Munich Personal RePEc Archive

Effect of external debt on Nigerian Economy: Further evidences

Festus, Gift Emmanuel and Saibu, Muibi Olufemi (2019): Effect of external debt on Nigerian Economy: Further evidences.

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Abstract

The study sought further evidences on the effect of external debt on economic growth in Nigeria. Time series data on external debt stock, real gross domestic product, trade openness, and gross fixed capital formation as a percentage of GDP as well as data on inflation and exchange rates were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and World bank indicators. The study set out to test for both the long run and short run relationship as well as presenting further evidences on the relationship between external debt and economic growth. The Autoregressive Distributed Lag (ARDL) Model was employed as a technique of estimation in the study and the results led a finding that the external debt contribute negatively to growth in Nigeria based on data from 1981 through 2016 which was in line with Ayadi and Ayadi(2008). The study recommended amongst others, the need for accountability in governance, good macroeconomic policy environment, proper acquisition and use of debt solely for productive reasons and the enhanced exportation of domestic products.

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