DEBT AND DEBT SERVICE: IMPLICATIONS ON NIGERIAN ECONOMIC DEVELOPMENT
Journal Title: Asian Journal Social Sciences & Humanities - Year 2013, Vol 2, Issue 2
Abstract
The study is an empirical investigation of the influence of total domestic debt, total external debt cum servicing of external debt from 1970-2010 on the economic development of Nigeria. The required data was sourced from Central Bank of Nigeria Statistical Bulletin and World Bank data bank. The study started with the battery test of stationarity of time series data using Augmented Dickey-Fuller test and Johansen test for co-integration to ascertain the long-run relationship of the variables. Ordinary least square was used to analyse the data. The results show thattotal domestic and total external debts are inversely related to real gross domestic product, a proxy for economic development, but at an insignificant level. Interest on total external debt relates positively on real gross domestic product contrary to our expectation but at an insignificant level. On this basis, we made the following recommendations, among others: The government mustbe sincere and focus more on internally generated revenue to finance development projects until all the debts and its interests are finally settled. It is imperative for the government to cut down cost of government with the intention to promptly redeem loans repayment and its servicing. The government has to diversify the economy as there are many sectors that need to be developed so as to generate more revenue and avoid opting for loans as the bestalternative.
Authors and Affiliations
F E Eboh, K. E. Uma, P. C. Obidike
Keywords
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