Foreign Debt and Real Sector Performance in Nigeria

Abstract

This study examines the impact of foreign debt on real sector performance in Nigeria from 1981 – 2018. The study adopted series of simple regression models using as proxies agriculture gross domestic product, industry gross domestic product, construction gross domestic product, trade gross domestic product and services gross domestic product as dependent variables for measuring real sector performance while foreign debt as the independent variable. Annual time series data was sourced from Central Bank of Nigeria statistical bulletin 2018. The models were estimated accordingly using econometric view (E-View) 7.0. The data analysis was carried out at 5% level of significance using t-calculated and t-tabulated values. The results of the study shows that agriculture gross domestic product, industry gross domestic product, construction gross domestic product, trade gross domestic product and services gross domestic product have positive relationship with foreign debt. It also shows that foreign debt contributes significantly to the real sector of Nigeria. The study recommends that foreign borrowing should only be for investment purposes to fill the gap left by insufficient domestic investment and savings.