AfDB warns of funding gap despite Ghana's strong growth outlook

The African Development Bank (AfDB) has cautioned that Ghana's development ambitions could be undermined by a significant investment financing gap, even as the country is projected to maintain steady economic growth over the next two years.

According to the AfDB's African Economic Outlook 2026 report, Ghana's economy is expected to expand by 5.0% in 2026 and 5.4% in 2027, following an estimated GDP growth rate of 5.8% in 2025.

The Bank, however, noted that sustaining growth will require urgent measures to address structural financing constraints and attract long-term capital.

The report revealed that Ghana faces an investment financing gap estimated at about 9% of GDP, citing high public debt levels, weak domestic revenue mobilisation, and tighter global financial conditions as major obstacles.

"High public debt, low domestic revenue, and tighter global financial conditions have constrained access to long-term, affordable capital. Addressing these challenges requires diversifying the economy, deepening policy, regulatory, and institutional reforms, and integrating domestic and international financial systems to mobilize resources on scale," the report stated.

The AfDB stressed that maintaining a stable macroeconomic environment remains critical to attracting both domestic and foreign investment.

"A stable macroeconomic environment with sustainable debt, transparent institutions, and efficient financial intermediation is critical to attract domestic and foreign capital to priority development objectives," the report said.

It further emphasised the need for stronger coordination between fiscal and monetary policies, improved regulatory oversight, reliable financial infrastructure, and transparent public financial management.

According to the Bank, policy coherence will be crucial in boosting private sector investment and unlocking concessional financing opportunities.

To bridge the financing gap, the AfDB urged Ghana to strengthen domestic resource mobilisation by broadening the tax base, improving revenue administration, and developing local currency capital markets.

"Catalytic and concessional financing should be deployed effectively through public-private partnerships and structured blended finance instruments to de-risk investment in infrastructure, health, education, and the energy transition," the report noted.

The Bank believes such interventions could attract private capital, strengthen economic resilience, and support inclusive long-term growth.

Despite the financing concerns, the AfDB maintained that Ghana's medium-term economic outlook remains positive, driven by improved investor confidence, prudent macroeconomic management, and continued growth in the services sector and household consumption.

Meanwhile, the report projected that economic growth across West Africa would stabilise at 4.7% in 2026 and 4.5% in 2027, compared with an estimated 4.8% in 2025. It added that 10 out of the region's 15 countries are expected to record growth rates of at least 5%, placing them among Africa's fastest-growing economies.

ANAS/SA

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