Capitalizing on West Africa’s high growth potential

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Turning West Africa’s sizable growth potential into reality depends on how effectively economies convert demographic and commodity advantages into productivity gains. Large commodity projects can lift exports and foreign-exchange earnings and, over the longer term, spur stronger local linkages, infrastructure investment and job creation beyond extractive sectors. At the same time, the region needs to accelerate skills development while expanding reliable power and digital infrastructure to support adoption of new technologies and innovation. Security risks in the Sahel will remain a key downside risk, making regional cooperation and institutional resilience critical to preserving investor confidence and supporting inclusive growth.

West Africa’s macroeconomic trajectory 

West Africa is likely to remain one of Africa’s most economically dynamic regions. Median real GDP growth in West Africa neared 6% in 2025, among the highest globally and about 1 percentage point above the emerging market average. The combination of favorable demographics and prospective growth in commodity exports will sustain the region’s high growth potential in the coming years. 

Economic snapshot of West Africa

The Economic Community of West African States (ECOWAS) provides a framework for regional cooperation and trade among its 12 members: Benin, Cape Verde, Côte d'Ivoire, Ghana, the Republic of Guinea, Guinea-Bissau, Liberia, Nigeria, Senegal, Sierra Leone, Gambia and Togo. 

Burkina Faso, Mali and Niger withdrew from ECOWAS in January 2025 but remain part of the West African Economic and Monetary Union, along with Benin, Côte d'Ivoire, Guinea-Bissau, Senegal and Togo.

West Africa’s nominal GDP surpassed $700 billion in 2025, accounting for about 20% of Africa’s GDP, S&P Global Market Intelligence data shows. The median size of the West African economy is about $24 billion, just above the $20 billion median for the continent. Nigeria is by far the largest economy in the region at almost $291 billion, followed by Ghana at approximately $116 billion and Côte d'Ivoire at just under $97 billion. 

Labor productivity has averaged about 2% over the last 10 years but varies significantly across the region, according to data from the International Labour Organization. For example, Ghana’s long-term average productivity is among the highest in Africa at 5%, while Nigeria’s average stands at 1%. The degree of economic diversification adds context to this productivity gap. In Nigeria, a large share of employment is concentrated in low-productivity sectors, particularly agriculture, which accounts for about 25% of GDP. By contrast, Ghana’s economic activity is distributed across more sectors, including services, construction and manufacturing, where productivity rates are higher. 

West African economies that cannot accelerate labor productivity growth rates risk falling even further behind in income per capita convergence with advanced economies, as is the case across most of the continent. After adjusting for differences in purchasing power, GDP per capita in the median West African economy is only about 6% of the median G7 economy, broadly unchanged from a decade ago. 

As the working-age population expands, overall economic stability will depend on creating employment opportunities that enable new workers to achieve higher income levels than the previous generation. Improving education will also be important, as literacy rates in West Africa average 61%, well below the global average of 93%.

West Africa’s opportunity to ride the commodity boom

Beyond human capital development, West Africa's economic trajectory will be shaped by how effectively it leverages its natural resource wealth. 

Recent commodity price developments have benefited a number of West African exporters. Over the past several years, prices for some of the region’s key export commodities have increased. This includes gold (produced in Ghana, Burkina Faso, Mali, Niger, Guinea and Côte d’Ivoire), oil (key to Nigeria, Ghana and Senegal) and aluminum (produced in Guinea). 

Gold prices rose by about 70% year over year in 2025, and ongoing geopolitical and global fiscal-related risks could keep prices volatile in the coming years. The price of cocoa — a key export commodity for Côte d’Ivoire and, to a lesser extent, Ghana — surged by about 200% year over year in 2024, though this was largely driven by poor harvests across West Africa.

While rising commodity prices benefit West African exporters, higher export volumes are needed to sustain economic growth. In the case of gold exports from Ghana and Burkina Faso, as well as bauxite exports from Guinea, export volumes have grown alongside prices. Similarly, oil export volumes have risen markedly in Senegal and Nigeria. 

As a result, average commodity exports as a share of GDP in West Africa have reached their highest level in more than a decade. In nominal US dollar terms, West Africa’s total commodity exports are now more than 4.5 times higher than in 2015. This has helped several West African economies grow faster than other African economies in recent years.

West African megaprojects expected to boost commodity exports

The commodity-led export boom is expected to persist in several West African economies through the ramp-up or recent completion of related megaprojects, with several notable examples: 

• Guinea: Simandou iron ore development, one of the world’s largest iron ore deposits

• Nigeria: Dangote Petroleum Refinery, Africa’s largest refinery, as well as Nigeria LNG Ltd. Train 7 project 

• Senegal: Sangomar oil field and Greater Tortue Ahmeyim LNG project 

• Sierra Leone: Tonkolili iron ore project, estimated to be the second-largest iron ore mine in Africa after the expected completion of an expansion in 2028

• Liberia: ArcelorMittal Phase II iron ore expansion project

In addition, there are smaller yet significant projects in Niger (oil, uranium), Mali (lithium) and Côte d'Ivoire (oil and gas). The continued expansion of these projects is expected to boost export volumes and strengthen foreign-exchange earnings in the years ahead. 

