Debt and Sustainable Development in Nigeria (1990-2021)

Abstract

The study investigated the sustainability of external debt on economic development in Nigeria from 1990-2021 using secondary data sourced from CBN publications. Descriptive statistics, OLS regression, unit root test, and appropriate length criteria were used to ensure the reliability and validity of the model. The model was estimated using ARDL. The unit root test (ADF) shows that GDP, debt growth (DEG) and export debt ratio (EXR) are stationary at level I(o) while domestic debt (DOD), export (EXP), external debt (EXD), debt overhang (DO)  are stationary at first difference I(1). The ECM shows that the short-run disequilibrium is corrected at a speed of 75.7% and that the economy will fully adjust to its long-run equilibrium after 2 years. The  ARDL of the estimated parameters that the explanatory variables explained about 76% variation in the dependent variable and the whole model was found to be statistically significant (P = 0.000).

The result indicated that external debt and debt overhang have a negative effect on sustainable development in Nigeria. The study recommends improvement in debt management, increasing internally generated revenue, revenue, prioritising investment for sustainable development, and negotiating favorable loan terms.