West Africa requires between $90 billion and $100 billion every year to achieve its development goals, but the region’s biggest challenge is not a lack of money. Instead, the problem is that available funds are not being properly collected, managed, or invested, according to a new report by the African Development Bank (AfDB).
In its West Africa Economic Outlook 2026 report, titled Mobilising West Africa’s Development Financing at Scale in a Fragmented World, the bank explained that the region has enough financial resources to support growth but struggles to turn those resources into productive investments.
According to the report, West Africa’s financing gap is mainly caused by weak financial systems that fail to channel savings into projects that can create jobs, improve infrastructure, and reduce poverty.
The AfDB estimates that the region needs between $90 billion and $100 billion annually to meet development targets. However, investment levels have remained stuck at around 23 to 24 percent of Gross Domestic Product (GDP), which is far below the 33 percent or more recorded by many middle-income economies.
The bank stressed that governments should not rely only on foreign loans or donor funding. Instead, they should focus on improving domestic revenue collection and making better use of local financial resources.
One of the report’s strongest recommendations is to improve tax collection. The AfDB described tax performance across West Africa as very low compared to other regions of the world. It urged governments to widen the tax base, reduce unnecessary tax exemptions, and adopt modern digital tax systems.
The report pointed to Nigeria’s TaxPro-Max platform as an example of how digital technology can improve tax administration and increase government revenue. It also noted that countries such as Senegal and Côte d’Ivoire lose billions of dollars every year through tax incentives and exemptions that reduce public income.
Another recommendation is for governments to make better use of revenues generated from natural resources such as oil, gas, and minerals. The AfDB advised countries like Nigeria, Ghana, and Senegal to strengthen their sovereign wealth funds and ensure that resource earnings are managed transparently for long-term development.
The bank also highlighted the importance of bringing more informal businesses into the formal economy. Since the informal sector accounts for more than 90 percent of employment in West Africa, formalising these businesses could significantly increase tax revenue and improve access to financing.
In addition, the report called for pension funds and insurance companies to invest more of their assets in long-term development projects instead of concentrating mainly on short-term government securities. Stronger regional capital market integration, it added, would also help mobilise larger pools of investment across West Africa.
The AfDB further expressed concern about how public funds are spent. It noted that Africa’s public investment efficiency remains low, meaning that a large share of government spending fails to produce the expected economic benefits. Improving project planning, transparency, and accountability would allow countries to get better value from public investments.
The report comes at a time when many West African nations are facing rising global borrowing costs, making it more difficult to access affordable international financing. As a result, the AfDB believes the region must increasingly depend on its own resources to finance development.
Its findings also reflect concerns raised earlier this year by investors and policymakers in Nigeria, who warned that limited access to finance continues to affect women, young entrepreneurs, and persons with disabilities. They argued that expanding inclusive financing would help unlock stronger and more sustainable economic growth across the region.
