Economists at the World Economic Forum (WEF) warn that Sub-Saharan Africa is likely to experience weak economic growth this year, primarily due to rising public debt levels and high borrowing costs that are limiting fiscal flexibility.

The projection shows a clear deterioration in sentiment compared to 2024, with a growing share of respondents downgrading their expectations.

Expectations for moderate growth have weakened, with the share of respondents forecasting it falling from 57 per cent to 47 per cent. At the same time, those anticipating weak growth rose sharply from 29 per cent to 40 per cent.

Inflation expectations remain relatively contained, as nearly two-thirds of economists foresee moderate inflation ahead, with average consumer prices expected to keep easing, offering some relief from high living costs.

Monetary policy is likely to stay on hold, with over four in five chief economists predicting no change. Fiscal policy is also expected to remain broadly unchanged, reflecting limited stimulus space.

Rising public debt stands out as a key concern, with borrowing across Africa up significantly since 2010. The report also warns that increasing domestic borrowing could pose risks to financial stability.

“More recently, domestic borrowing has started to surge, raising concerns about the vulnerability of local banks, which now hold around half of total government debt in the region,” the report reads.

Beyond Africa, the global backdrop remains uncertain, with more than half of chief economists expecting global economic conditions to weaken in the year ahead.

Debt pressures, geopolitical tensions and shifting trade and investment patterns are identified as key downside risks, even as financial markets have remained buoyant.

Debt burden on economies

For Sub-Saharan Africa, this fragile external environment compounds existing domestic vulnerabilities, particularly the burden of huge public debt, which is increasingly acting as a brake on economic growth and long-term development.

As governments devote a growing share of revenues to debt servicing, fewer resources remain for productive investment in infrastructure, education, healthcare and industrial development, sectors that are critical for raising productivity and fostering inclusive growth. High debt levels also tend to push governments toward higher taxation as they seek to shore up revenues, often through increased consumption taxes and levies that disproportionately affect households and small businesses.

This weakens disposable incomes, suppresses consumer demand and raises the cost of doing business, thereby discouraging private sector investment and job creation.

“High public debt fuels higher taxes that squeeze households and small businesses, weakening demand, investment, and job creation,” the report reads.

“When spending is trapped in wages and interest payments, borrowing sustains the past instead of building the productive future.”

At the same time, the structure of public spending in many countries is heavily skewed toward recurrent expenditure, including wages, subsidies and interest payments, leaving limited fiscal space for capital expenditure that could stimulate growth.

Rising recurrent costs, especially interest obligations, create a vicious cycle in which governments borrow more simply to meet existing commitments, further inflating debt stocks without expanding the productive base of the economy.