per cent in 2027, but stressed that the outlook remained threatened by prolonged conflict in the Middle East and continued disruptions in global shipping routes.
It disclosed that about 13 per cent of Africa’s imports, mainly oil and fertiliser, pass through the Strait of Hormuz, warning that disruptions along the corridor had already pushed freight costs sharply higher and intensified inflationary pressures across the continent.
According to the report, crude oil prices have surged by more than 50 per cent since the latest global supply chain crisis began, while urea fertiliser prices climbed by 35 per cent within weeks.
The AfDB noted that several African currencies had come under pressure as a result of the shocks, with at least 29 currencies depreciating against the US dollar as of March 2026.
The report stated that the rerouting of global shipping lines from the Suez Canal to the Cape of Good Hope had increased transit time between Asia and Africa by between 10 and 15 days, while freight costs had risen by between 20 and 40 per cent.
However, the bank said oil-exporting countries such as Nigeria could derive temporary gains from elevated crude prices, particularly because of recent investments in domestic refining capacity.
The AfDB nevertheless warned that those gains could be offset by imported inflation, weaker global demand and continued macroeconomic instability. The report also revealed that Africa’s total public debt stock rose to $1.9 trillion in 2024 from $1.6 trillion in 2020, reflecting rising government spending needs and growing dependence on borrowing.
Although the continent’s debt-to-GDP ratio eased slightly to 62 per cent in 2025 from 63.9 per cent previously, the bank warned that debt service obligations were becoming increasingly unsustainable.
According to the report, the share of government revenues devoted to external debt servicing rose from 23.7 per cent in 2017 to 31 per cent in 2024, thereby squeezing fiscal space and crowding out spending on infrastructure, healthcare and social investments.
The AfDB further disclosed that Africa faces an estimated annual development financing gap of about $1.3 trillion, arguing that the continent must dramatically scale up domestic resource mobilisation and investment to sustain meaningful economic transformation.
It stated that Africa would require growth rates of at least 7 per cent annually over several decades to create jobs at scale and significantly reduce poverty. To attain that target, the report estimated that Africa must increase annual capital stock growth from about 3.3 per cent currently to roughly 8.7 per cent by 2030.
The bank argued that the continent could unlock as much as $1.43 trillion annually in additional financing through reforms targeted at tax collection, public investment efficiency, domestic financial markets and resource mobilisation.
According to the report, nearly $469 billion in annual revenues remain untapped because of weaknesses in tax compliance, policy implementation and revenue administration systems across Africa.
It added that more than 40 per cent of public investment resources on the continent are currently lost to inefficiencies, estimating that plugging the leakages could generate an additional $299 billion annually for productive investments.
The report further highlighted the growing importance of remittances and foreign investment flows to African economies. It disclosed that remittances to Africa rose from $91.6 billion in 2023 to $104.6 billion in 2024, while foreign direct investment inflows increased from $55.4 billion to $97 billion during the same period.
Net portfolio investments, which had recorded outflows of $1.6 billion previously, rebounded strongly to inflows of $22.9 billion in 2024.
Official development assistance also increased modestly from $61.7 billion to $65.9 billion, although the AfDB warned that aid flows could weaken going forward as advanced economies increasingly redirect resources toward domestic priorities and strategic geopolitical interests.
Besides, the report noted that Africa’s financial systems remained shallow and fragmented, limiting the continent’s ability to mobilise domestic savings and channel them into productive sectors.
To address the problem, the bank called for deeper capital markets, improved regional financial integration and stronger domestic financial institutions capable of mobilising long-term development financing.
The AfDB also advocated stronger fiscal reforms across Africa, urging governments to broaden tax bases, digitise tax administration systems and improve transparency in public spending.
“With crisis-prone growth, priority should be given to broadening the tax base and improving the efficiency of revenue collection,” the report stated.
The lender warned governments against expensive fuel subsidies and blanket tax waivers, arguing that such policies weaken long-term fiscal resilience. Instead, it recommended targeted social protection programmes aimed at cushioning vulnerable households from food and energy shocks.
