UNCTAD: Lower borrowing costs could save Nigeria, Africa $500 billion yearly
By Aboki Forex —
Nigeria and other developing countries could save up to $500 billion each year if they borrowed at the same interest rates as rich nations. The United Nations Conference on Trade and Development (UNCTAD) said this in a new report titled “Financing Development: External Flows of Financial Capital to Developing Countries and Their Cost”.
Nigeria is classified as a developing country under the United Nations official system. The report shows that high borrowing costs are a heavy burden for many developing nations. Cheaper access to finance could unlock major development gains.
UNCTAD noted that many developing countries still face much higher borrowing costs than developed ones. In 2024, the average effective interest rate for developed countries was 2.2%. But about three-quarters of developing countries, 94 nations in total, paid an average of 5.5%. If they could borrow at 2.2%, they would save roughly $500 billion in interest payments every year.
The other quarter of developing countries already borrow at or below the 2.2% rate.
High borrowing costs continue to pull money away from critical areas like education, healthcare, infrastructure, and food security. The report highlighted a debt swap in Côte d’Ivoire backed by a World Bank guarantee. That deal is expected to save €60 million, with €40 million going to build 30 schools for about 30,000 students.
UNCTAD said the potential savings from lower debt costs could dramatically expand investments in social and economic infrastructure across developing economies. Based on similar construction costs, the $500 billion in annual interest savings could fund massive development projects.