Public Debt and the Nigerian Economic Development (1990 – 2019)

Abstract

The huge infrastructure deficit in Nigeria underscores the need for capital mobilization required to finance activities and ensure sustainable growth and development. This study examined the effect of public debt on the economic development of Nigeria covering the period 1990-2019. Domestic public debt, External public debt, Total public debt, and public debt servicing represented independent variables. Per capita income was the dependent variable. Ex post facto research design was adopted for the study. Data was sourced from the Central Bank of Nigeria Statistical Bulletin and Globaleconomy.com. The study used Augmented Dickey-Fuller (ADF) unit root test to test for the stationarity of the variables while the Johansen cointegration test was used to establish that a long-run relationship exists among the variables. Ordinary Least squares (OLS) and Error Correction Model (ECM)) were the tools used for analysis. Results showed that domestic debt and external debts each has a negative and statistically significant effect on per capita income while total public debt and public debt servicing showed a positive and statistically significant effect on per capita income respectively. Based on the findings, the study concluded that neither external debt nor domestic debt has been able to singly spur economic development while total public debt which is the combination of domestic and external public debt positively drive economic growth, thereby, improving the per capita income of the citizens in Nigeria.