Effects Of External Debt On The Nigeria Economic Growth (1990-2017)

ABSTRACT

The study investigated impact of external debt on economic growth of Nigeria from 1990 to 2018. The study was analyzed using real GDP as the dependent variable and external debt, external debt servicing and exchange rate as independent variables. The tool of data analysis was the multiple regression analysis technique. Based on the results, it was found that the independent variables explained approximately 94% of the total variations in real gross domestic product. Specifically, external debt outstanding has positive and significant impact on economic growth in Nigeria while external debt servicing has negative and significant impact on economic growth in Nigeria. Based on these findings it was recommended among other things that Debt Management Office (DMO) should set mechanisms in motion to ensure that government borrowings are utilized for the purpose for which they were acquired. This could be achieved through proper monitoring of the use to which the funds are put.  

TABLE OF CONTENTS

CHAPTER ONE:  INTRODUCTION ﾿

1.1 ﾿ Background to the Study ﾿ 1

1.2 ﾿ Statement of the Problem ﾿ 4

1.3 ﾿ Objectives of the Study ﾿ 5

1.4 ﾿ Research Questions ﾿ 5

1.5 ﾿ Research Hypotheses ﾿ 5

1.6 ﾿ Scope of the Study ﾿ 6

1.7 ﾿ Significance of the Study ﾿ 6

1.8 ﾿ Limitation of the Study ﾿ 7

CHAPTER TWO: LITERATURE REVIEW ﾿ 8

2.1 ﾿ Conceptual Framework ﾿ 8

2.1.1 ﾿ Definitions of debt and external debt ﾿ 8

2.1.2 ﾿ Reasons for debt ﾿ 9

2.1.3 ﾿ Debt servicing ﾿ 10

2.1.4 ﾿ Origin of external debt in Nigeria ﾿ 11

2.1.5 ﾿ Drivers of Nigeria’s external debt ﾿ 12

2.1.5.1 ﾿ Inefficient trade and exchange rate policies ﾿ 13

2.1.5.2 ﾿ Adverse exchange rate movements ﾿ 13

2.1.5.3 ﾿ Adverse interest rate movements ﾿ 14

2.1.5.4 ﾿ Poor lending and inefficient loan utilization ﾿ 14

2.1.5.5 ﾿ Poor debt management practices ﾿ 14

2.1.5.6 ﾿ Accumulation of arrears and penalties ﾿ 14

2.1.6 ﾿ Debt management in Nigeria ﾿ 14

2.1.7 ﾿ Mechanisms of economic growth ﾿ 16

2.2 ﾿ Theoretical Framework ﾿ 17

2.2.1 ﾿ Debt overhang theory ﾿ 17

2.2.2 ﾿ The Keynesian theory ﾿ 17

2.2.3 ﾿ The dependency theory of underdevelopment ﾿ 18

2.1.4 ﾿ Ricardian equivalence theory ﾿ 19

2.3 ﾿ Empirical Framework ﾿ 20

2.4 ﾿ Summary of Literature Review ﾿ 33

CHAPTER THREE:  RESEARCH METHODOLOGY ﾿ 34

3.1 ﾿ Research Design ﾿ 34

3.2 ﾿ Nature and Sources of Data ﾿ 34

3.3 ﾿ Method of Data Analysis ﾿ 34

3.4 ﾿ Model Specification ﾿ 34

3.5 ﾿ Classifications and Explanations of Relevant Variables Used in the Models ﾿ 35

3.5.1 ﾿ Dependent variable ﾿ 35

3.5.2 ﾿ Independent variables ﾿ 36

3.6 ﾿ Data Analysis Techniques ﾿ 36

3.6.1 ﾿ Ordinary Least Squares (OLS) Technique ﾿ 36

3.6.2 ﾿ Coefficient of multiple determination ﾿ 37

3.6.3 ﾿ t-Statistic ﾿ 37

3.6.4 ﾿ F-statistic

﾿ 37

CHAPTER FOUR: PRESENTATION OF DATA, ANALYSIS AND DISCUSSIONS

4.1 Presentation of Data ﾿ 39

4.2 Analysis of Data, Presentation of Results and Interpretations ﾿ 40

4.2.1 Descriptive Statistic ﾿ 40

4.2.2 Regression Analysis ﾿ 41

4.2.3 Hypothesis Testing ﾿ 42

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1Summary of Findings ﾿ 44

5.2 Conclusion ﾿ 44

5.3 Recommendations ﾿ 44

REFERENCES ﾿