ABSTRACT

 The study investigated on'the effect of external debt on Nigerian economic growth. The objectives ofthe study are; to assess the impact ofexternal debt on public andprivate investment within the Nigerian economy, to evaluate the effect offoreign debt on domestic economic growth in Nigerian, to investigate the impact of external debt servicing on investment development in Nigeria and to investigate the impact offoreign debt on exchange rate within the Nigeria economy. To achieve the objectives ofthe study, expostfacto research design was adopted. The researcher adopted secondary data in getting the required information. Data were collected from CBN statistical bulletin. Conclusively, in as much as external debt burden is a reality in Nigeria, it is also true that'the country cannot achieve its goal of becoming an industrialized nation -by the year 2020. without external financial assistance. However, over reliance on external finance should be discouraged since this aggravates the problem of lean external sources offunds. The study therefore, recommends that externalfinance should be used onlyfor projects of highest priority. This is so because it is huge external debt that threw us into the series ofeconomic problem in the first instance. The implementation must stipulate period long enough (10 years or more) before dividends can be repatriated for investment to mature. To achieve a long term solution to external debt problem there must be vigorous promotion ofthe nations export trade and drastic reduction in her merchandise imports. The principal vulnerability ofNigeria is to have an open-ended burden ofhigher interest payment in the event of an increase in international interest rate. Nigeria should therefore seek fixed interest rate. Nigeria should devote a tangible proportion ofher annual foreign exchange earningsfor debt servicing. This would enable the country to accommodate the creditors’ requirements.