Abstract
This study scrutinizes the influence of external obligation on the cost of living in Nigeria. In recent times, Nigeria has been tagged as the headquarters of world poverty due to the unaffordable cost of living that has resulted in all manner of crimes prevailing in the country. However, the role of foreign loans being contracted by the government in reducing consumption cost has become a concern, hence this investigation. This study made use of a secondary form of statistical records covering the period 2000–2018. The result of the data analysis has shown that external debt does not improve consumption cost, but rather aids the rising cost of living in Nigeria. In a nutshell, the study suggests that the government should invest a large chunk of the borrowed funds into agriculture and local manufacturing for sufficient food supply and provision of goods and services at reasonable costs. This study recommends support for infant industries and entrepreneurship to reduce the consumption cost in the country. The study also encourages the government to seek debt rearrangement or outright revocation by the lending institutions and countries.
Highlights
External debt financing is a developmental necessity that is difficult to avoid, especially in a developing economy such as that of Nigeria
Let us narrow the issue at stake to its effects on consumers’ cost of living, which is the cost per basket of food in the country; does it tally or is there any synchronization with the rate at which external borrowing escalates? The major goal of this study is to determine the influence of foreign liability on consumption cost, which is of the utmost importance to the average person in Nigeria
The major aim of this study was to determine the effect of external debt on consumption cost in Nigeria
Summary
External debt financing is a developmental necessity that is difficult to avoid, especially in a developing economy such as that of Nigeria. Many scholars have found that external debt is detrimental to a nation’s economic system [1,2,3,4,5,6,7,8,9], largely due to its mismanagement and incorrect application. Provide empirical evidence that substantiates the view that foreign obligation has a favorable effect on fiscal development. Nations cannot afford to ignore foreign borrowing since domestic savings cannot provide sufficient funds required for the developmental projects of a nation. In recent times, it appears that the often-debated notion that external debt depresses an economy is finding more corroborating evidence than the view that foreign loans aid a nation’s economic growth
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