A new report by the United Nations Conference on Trade and Development (UNCTAD) has revealed that developing countries, including Nigeria, could save up to $500 billion every year if they were able to borrow money at the same interest rates enjoyed by advanced economies. The report argues that these savings could be redirected to critical sectors such as education, healthcare, infrastructure, energy, and social welfare.
According to UNCTAD, developed countries paid an average borrowing cost of about 2.2 percent in 2024, while around 94 developing nations faced average rates of roughly 5.5 percent. The difference may appear small, but it has significant consequences for public finances across the developing world. If those countries had access to the same borrowing conditions as wealthier nations, they could collectively reduce their annual interest payments by approximately $500 billion. (
The report noted that high borrowing costs force governments to spend a large portion of their budgets on debt servicing instead of investing in development projects. As a result, funds that could be used to build schools, hospitals, roads, renewable energy facilities, and nutrition programmes are diverted to interest payments.
To demonstrate the potential impact of lower borrowing costs, UNCTAD highlighted examples from different countries. One such example is a debt-swap arrangement in Côte d’Ivoire that is expected to generate substantial savings, part of which will be used to construct new schools. The agency estimates that annual savings of $500 billion could finance hundreds of thousands of schools, over a million healthcare centres, and massive renewable energy projects around the world.
For Nigeria, the findings are particularly important because debt servicing continues to consume a significant share of government revenue. Rising domestic and external debt obligations have placed pressure on public finances, limiting the amount available for infrastructure development, healthcare improvements, education, and social intervention programmes.
Economic experts say Nigeria’s borrowing costs remain relatively high due to factors such as inflation, exchange-rate pressures, investor concerns, and limited access to low-cost international financing. These conditions make it more expensive for the country to raise funds compared to advanced economies.
UNCTAD believes the solution requires both domestic reforms and international cooperation. The organisation recommends increasing access to affordable long-term financing, expanding concessional loans, improving debt management, strengthening economic policies, and enhancing transparency. It also calls on multilateral institutions to provide more guarantees and support that can help developing countries borrow at lower rates.
The report warns that without action, the gap between developed and developing countries could widen further. High financing costs, combined with global economic uncertainties, commodity price swings, and tighter financial conditions, continue to restrict growth opportunities in many emerging economies.
UNCTAD concluded that reducing borrowing costs is not just a financial issue but a development priority. For countries like Nigeria, lower debt-servicing expenses could free up billions of dollars for projects that create jobs, improve public services, strengthen infrastructure, and accelerate economic growth.
