Africa’s poorest economies are sending more money to foreign creditors than they are receiving to build roads, factories and power plants, a reversal of the capital flows economists say are needed for developing countries to grow.
That contradiction sits at the heart of a new report by French development think tank Ferdi, which estimates that 38 low-income African countries face an external financing gap of about $120 billion in 2026 if they are to raise investment to levels associated with the rapid industrialisation achieved by several Asian economies.
The report comes as global financing conditions become increasingly difficult for poorer nations.
According to the World Bank, low- and middle-income countries paid $741 billion more in principal and interest on external debt between 2022 and 2024 than they received in new external financing, the largest net capital outflow recorded in at least half a century.
For countries expected to import capital to finance development, the trend represents a sharp reversal.