Strategic Development Financing Mix and Economic Growth in Nigeria

Abstract

The development of the economy has been a major concern of most developing nations such as Nigeria in the provision of infrastructural facilities and developmental projects that have the potentials of enhancing the standard of living of the citizens and national outputs. But, these objectives cannot be achieved without adequate source of developmental funds. As a result of various source options of developmental financing, this study examined the effect of debt financing mix on economic growth and development in Nigeria strategically from a decade after independence (1970) to 2007 fiscal years. Major debt financing options were considered in the analysis of this study and the long-run relationship between selected debts financing mix and economic growth proxy as Real Gross Domestic Product (RGDP) was established through the Augmented Engle Granger (AEG) Cointegration test. The entire time series variables data regressed-treasury bill, development stocks, treasury certificate and bond, multilateral debt source, international lending clubs and real gross domestic productwere found stationary at first difference excluding series on international lending clubs which was found explosive. The estimated cointegrated regression model formulated revealed the best economic friendly debts financing mix to achieved major macroeconomic targets of the governments. Strategic policy recommendations were proffered based on the findings emanated from the study.