Public Debt and Infrastructural Development in Nigeria; An Empirical Investigation

This study examines the impact of public debt on infrastructural development in Nigeria from 1990-2022, as debt load has become one of the most critical impediments limiting recovery and growth on the continent, but if these debts both internally and externally sourced are being channelled and utilized effectively to improvement of public infrastructure might influences level of the economy, hence contentious in macroeconomics theories. Relying on data from the World Bank Development Indicators and the outcome of various pre-estimation tests ; the Augmented Dickey Fuller and Phillip Peron method were employed to determine the stationarity trend in the data, the correlation analysis to test the relationship between the variables, the study adopted the Auto Regressive Distributive Lag Model (ARDL) estimation technique to determine the relationship between public debt (proxied by domestic debt and external debt) and capital expenditure a proxy for public infrastructure in Nigeria. The long-run results revealed that external debt and internal debt is insignificant but have positive impact of capital expenditure in Nigeria, which implies the misallocation of funds to the development of infrastructures in the country. The study further revealed that the debt service payment and Inflation rate has negative impact of the capital expenditure at the current Lag but has positive association at Lag 1 and not statistically significant at both Lag. The study conclude that public debt positively impact infrastructural development in Nigeria. The research recommend that government should ensure that debts incurred are channel towards the specific and identified infrastructural productive projects and not just for solving short run problems