Nigeria is the leading debtor to the World Bank’s International Development Association (IDA) in Africa and ranks third globally, as per the Bank’s financial statement. By June 30, 2024, Nigeria’s debt to the IDA had risen by 14.4%, from $14.3 billion in FY2023 to $16.5 billion in FY2024.
This highlights the heavy reliance of several African countries on IDA financing for development projects and raises concerns about long-term sustainability and economic stability.
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The IDA, a World Bank entity, aims to reduce poverty and inequality while fostering economic growth, job creation, and infrastructure improvements. Managed by 173 shareholder nations, IDA provides loans and grants to support development in low-income regions.
According to the latest financial statement, the IDA’s total outstanding loans increased by $10.8 billion to $198.5 billion from $187.7 billion. Additionally, development grant expenses rose to $5.3 billion in FY24 from $3.9 billion in FY23 due to the fulfilment of grant conditions.
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Here are the 6 African countries with the highest debt to the World Bank’s IDA
1. Nigeria – $16.5 bn
Nigeria, Africa’s most populous country and largest economy holds the top spot with an outstanding IDA debt of $16.5 bn. This large amount reflects the country’s significant borrowing needs, particularly in critical sectors like infrastructure, health, and education. While Nigeria is often seen as a resource-rich nation due to its oil reserves, challenges such as population growth, insecurity, and underinvestment in essential services have created gaps that external loans have sought to address. However, the weight of this debt raises concerns about the long-term impact on Nigeria’s economy, especially with increased oil prices and slow diversification efforts.
2. Ethiopia – $12.2 bn
Ethiopia’s debt of $12.2 bn to the IDA is due to its ambitious infrastructure projects aimed at transforming the country into an industrial hub. Over the past decade, Ethiopia has invested heavily in large-scale projects, including hydroelectric power, transport networks, and industrial parks. These projects are part of the government’s strategy to boost economic growth and reduce poverty. However, the debt burden has intensified amid political unrest and recent conflict, raising concerns over the country’s ability to manage its economic growth and debt repayments simultaneously.
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3. Kenya – $12.0 bn
Kenya owes $12 bn to the IDA. The country has borrowed significantly to fund its infrastructure development, including roads, ports, and power projects, aiming to position itself as a major commercial and financial hub in the region. The loans have also supported Kenya’s social sectors, particularly health and education. However, as Kenya’s debt level rises, there is growing public debate over the sustainability of such borrowing, with fears that the country could be sliding into a debt trap if economic growth does not keep pace with repayment obligations.
4. Tanzania – $11.7 bn
Tanzania, with an IDA debt of $11.7 bn, has primarily focused its borrowing on infrastructure, agriculture, and energy sectors. The government’s investment in these areas is designed to support its long-term goal of achieving middle-income status. Tanzania’s efforts in building road networks, and ports, and expanding its power generation capacity have been crucial in spurring economic growth. However, the rise in debt has sparked concerns among economists and international observers about the potential impact on future public spending and the risk of stunting other critical investments.
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5. Ghana – $6.7 bn
Ghana’s debt of $6.7 bn is largely tied to its development goals, particularly in the areas of energy, infrastructure, and social services. The country has borrowed from the IDA to stabilize its economy, especially during periods of low commodity prices that have impacted its revenue from natural resources like oil and gold. While the loans have helped the government mitigate economic shocks, the growing debt profile is causing anxiety, especially as the country contends with fiscal deficits and pressure to meet public service delivery expectations.
6. Uganda – $4.8 bn
Uganda owes $4.8 bn to the IDA, making it the sixth African country with the highest debt. The loans have funded key sectors such as infrastructure, education, and health, which are crucial for the country’s development. However, Uganda’s rising debt has drawn criticism from both local and international observers, with concerns over how the country plans to service this debt in the long run. The focus on long-term infrastructure projects may yield future economic returns, but there are apprehensions that current debt levels could restrict future borrowing for essential public services.
