Keywords
Gross domestic product
ADF
Internal debt
Cointegration
Abstract
This study examined the impact of external debt on economic growth in Nigeria between 1990 and 2025. The primary objective was to analyze the impact of public debt on Nigeria's real GDP growth rate and to evaluate the significance of infrastructure in driving economic growth. Time series data for the study were sourced from the Central Bank of Nigeria Statistical Bulletin, Debt Management Office, and the World Bank. The unit root tests- the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests were used to assess the stationarity of the variables, while the cointegration tests were conducted to determine the long-run relationships among the variables. The findings revealed that external debt has a significant negative impact on Nigeria's economic growth, while internal debt showed no significant impact. Infrastructure demonstrated a significant positive impact on economic growth. The study concluded that prudent external debt management and strategic infrastructure are critical for fostering sustainable economic growth in Nigeria. Arising from the findings, the researcher therefore recommended that; Policymakers should prioritize borrowing from concessional sources to minimize the external debt burden, place an embargo on new loans, and implement stringent debt management policies. Developing a robust domestic debt market through regulatory enhancements and private sector incentives can provide a stable funding source for developmental projects. Additionally, strategic investments in critical infrastructure sectors, supported by public-private partnerships (PPPs), can address bottlenecks and encourage foreign direct investments.
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