Effect of Increasing Government Debt Profile on Economic Prosperity of Nigeria (Published)
The study aimed at assessing the effect of increasing government debt profile on economic prosperity of Nigeria. Specifically, the study examined the extent that Gross Domestic Product (GDP) was affected, during the period of study, by rising domestic debt, external debt, and cost of borrowing in Nigeria. The data for analysis were sourced principally from CBN Bulletins and Debt Management Office. The null hypotheses that domestic debt, external debt, and cost of borrowing do not significantly affect Gross Domestic Product, were tested through a multiple regression analysis. The findings indicate that Domestic Debt has a positive and significant effect on Gross Domestic Product in Nigeria with coefficient of 1.005965 and p-value of 0.0000. Furthermore, the external debt stock reveals a negative and non-significant effect on Gross Domestic Product with coefficient of -0.083963 and p-value of 0.5909, while Cost of Borrowing exposes a positive and non-significant effect on Gross Domestic Product in Nigeria with coefficient of 0.038835 and p-value of 0.7589. The R-squared (Coefficient of Determination) indicates that 98% of the variations in Gross Domestic Product in Nigeria could be explained by changes in Domestic Debt, External Debt and Cost of Borrowing. The implication of the findings is that economic prosperity is facilitated by Domestic Borrowing while External Borrowing must be avoided where possible because of its’ negative effect on GDP. In addition, the effect of Cost of Borrowing on GDP is purely dependent on the appropriateness of use of borrowed fund. The study recommended that government should first explore internal sources of fund whenever borrowing is unavoidable in preference to foreign/external sources, reduce or avoid external borrowing and properly apply the borrowed fund for its economy to prosper.
Keywords: External Debt, Gross Domestic Product, Nigeria, cost of borrowing, economic prosperity, internal debt
External Debt and Economic Growth: The Nigeria Experience (Published)
This research work was aimed at ascertaining the impact of external debt on economic growth in Nigeria. Ex-post facto research design was adopted for the study. While data on Gross Domestic Product (GDP), External Debt Stock and External Debt Service Payment were obtained from World Bank International Debt Statistics, Exchange Rate data were collected from Central Bank of Nigeria Statistical Bulletin, 2013. The period of study was 1980-2013. Model was formulated and data were analyzed using Ordinary Least Square. Diagnostic tests were conducted using Augmented Dick Fuller Unit Root Test, Co-integration and Error Correction Model. The independent variable was GDP, while the explanatory variables were External Debt Stock, External Debt Service Payment and Exchange Rate. We discovered that External Debt had a positive relationship with Gross Domestic Product at short run, but a negative relationship at long run. Also, while External Debt Service Payment had negative relationship with Gross Domestic Product, Exchange Rate had a positive relationship with it. The paper concluded that exchange rate fluctuation had positive impact on the Nigerian economy while external debt stock and debt service payment had negative impact on the same economy. The study recommended amongst others, that Debt Management Office should set mechanism in motion to ensure that loans were utilized for purposes for which they were acquired as well as set a ceiling for borrowing for states and federal governments based on well-defined criteria.
Keywords: Debt Stock, Exchange Rate, External Debt, External Debt Service Payment, Gross Domestic Product
EXTERNAL DEBT ACCUMULATIONS AND MANAGEMENT IN DEVELOPING ECONOMIES: A COMPARATIVE STUDY OF SELECTED SUB-SAHARAN AFRICAN AND LATIN AMERICAN COUNTRIES. (Published)
The issue of debt crisis and management have constituted major challenges to the developing economies of the world. This study examined external debt accumulations and management strategies adopted by developing countries using Nigeria, Ghana and Brazil. The study covers a ten year period, 2002-2011. This work is both conceptual and empirical. Data were gathered through of the documentations/releases of relevant agencies such as the Debt Management Offices and Central Banks of the countries studied. The study attributed the debt crisis in these nations primarily to mismanagement of credit facilities, weak economic base, overdependence on foreign aids, weak debts contractual agreements and ineffective debt managements strategies. The paper recommends among other things that developing economies should place less emphasis on external borrowings as most of the credits are given under very harsh conditions, emphasis should be placed on prudent resource management. The government should rather pursue deliberate policies that will ensure the diversification of their economy by developing other productive sectors of the economies, while external debts should be seen as a last resort and must be contracted to finance only self- sustaining projects that will stimulate real sector and other factors of production needed to guarantee enduring economic development.
Keywords: Debt Crisis, Debt Management Strategies, Developing Economies, External Debt
EXTERNAL DEBT ACCUMULATIONS AND MANAGEMENT IN DEVELOPING ECONOMIES- A COMPARATIVE STUDY OF SELECTED SUB-SAHARAN AFRICA AND LATIN AMERICA COUNTRIES. (Published)
The issue of debt crisis and management have constituted major challenges to the developing economies of the world. This paper has x-rayed issues of external debt accumulations and management strategies adopted by developing countries using Nigeria, Ghana and Brazil economies. The study covers 2002-2011 and reviews the issues that led to the debt accumulations countries and how they have managed the crisis via policy formulation and implementations. This work is both conceptual and empirical. Data were gathered through of the economic statistics releases of relevant agencies and reveiw records sourced via the internet and other scholarly publications relevant to the topic. The study attributed the debt crisis in these nations primarily to mismanagement of credit facilities, weak economic base, overdependence on foreign aids, weak debts contractual agreements and ineffective debt managements strategies. The paper recommends among other things that developing economies should place less emphasis on external borrowings as most of the credits are given under very harsh conditions, emphasis should be placed on prudent resource management. The government should rather pursue deliberate policies that will ensure the diversification of their economy by developing other productive sectors of the economies, while external debts should be seen as a last resort and must be contracted to finance only self- sustaining projects that will stimulate real sector and other factors of production needed to guarantee enduring economic development.
Keywords: Debt Crisis, Debt Management Strategies, Developing Economies, External Debt