ABSTRACT

The study evaluates the cfThct of' external debt burden on the Nigerian econoiiy from

1996 — 2005. l)ett is an important resource needed to Support sustainable economic

growth. But a huge external debt without servicing, as WLS the case Ir Nigeria beFore

year 200() constituted a major impediment to the revitalization of' her shattered CConolfly •1

as well as the alleviation of debilitating poverty. 1 he much needed inflow of loicigmi

resources for investment stimulation, growth and employment were hampered. 'Ihe

objectives of the study include, evaluating t11c structure and trend of' Nigeria's external

debt, to determine the impact of external debt on the Nigerian economy, to identi!'y the

external debt nlanagcment stnitcgies used in Nigeria, to determine the effectiveness of the

strategies adopted. and to make recommendations on the ways to manage the external

debts of the nation. Secondary data were used and were analyzed by the use of

econometric appo acli. Timmie series data vei colleJed on outstanding external debt,

Gross Domestic l'ioducts and other relevant variables. 'Ihe regression result showed that,

availability of access to external finance strongly influences the economic development

process of any nation. Econometric model was used to analyze, the relationship between

Gross l)omnestic Product and external debt, and Gioss Domestic l'roduct and its

determinants. 'ihe regression result revealed that external debt impacted negatively el'fect

on the Nigerian economy even at 1% probability level. From the above findings it was

recommended that debt could only be productive if' well managed so as to make the rate

of return higher than the cost of debt servicing. External linanee should be used only for

projects of highest priority, to achieve a long-term solution to the external debt problem

thei'e must he vigorous promotion of the nations export trade and drastic reduction in her

nierchandize imports, with proper management, the government should ensure that the

money saved from debt cancellation is invested in changing the lives of' millions of

people in Nigeria by providing more educational and health Facilities.