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