SIAR-Global Jou nal o Economics, Finance & Accoun ing (GJEFA)
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Nige ia’s Deb Conund um: An App aisal o Deb Managemen S a egies and hei
Impac on Economic G ow h
1Mahmood Omeiza Adeiza & 2Selim Mayowa Onawola
Depa men o Accoun ing, Facul y o Managemen Sciences, Usmanu Dan odiyo Uni e si y,
Soko o 1[email p o ec ed], [email protected] +2348067136847,
+2348097723017 2onawolamayow[email p o ec ed] +2348142493729
ABSTRACT
This s udy in es iga ed he ela ionship among deb managemen s a egies and economic g ow h
in Nige ia o e a 34-yea pe iod be ween 1990 and 2023. Nige ia’s pe sis en deb accumula ion,
hea y deb -se icing obliga ions, and iscal ulne abili y aise p essing ques ions abou he
e ec i eness o exis ing s a egies in os e ing sus ainable de elopmen . While bo owing
po en ially s imula ed g ow h by b idging esou ce gaps, he coun y’s ising deb p o ile —
combined wi h exchange a e ola ili y, high in e es a es, and weak go e nance —gene a ed
mo e conce ns abou deb sus ainabili y. The speci ic objec i es o his s udy we e o examine he
e ec o ex e nal deb on economic g ow h, he impac o deb se icing on g ow h, and he
mode a ing e ec o ins i u ional quali y on he ela ionship be ween Nige ia’s deb and economic
g ow h. Seconda y da a o mac oeconomic indica o s such as GDP g ow h, ex e nal and
domes ic deb , deb se icing, exchange a e, and in e es a e we e sou ced om he Cen al Bank
o Nige ia, Deb Managemen O ice, Wo ld Bank, and In e na ional Mone a y Fund (IMF). The
Au o eg essi e Dis ibu ed Lag (ARDL) model was employed o cap u e bo h sho - un and long-
un dynamics among he a iables. The empi ical analyses e ealed h ee key indings. Fi s ,
ex e nal deb exe ed a signi ican nega i e impac on g ow h in bo h he sho and long un,
unde sco ing he isks o o e eliance on o eign bo owing amid exchange a e dep ecia ion and
global in e es a e p essu es. Second, deb se icing obliga ions se e ely cons ained economic
g ow h, as he di e sion o e enues (o en exceeding 90% o ede al income) o deb epaymen
c owded ou public in es men s in educa ion, heal hca e, and in as uc u e. This bu den was
u he ampli ied by exchange a e dep ecia ion and high domes ic in e es a es. Thi d,
ins i u ional quali y was ound o signi ican ly mode a e he deb –economic g ow h ela ionship
as s ong go e nance, anspa ency, and accoun abili y mi iga ed he ad e se e ec s. Howe e ,
weak ins i u ions exace ba ed iscal ulne abili ies hus, he s udy ecommends; cau ious and
s a egic bo owing, enhanced domes ic e enue mobiliza ion, and s eng hened ins i u ional
amewo ks.
Keywo ds: Deb Managemen , Deb Se icing, Economic G ow h, Ex e nal Deb , Ins i u ional
Quali y, Nige ia
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INTRODUCTION
Public deb has long been a c i ical ins umen o inancing na ional de elopmen , pa icula ly in
de eloping coun ies whe e e enue gene a ion is o en insu icien o mee in as uc u al and
social needs. When judiciously u ilized, bo owing can s imula e economic g ow h by p o iding
he capi al needed o in es men in key sec o s. Howe e , he sus ainabili y o public deb and he
s a egies employed o manage i emain subjec s o in ense deba e among policymake s and
schola s alike. In Nige ia, deb managemen has e ol ed signi ican ly o e he yea s. The Deb
Managemen O ice (DMO), es ablished in 2000, ma ked a u ning poin in he o maliza ion o
deb policies aimed a ensu ing sus ainabili y.
