Impact of External Debt on Economic Growth in Nigeria: 1986-2019

Abstract

The study examined the impact of external debts on economic growth in Nigeria between 1986 and 2019. The specific objectives of this study were to: examine the impact of external debt stock on economic growth in Nigeria; assess the impact of external debt servicing on economic growth in Nigeria and investigate the extent to which external debt interest has impacted on economic growth in Nigeria. It was discovered that debt is synonymous to underdevelopment, poverty, unemployment which has led to low living standard of the people and Nigeria’s huge debt stock has prevented it from embarking on higher domestic investment which would lead to higher growth and development which is a major problem to Nigeria. The findings shows that Nigeria’s economic growth has been adversely but significantly affected by rising external debt servicing and the study recommended that external debt should be effectively utilize for sustainable development and diversification of Nigeria’s economy will reduce the rate of external debt. The study adopted the ex-post facto research design being of secondary nature and was used to test the hypotheses. Descriptive Statistics, Unit Root Test, Co-integration, Auto-regressive Distributive Lag and Error Correction Mechanism estimates, were used to estimate and to test the impact of external debt on economic growth in Nigeria were demonstrated.