We expect commodity-related investments to have a particularly strong impact in Guinea, where the Simandou and alumina refinery projects could double total exports once they reach full production capacity. Similarly, in Sierra Leone, completion of the Tonkolili expansion could triple export volumes.

Recent developments suggest that commodity-related projects and exploration investment are likely to continue rising. Traditionally, exploration investment in West Africa has been concentrated in the gold sector, and elevated gold prices are likely to encourage further spending. However, commodity-related investments in West African energy exporters such as Nigeria and Senegal could also increase further as the Middle East war keeps oil prices elevated. Nevertheless, investments remain somewhat below levels recorded in the early 2010s despite the recent rise in commodity prices and corresponding pickup in exploration budgets.

Services is the largest sector, while agriculture remains a major source of employment

As the youth population grows, urbanization is also likely to accelerate. As a result, the services sector, which tends to be more concentrated in larger cities, will increasingly drive economic activity. The services sector accounts for the largest share of overall GDP in West Africa at about 44% and includes wholesale and retail trade, telecommunications, transport, finance, public administration, tourism, and real estate.

Despite representing a smaller share of output than services, agriculture remains a major source of employment across most West African economies, ranging from 30% to 70% of the workforce. Agricultural output in the region is highly susceptible to volatile weather patterns, which can lead to erratic incomes. Other factors also increase the volatility of agricultural output, such as the recent increase in fertilizer prices due to geopolitical conflicts. 

Agriculture will likely remain the backbone of household incomes in several West African economies — particularly those with export-oriented crops such as cocoa, cotton and cashews — but higher urbanization rates may influence younger generations to remain in cities. This increases the importance of infrastructure in accommodating growing urban populations and fostering employment. 

Opportunities and risks on the horizon

Security threats and technological disruption present dual challenges for West Africa. Instability can deter investment and disrupt trade, while AI adoption offers productivity gains — if countries can overcome infrastructure constraints.

Is AI a catalyst for growth or a source of disruption in West Africa? 

AI could become a significant driver of productivity growth in sub-Saharan Africa. Realizing AI productivity gains will depend less on model development and more on governments’ ability to address electricity and water infrastructure deficits, labor skills gaps, and institutional constraints that limit adoption.

Under a strong AI adoption scenario, productivity gains across agriculture, manufacturing and public administration are likely. AI could expand educational access and skills development across sub-Saharan Africa. 

Early warning signs exist, though. Countries that rely heavily on call centers and back-office services face rising pressure as AI automates these tasks. This creates concerns for African economies, particularly Ghana and Nigeria, where business-process outsourcing and IT-service hubs are expanding.

Despite these risks, S&P Global analysis shows that Nigeria and Ghana are the best positioned to benefit from AI adoption. Their AI adoption capacity — measured by factors such as internet usage, secure internet services and market size — leads the region, although adoption remains well below global benchmarks. 

Nigeria and Ghana are also among the best positioned in the region for electricity access and power consumption per capita. Nigeria stands out for its data center development, which will be critical to the region’s digital future. Data center expansion will bring computing and storage capacity closer to users, improve reliability, support cloud services and reduce transaction costs in sectors such as finance, logistics and public administration.  

Obstacles that could derail large-scale digital infrastructure in West Africa include grid instability, limited generation capacity, transmission bottlenecks and weak utility finances. Data centers also require sizable imports of servers, cooling systems and power equipment, which could intensify foreign-exchange pressures and increase external financing needs.

Sahelian security trends could pose medium-term fiscal risks

Strained relations between Mali, Burkina Faso, Niger and their coastal neighbors will likely continue to complicate regional counterterrorism efforts, though continued membership in WAEMU suggests a level of institutional cooperation. Al-Qaeda-affiliated Jama’at Nusrat al Islam wal Muslimin (JNIM) is likely to attempt further expansion into coastal West African countries — Benin, Côte d'Ivoire, Ghana and Togo. JNIM’s growth across the Sahel suggests that the group may increasingly embed itself within local communities with the intention to take control of key trade corridors. JNIM’s deepening cooperation with armed groups such as the Nigeria-based Ansaru — a breakaway faction of Boko Haram — could deepen cross-border militant networks linking the Sahel with Nigeria and coastal West Africa. 

While the security landscape remains fluid, including some potential for improved operational coordination, security developments have not yet caused significant systemic economic damage; however, they could pose a growing medium- to long-term risk. The primary exposure for regional economies is likely to be fiscal, relating to rising defense requirements that, if persistent and material, could constrain future fiscal space.