Investigating the Relationship between Debt Burden Servicing and Infrastructural Development in Nigeria.

Abstract

This study evaluates debt burden and servicing as it relates to infrastructural development in Nigeria for the period 1992-2021. The study embraced annual time-series data and employed the Fully Modified Ordinary Least Squares (FMOLS) estimation techniques to examine the relationship between the variables. The findings revealed that there exist a positive and significant relationship between domestic debt and infrastructural development; as well as external debt and infrastructural development. The implication of the findings is that increases in domestic and external debt of the federal government leads to an increase in Infrastructural development. More so, a significant and strong relationship was established between infrastructural development, domestic debt, external debt and exchange rate, while all the dependent variables were found to be responsible for 81% variation in the state of infrastructural development in Nigeria. The study, therefore, concluded that domestic and external debt remains strong and active variables driving infrastructural development in Nigeria. It suggested that Public debt should be used for the purpose for which it was borrowed for and such, debts should be used on the basic infrastructural development that will help to improve on the business environment and economic output making for ease of repayment