Africa, Developing Economies Face Mounting Debt, Jobs Crisis – IMF, World Bank

The rising cost of servicing public debt and a projected global shortfall of 800 million jobs threaten development prospects in Africa and other developing economies, the International Monetary Fund (IMF) and the World Bank Group have warned.

The two Bretton Woods institutions raised the concerns at the 2026 IMF/World Bank Annual Meetings Plenary in Bangkok, Thailand, yesterday, highlighting the growing pressure on governments to meet debt obligations while funding infrastructure, social services and job creation.

World Bank Group President, Ajay Banga, warned that the global economy was heading towards a significant employment challenge, with about 1.2 billion young people expected to enter the labour market over the next 10 to 15 years, against projected job creation of only 400 million.

The resulting gap of approximately 800 million jobs could deepen economic hardship and undermine social stability, particularly in developing countries where governments are already grappling with limited fiscal resources and rising development needs.

Although Nigeria was not specifically mentioned, the warning reflects the pressures confronting African economies as they seek to expand economic opportunities, attract private investment and finance critical infrastructure amid competing budgetary demands.

“The jobs gap is a projection. It does not have to be our future,” Banga said.

He stressed that employment was central to economic development, individual dignity and social stability, warning that failure to provide opportunities for the growing youth population could have consequences that extend beyond national borders.

“A job is not a statistic. A job is dignity. It is the difference between a young person who can build a future… and a young person awaiting one. Leave that potential unrealized, and the consequences cross border. Give it opportunity, and the benefits cross borders too,” he said.

Banga argued that closing the employment gap would require governments to deploy scarce resources more efficiently while mobilising private capital, philanthropic funding and technology to accelerate economic growth.

He disclosed that the World Bank Group mobilised $112 billion in private capital in the last financial year, compared with approximately $35 billion in financial year 2022.

The institution’s total financing, including funds from its own resources, exceeded $230 billion, underscoring its strategy of leveraging public financing to attract greater commercial investment into development projects.

“Those are the twin challenges we have been working to address: making scarce resources go further while helping countries create jobs at scale,” Banga said.

However, he acknowledged that mobilising private investment in the poorest economies remained difficult, revealing that private capital mobilisation in low-income countries stood at approximately $3 billion.

The disparity highlights the challenge facing countries with limited access to investment capital, where inadequate infrastructure, regulatory barriers and weak access to finance can constrain business expansion and employment generation.

Banga said small businesses would play a crucial role in addressing the challenge, particularly in economies where large corporations had yet to establish a significant presence.

He called for stronger support for micro, small and medium-sized enterprises (MSMEs), noting that their ability to access finance, connect with markets and expand operations would be critical to creating jobs at scale.

“The path to the poorest and most fragile economies runs through their small businesses often growing where larger companies have yet to take root,” he said.

According to him, the World Bank Group’s MSME strategy focuses on improving access to funding, connecting smaller businesses with larger buyers and markets, and simplifying regulations that impede business growth.

“Our MSME strategy is designed to make firms more visible, connected, enabled, and funded—using digital records to improve access to finance, link smaller businesses to larger buyers and markets, and simplify the rules that allow them to grow,” Banga said.

Beyond access to finance, he identified reliable infrastructure, human capital development and predictable regulatory frameworks as essential conditions for sustainable job creation.

He said businesses needed dependable electricity, water supply, transportation networks and digital connectivity to operate efficiently, while workers required quality education, healthcare and skills aligned with labour market demands.

To address these constraints, Banga disclosed that the World Bank Group committed $40 billion to infrastructure and human capital development in the last financial year, accounting for nearly one-third of its financing.

The institution also allocated 30 per cent of its public-sector financing to policy and institutional reforms aimed at improving the environment for economic development.

For African economies, electricity access remains a major component of the infrastructure challenge, given its implications for industrial production, business competitiveness and job creation.

Banga highlighted the World Bank Group’s collaboration with the African Development Bank under Mission 300, an initiative designed to connect 300 million people across Africa to electricity by 2030.

He said 59 million people had gained access to electricity under the initiative, while annual connections increased from 12 million in financial year 2024 to 18 million in financial year 2025 and 28 million in the last financial year.

Expanding electricity access is expected to improve productivity, support new business activities and strengthen the capacity of African economies to attract investment and generate employment.

Meanwhile, IMF Managing Director, Kristalina Georgieva, highlighted the fiscal constraints confronting developing economies as higher borrowing costs and debt-servicing obligations limit the resources available for development.

The debt burden presents a difficult balancing act for governments, which must meet existing financial commitments while investing in infrastructure, healthcare, education and other services needed to support economic growth.

For developing countries, the combination of rising debt costs and a rapidly expanding labour force threatens to complicate efforts to achieve sustainable growth and improve living standards.

The warnings from the two institutions underscore the need for stronger private-sector participation, more efficient use of public resources and reforms that enable businesses to expand.

With 1.2 billion young people projected to enter the global labour market over the next 10 to 15 years, the World Bank’s employment projections suggest that governments and development institutions face mounting pressure to accelerate investment and create productive opportunities.

Without sufficient job creation and improved access to development financing, African and other developing economies could face deeper economic and social pressures as they struggle to meet the expectations of growing populations while managing existing debt obligations.