- AfDB Says West Africa Must Turn Domestic Savings Into Investment as Financing Gap Widens
West Africa is expected to remain one of Africa’s more resilient economic regions in 2026, with growth projected at 4.60%, but a persistent development financing gap of as much as US$100 billion a year is sharpening the debate over whether governments can convert expansion into jobs, infrastructure and stronger fiscal buffers.
The African Development Bank’s 2026 West Africa Regional Economic Outlook shows the region expanded by 4.80% in 2025, outperforming Africa’s average growth rate of 4.40% despite geopolitical tensions, insecurity, fragmentation of the global economy and volatility in international financial markets.
Growth is expected to moderate slightly to 4.60% in 2026, supported by private investment, recovering domestic demand, infrastructure spending and further activity in oil, gas and mining.
The headline numbers, however, conceal a more difficult financing problem.
West African governments continue to face elevated debt, tighter global financing conditions and large infrastructure and social-investment needs. The challenge is increasingly not simply how quickly economies grow, but how that growth is financed and whether countries can reduce dependence on expensive external borrowing.
Côte d’Ivoire remains one of the region’s strongest performers. The economy is estimated to have expanded by 6.50% in 2025 as Abidjan pursues an ambition of reaching upper-middle-income status by 2030.
The AfDB argues that sustaining that pace will require industrialisation, stronger private-sector development and a broader domestic revenue base.
“Our ambition is not limited to generating growth. It is about transforming that growth into jobs, stronger human capital, higher productivity, and shared prosperity,” said Loesse J. Esso, Chief of Staff at Côte d’Ivoire’s Ministry of Planning and Development, speaking on behalf of Planning and Development Minister Souleymane Diarrassouba.
“The findings of these reports reinforce the importance of mobilizing public and private resources at scale to support the successful implementation of Côte d’Ivoire’s National Development Plan 2026-2030 and accelerate structural transformation.”
That distinction between growth and transformation is central to the region’s policy challenge.
Strong GDP expansion has not always produced enough formal employment, productivity gains or fiscal revenues to finance infrastructure, healthcare, education and climate resilience at the scale required.
The AfDB estimates West Africa faces an annual development financing gap of between US$90 billion and US$100 billion.
But the Bank argues that the problem is not simply a lack of money.
“West Africa’s challenge is not simply the volume of resources available to finance development. The challenge is how those resources are mobilized and deployed to transformative investments that create jobs, strengthen resilience and improve livelihoods,” said Joseph Ribeiro, AfDB Deputy Director General for West Africa and Country Manager for Côte d’Ivoire.
“These reports show that the region has the opportunity to turn fragmented pools of capital into long-term investments that accelerate structural transformation.”
The implication is potentially significant.
Rather than relying predominantly on Eurobonds, concessional lending and bilateral finance, governments could increasingly mobilise pension assets, insurance funds, domestic capital markets and higher tax revenues to fund productive investment.
Marcellin Ndong Ntah, the AfDB’s Lead Economist for West Africa, said significant financing capacity remains underutilised.
“The reports show that West Africa’s financing gap is not driven solely by a lack of resources. Significant opportunities exist to broaden the tax base, formalize informal sector, improve public investment efficiency, and channel long-term resources from institutional investors towards productive investments.”
“These reforms can help countries mobilize financing at the scale needed to sustain growth and improve development outcomes,” he added.
Taxation remains one of the clearest weaknesses.
The region’s average tax-to-GDP ratio stood at just 9.90% over the past five years, according to the outlook, less than half the 20.00% WAEMU convergence benchmark.
Such a narrow revenue base limits governments’ ability to finance development directly and increases pressure to borrow.
The AfDB identifies four broad priorities: widening tax bases, strengthening management of natural-resource revenues, formalising informal economic activity and directing more long-term institutional savings towards productive investment.
The last point could be particularly important.
West Africa has expanding pension systems, insurance assets, bank deposits and increasingly sophisticated capital markets, yet only a limited share of that capital is deployed into long-duration infrastructure and industrial projects.
Deepening regional markets, including through the BRVM, could create additional channels through which domestic savings are converted into infrastructure, corporate finance and productive investment.
This would also help reduce vulnerability to abrupt changes in global capital-market conditions.
The current growth outlook gives governments some room to undertake these reforms. A region expanding at 4.60% is better positioned to broaden revenue mobilisation and attract investment than one facing stagnation or recession.
But growth alone will not close the financing gap.
The more consequential test will be whether governments can build what amounts to greater fiscal sovereignty: collecting more efficiently, improving public investment, mobilising domestic savings and reducing dependence on external capital.
If those reforms succeed, West Africa could begin narrowing its US$90 billion-US$100 billion annual financing shortfall without simply adding to already elevated debt burdens.
If they fail, the region risks repeating a familiar pattern — relatively strong headline GDP growth alongside weak fiscal space, inadequate infrastructure and persistent dependence on foreign financing.
That is why the AfDB’s outlook is simultaneously encouraging and cautionary.
West Africa appears capable of defying a difficult global environment. The harder task is ensuring that its resilience is financed in a way that produces durable development rather than another cycle of growth constrained by debt and underinvestment.
