Effect of Rising Public Debt on Growth of Agricultural and Non-Agricultural Sectors in Nigeria

This study explores the growth effect of public debt on the growth of agricultural and non-agricultural sectors as well as the aggregate economy. This investigation is imperative because the rising public debt in Nigeria may not have uniform implication on growth across sectors and the economy at large. The data for the analysis was sourced from the World Bank (WB), World Development indicators (WDI) covering the period of 1980 to 2021. The results using the Fully Modified Ordinary Least Squares (FMOLS) show that public debt, exports, and inflation have a statistically significant negative effect on growth in Nigeria while population growth has a significant positive effect on growth in Nigeria. However, the relationship between imports and GDP in Nigeria is not statistically significant. The result also shows that public debt exerts a significant negative effect on agricultural and industrial growth, while its effect on services growth is not significant. The study submitted that public debt exerts a significant adverse effect on growth in Nigeria. However, when looking at the sector-specific effect, the effect of public debt remains significant and negative for both agricultural and industrial sectors implying that higher levels of public debt are associated with lower growth in these two sector while in the services sector public debt does not show a significant effect. The study recommended the need to implement strong fiscal discipline and progressive tax system rather than borrowing to reduce public debt significantly and promote sectoral development.