AfDB: West Africa misallocates capital despite $100 billion annual development needs
West Africa needs between $90 billion and $100 billion annually to meet its development goals, yet the region continues to struggle with poorly mobilised, fragmented and misallocated capital rather than a genuine shortage of funds, according to the African Development Bank (AfDB).
West Africa needs between $90 billion and $100 billion annually to meet its development goals, yet the region continues to struggle with poorly mobilised, fragmented and misallocated capital rather than a genuine shortage of funds, according to the African Development Bank (AfDB).
The bank gave the warning in its West Africa Economic Outlook 2026 report themed Mobilising West Africa’s Development Financing at Scale in a Fragmented World.
The AfDB said the region’s financing gap reflects an intermediation failure, where existing capital and savings are not being effectively mobilised, allocated or converted into productive investment.
The AfDB report identifies domestic resource mobilisation as the most urgent and underutilised lever available to West African governments, calling the region’s tax performance “critically low” relative to continental and global benchmarks.
The AfDB also said West Africa’s development challenge extends beyond simply raising more money. It said the region is failing to effectively mobilise and channel available capital into productive sectors.
The report comes as West African governments face a more difficult external financing environment.
Higher global interest rates and elevated borrowing costs have made it harder and more expensive for many countries in the region to raise money in international capital markets.
Against this backdrop, the AfDB argues that the region must rely more on domestic sources of capital.
The AfDB identified four policy levers it says offer the greatest potential to mobilise large-scale development finance for West Africa in a fragmented global environment.
The report also flagged significant inefficiency in how existing public investment is deployed, noting that Africa’s average public investment efficiency score of 0.59 implies that $41 of every $100 of public spending fails to translate into productive capital, an efficiency gap the report describes as “far above the global average of 14%.”
The AfDB’s findings mirror concerns raised by stakeholders at Nigeria’s 4th Gender Impact Investment Summit earlier this year.
Investors and policymakers warned that the country faces a $6.75 billion financing gap that continues to limit access to capital for women, young entrepreneurs and persons with disabilities.
They argued that closing this gap through more inclusive financing and gender-lens investing is essential to unlocking broader economic growth.
