NIGERIA’S DOMESTIC AND EXTERNAL DEBT: AN ASSESSMENT OF BORROWINGS ON THE POLITICAL ECONOMY OF NIGERIA

Nwafor, Alphonsus Onyeachonam and Ngwoke, Ogechukwu Maria (2020) NIGERIA’S DOMESTIC AND EXTERNAL DEBT: AN ASSESSMENT OF BORROWINGS ON THE POLITICAL ECONOMY OF NIGERIA. Economics And Social Sciences Academic Journal, 2 (3). pp. 1-12. ISSN 5282 -0053

Text Alphonsus & Oge.pdf Download (523kB)

Abstract

The rationale for this paper is to establish the relationship between economic growth, external debt and domestic debt in Nigeria. Debt has become inevitable phenomenon in Nigeria, despite its oil wealth. This paper therefore is set to investigate the impact of external debt, and domestic debt on economic growth in Nigeria. A good performance of an economy in terms of per capita growth may therefore be attributed to the level of domestic debt and not on the level of external debt in the country; therefore external debt is seen as inimical to the economic progress of a country. The paper found that domestic debts if properly manage can lead to high growth level. A major policy implication of this result is that concerted effort be made by policy makers to manage the debt effectively by channeling them to productive activities (real sector) so as to increase the level of output in Nigeria, hence achieving the desire level of growth. The paper found that domestic debts if properly manage can lead to high growth level. A major policy implication of this result is that concerted effort be made by policy makers to manage the debt effectively by channeling them to productive activities (real sector) son as to increase the level of output in Nigeria, hence achieving the desire level of growth. Another policy implication of the study is that most developing countries contract debt for selfish reasons rather than for the promotion of economic growth through investment in capital formation and other social overhead capital. Thus, the paper also recommends that government should rely more on domestic debt in stimulating growth rather than external debt. The methods of data collection were done through documentary source, and the data were analyzed through the use tables and graphs for further illustrations. The study recommended the following The policy implication of this result is that domestic debt rather than external debt will stimulate economic growth in Nigeria. This is because the repayment of the principal and interest on such internal debt is a reinvestment into the domestic which would usually have a chain investment effect on the domestic economy. But with respect to external debt, more resources will be needed to repay and service the debt and this would impair the positive effect of this debt on economic growth. Thus, the paper recommends that government should rely more on domestic debt in stimulating growth rather than external debt. Government should formulate policies aimed at encouraging domestic savings vis-à-vis domestic investment. The need for borrowing is due to gap between domestic savings and investment; therefore, bridging the gap can be a likely solution to Nigeria’s debt accumulation.

Item Type:	Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Divisions:	Faculty of Management and Social Sciences
Depositing User:	mrs chioma hannah
Date Deposited:	10 Apr 2020 19:46
Last Modified:	10 Apr 2020 19:46
URI:	http://eprints.gouni.edu.ng/id/eprint/2567

Actions (login required)

View Item