No ably, he 2005 Pa is Club deb o gi eness ini ia i e p o ided Nige ia wi h a iscal ese ha
educed ex e nal deb s ock by o e $18 billion (app oxima ely ₦2.34 illion) and empo a ily
alle ia ed he coun y’s deb bu den. Since hen, successi e go e nmen s ha e adop ed a ious
deb managemen s a egies, including domes ic bo owing h ough easu y bills and bonds,
ex e nal bo owing h ough Eu obonds and concessional loans, deb e inancing, deb
es uc u ing, and he issuance o Sukuk Bonds o inance in as uc u e. Despi e hese measu es,
Nige ia’s deb ajec o y aises g owing conce ns. The o al public deb s ock s ood a ₦97.3
illion (app oxima ely $108 billion) as o Decembe 2023, wi h deb se icing obliga ions
consuming o e 90% o ede al e enue (Deb Managemen O ice, 2023). This ala ming end
aises ques ions abou he e ec i eness o cu en deb managemen s a egies in os e ing
economic g ow h while main aining iscal sus ainabili y.
The challenges a e compounded by mac oeconomic ola ili y, go e nance cons ain s, exchange
a e dep ecia ion, and an inc easing eliance on non-concessional loans. P e ious s udies ha e
explo ed he ela ionship be ween public deb and economic g ow h in Nige ia, bu hei indings
emain inconclusi e. While some schola s a gue ha deb suppo s g ow h when p ope ly
managed, o he s highligh i s po en ial o c owd ou public in es men and cons ain de elopmen .
Gi en hese mixed pe spec i es and he e ol ing deb landscape, he e is a need o a holis ic
e alua ion o deb managemen s a egies and hei implica ions o Nige ia’s economic
pe o mance.
S a emen o he Resea ch P oblem
Nige ia's ising public deb and deb se icing obliga ions ha e aised conce ns abou economic
g ow h sus ainabili y. Despi e e o s o manage deb , exis ing li e a u e p o ides mixed e idence
on he ela ionship be ween public deb and economic g ow h, pa icula ly in he Nige ian con ex .
This s udy add esses his gap by examining he e ec o ex e nal deb on economic g ow h in
Nige ia; analyzing he impac o deb se icing on economic g ow h in Nige ia; and assessing
whe he ins i u ional quali y mode a es he ela ionship be ween deb managemen and economic
g ow h in Nige ia.
Signi icance, Scope and Limi a ions o he S udy
This s udy is signi ican o se e al easons. Fo policymake s, i o e s empi ical e idence as
suppo o he e ec i eness o Nige ia’s deb managemen s a egies and hei implica ions o
economic g ow h. The indings p o ide a guide o u u e bo owing decisions, ensu ing ha deb
con ibu es posi i ely o de elopmen wi hou unde mining iscal sus ainabili y. Fo schola s and
esea che s, his wo k con ibu es o he exis ing body o knowledge by add essing key gaps in
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li e a u e, such as he in eg a ion o ex e nal and domes ic deb in a uni ied amewo k and he
conside a ion o ins i u ional quali y as a mode a ing ac o . In addi ion, he s udy p o ides a basis
o compa a i e s udies in o he de eloping coun ies wi h simila deb p o iles, while i gi es a
con ex ual unde s anding o Nige ia’s deb dynamics - helping o in o m in e na ional
de elopmen pa ne s and lende s on be e lending p ac ices and deb sus ainabili y analyses.
The scope o his s udy co e s Nige ia’s public deb managemen s a egies and hei impac on
economic g ow h o e a 34 yea pe iod ending 2023. Wi h a ocus on key a iables including
ex e nal deb , domes ic deb , deb se icing, exchange a e, and in e es a e, he s udy also
conside s he mode a ing e ec o ins i u ional quali y on he ela ionship be ween public deb and
economic g ow h. The s udy analyses ends and ela ionships wi hin he Nige ian economy du ing
his pe iod using ime-se ies seconda y da a.
The cons ain s o his s udy a e due o se e al ac o s. Fi s , he eliance on seconda y da a limi s
he esea che ’s abili y o ensu e absolu e accu acy, as da a quali y depends on he epo ing
agencies. Secondly, he s udy does no accoun o all socio-poli ical ac o s ha may in luence
deb managemen ou comes, such as poli ical ins abili y o egional dispa i ies. Thi d, he scope is
con ined o Nige ia, limi ing he gene aliza ion o indings o o he coun ies. Despi e hese
limi a ions, he me hodology adop ed ensu es ha he esul s emain alid and ele an wi hin he
con ex o policy and academic discou se in Nige ia.
