External Debt and Economic Growth of Nigeria: An Empirical Investigation
S. Sajuyigbe, Ademola *
Department of Business Administration and Management, Osun State Polytechnic, Iree, Nigeria
A. Odetayo, Tajudeen
Department of Accountancy, Osun State Polytechnic, Iree, Nigeria
Z. Adeyemi, Adewumi
Department of Accountancy, Osun State Polytechnic, Iree, Nigeria
*Author to whom correspondence should be addressed.
Abstract
The study investigates the impact of external debt on economic growth in Nigeria for the period 1999-2015. The data for this study was obtained mainly from secondary sources mainly from Central Bank of Nigeria (CBN) Statistical Bulletins and Debt Management Office. Time series data on Gross Domestic Product (GDP) as a proxy for Economic Growth, External Debt Stock (EXDS), External Debt Service Payment (EDSP), and Exchange Rate (EXGR) were used for the analysis. The techniques of Estimation employed in the study include Augmented Dickey Fuller (ADF) test, Johansen Co-integration, Vector Error Correction Mechanism and Granger Causality Test. Results show that external debt has an inverse effect on economic growth in Nigeria. Subsequently, the study recommends that government should empower Debt Management Office to set the mechanism in place, ensure that loans are utilised for purposes they are meant for and prosecute corrupt public officers who siphoned the money.
Keywords: External debt, external debt stock, external debt service payment, economic growth, Nigeria