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Nigeria’s Domestic Public Debts and Economic Development

Author

Listed:
  • Opara Ihunna Victoria

    (Department of Financial Management Technology, Federal University of Technology, Owerri)

  • Nzotta Samuel Mbadike

    (Department of Financial Management Technology, Federal University of Technology, Owerri)

  • Kanu Success Ikechi

    (Department of Banking and Finance, Faculty of Social and Management Sciences, Eastern Palm University, Ogboko Ideato,P.M.B 6, Orlu Imo State, Nigeria)

Abstract

This study investigates the effect of Nigeria’s domestic public debt on economic development of Nigeria spanning from 1981-2018. This is in response to the doubts being raised in some quarters as to whether the continuous increase in domestic debt over the years has led to the economic development of Nigeria as the former has been known to influence the later if well harnessed and executed. The secondary data used in the study were sourced from Central Bank of Nigeria Statistical Bulletin, Debt Management Office of Nigeria, World Bank Development Indicators and United Nations Development Program. The study made use of Ordinary Least Square Regression tools to determine the statistical relationship between Nigeria’s domestic public debt profile and Human Development Index as well as private sector investment. The outcome of study in the first model showed that domestic debt servicing and state governments’ domestic debts are significantly related to economic development. On the other hand, Federal domestic debt and State domestic debt are significantly related to private sector investment. The study therefore recommends that government should be cautious in her domestic borrowing policy given that servicing debt always becomes a burden to the sustainability of economic gains, in addition to its tendency of crowding-out private sector investment in Nigeria.

Suggested Citation

  • Opara Ihunna Victoria & Nzotta Samuel Mbadike & Kanu Success Ikechi, 2021. "Nigeria’s Domestic Public Debts and Economic Development," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 7(5), pages 7-22, July.
    • Handle: RePEc:mgs:ijmsba:v:7:y:2021:i:5:p:7-22
    DOI: 10.18775/ijmsba.1849-5664-5419.2014.75.1001
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    References listed on IDEAS

    as
    1. Vratislav Izák, 2014. "Private and Public Debt," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2014(1), pages 4-21.
    2. Mr. Michael Kumhof & Mr. Evan C Tanner, 2005. "Government Debt: A Key Role in Financial Intermediation," IMF Working Papers 2005/057, International Monetary Fund.
    3. James Sunday Kehinde, 2012. "Debt and Debt Volatility: Effect on Economic Growth in Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(2), pages 325-329.
    4. Phillips, P C B, 1987. "Time Series Regression with a Unit Root," Econometrica, Econometric Society, vol. 55(2), pages 277-301, March.
    5. James Sunday Kehinde, 2012. "Debt and Debt Volatility: Effect on Economic Growth in Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(2), pages 325-329, June.
    6. Mr. S. M. Ali Abbas & Mr. Jakob E Christensen, 2007. "The Role of Domestic Debt Markets in Economic Growth: An Empirical Investigation for Low-Income Countries and Emerging Markets," IMF Working Papers 2007/127, International Monetary Fund.
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    More about this item

    Keywords

    Domestic debts; Economic development; Human development index; Debt servicing; Private sector investment.;
    All these keywords.

    JEL classification:

    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General

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