External Debt and Economic Growth in Nigeria

ABSTRACT This study reviewed the External Debt and Economic Growth in Nigeria with specific emphasis on Nigeria Over the period of 1985-2014. One major problem of this study is under development of the Nigeria Economy. An objective of the study is to measure the impact of external debt on the Growth of the nation. The theoretical view sees External debt as fiscal policy instrument which fills the savings Gap. By extension, external debt supplements Government external reserves and sustainable economic growth. In Empirical result, borrowings should become an option only when high priority projects are being considered and borrowed fund should be strictly monitored and evaluated to ensure they are used for the purpose for which they are borrowed. The Research design used in this study is the ex-post facto as method of design. The ordinary least square multiple regression analytical method was- used to analyze the results where GDP as the dependent variable and multilateral debt, Paris club debt, London club debt, promissory notes and others debt on the other hand were the independent variables. Student T-test and Pearson correlation was used to test the hypotheses. The analysis of the data revealed that all the forms of external debts contributed towards the growth of the GDP, the Pearson correlation explained that GDP had an inverse relationship with Paris club debt and Promissory notes while the dependent variable had a direct relationship with the rest of the independent variables. The hypotheses tested revealed that all the independent variables have a positive impact and are also significant to the effect of the dependent variable there by rejecting the null hypotheses and accepting the alternate hypotheses. The study concluded that external debts have a significant impact on the economic growth in Nigeria and therefore recommends that there should be an improvement in the management of these external debt borrowings towards sustainable growth.