ABSTRACT

The study investigates external debt and economic growth in Nigeria, using time series data on the variables understudy from 1986 to 2020. The ordinary least square regression method was used to analyze the data.

The results from the empirical analysis revealed that external debt (EXD), external debt servicing (EDS) and inflation (INF) had insignificant negative relationship with the economic growth of Nigeria. On the other hand, openness of the economy (OPEN) and foreign direct investment (FDI) had insignificant positive relationship with the economic growth of Nigeria within the period of investigation.

The study recommends among others that, the Debt Management Office (DMO) and Central Bank of Nigeria should put in place policies that will control excessive external borrowing, as well as sustainable debt management policies in order to put the Nigerian economy on the path of sustainable growth and development. Again, debt rescheduling, debt forgiveness, debt buy-back and other debt management policies should be put on the negotiating table in order to reduce the excruciating burden of debt service payments to creditors and enhance growth in Nigeria. Furthermore, government and policymakers should encourage greater trade through greater degree of openness trade and the resulting increased in international competition to promote rapid economic growth in Nigeria. Also, foreign direct investment inflow-enhancing policies should be implemented in Nigeria in order to augment domestic resource shortages. Finally, stable macroeconomic policy environment in terms of low domestic inflationary pressures should be put in place through appropriate anti-inflationary policies in Nigeria.