Resea ch Me hodology and Design
In any empi ical s udy, he me hodological app oach se es as a ounda ion o achie ing he s a ed
esea ch objec i es. I is h ough a clea ly de ined esea ch me hodology ha he esea ch p oblem
is sys ema ically in es iga ed, and meaning ul conclusions a e d awn. In he con ex o Nige ia’s
pe sis en deb challenges and i s implica ions o economic g ow h, selec ing an app op ia e
me hodology is no only essen ial bu also deeply consequen ial. Gi en he mul i ace ed na u e o
deb managemen and he dynamic s uc u e o mac oeconomic indica o s in de eloping
economies, a me hodological amewo k ha emphasizes da a quali y, sound econome ic
modeling, and empi ical alidi y becomes impe a i e. This me hodology, he e o e, ou lines he
guiding amewo k unde which his s udy was ca ied ou . I co e s he philosophical and
analy ical choices made o examine he ela ionship be ween deb managemen s a egies and
Nige ia’s economic pe o mance o e he pas decades.
The app oach aken in his s udy has been in o med by exis ing gaps in li e a u e, pa icula ly he
na u e, me hodology, and heo e ical in eg a ion seen in p io esea ch. Hence, he esea ch design,
da a sou ces, sampling scope, analy ical echniques, and a iable measu emen s ha e all been
delibe a ely chosen o b idge hese gaps and ensu e ha indings a e bo h c edible and policy-
ele an . Fu he mo e, conside a ion has been gi en o Nige ia’s unique inancial his o y (one
ma ked by cycles o bo owing, es uc u ing, and e o m) hus equi ing a me hodology lexible
enough o accoun o long- and sho - e m dynamics. The esea ch p ocess has also been guided
by p ac icali y and ealism, wi h a conscious e o o ensu e ha each s ep aken is based on
e i iable da a, and can be eplica ed. Thus, his esea ch me hodology se es as a g oundwo k o
e en simila s udies by jus i ying how he s udy was conduc ed, as well as explaining why such an
app oach is mos sui able o he complex subjec o deb managemen and economic g ow h in
Nige ia.
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The esea ch design adop ed in a s udy plays a c i ical ole in shaping he s uc u e, di ec ion, and
c edibili y o i s indings. In his pa icula in es iga ion, he need o explo e he ela ionship
be ween deb managemen s a egies and economic g ow h in Nige ia has necessi a ed a design
ha no only accommoda es he his o ical na u e o he da a bu also suppo s he quan i a i e
analysis o mac oeconomic ela ionships o e ime. Acco dingly, he ex-pos ac o esea ch design
was adop ed, as his app oach is pa icula ly i ing o s udies ha analyze a iables which ha e
al eady occu ed and canno be manipula ed o in luenced by he esea che (Ke linge & Rin ,
1986). Ra he han a emp ing o con ol a iables o in oduce expe imen al ea men s, his s udy
adop s a e ospec i e app oach by examining and e alua ing he impac o deb - ela ed policy
s a egies on Nige ia’s economic pe o mance o e he pe iod 1990 o 2023.
The choice o his design has also been in luenced by he objec i e o e alua e cause-and-e ec
ela ionships. The ex-pos ac o design allows o s a is ical echniques o be employed in
examining he deg ee and di ec ion o associa ions be ween key a iables such as deb le els, deb
se icing, and economic g ow h. In his case, eal GDP se es as a p oxy o economic g ow h,
while deb s uc u e, se icing a ios, and policy in e en ions a e ea ed as explana o y a iables.
Mo eo e , his design is pa icula ly sui able o he applica ion o ime-se ies econome ic
models, especially he Au o‑Reg essi e Dis ibu ed Lag (ARDL) app oach which is widely
ecommended o i s obus ness in small ep esena ions and i s abili y o accommoda e a iables
wi h mixed o de s o in eg a ion (Pesa an & Shin, 1999; Haug, 2002; Na ayan & Smy h, 2005).
By ocusing on his o ical da a om 1990 o 2023, he esea ch design suppo s bo h sho - un and
long- un analysis, making i possible o de i e balanced pe spec i es ha go beyond s a ic
ela ionships.
Me hods o Da a Collec ion and Analyses
This s udy elies on seconda y da a ob ained om au ho i a i e na ional and in e na ional sou ces,
including he Cen al Bank o Nige ia, Deb Managemen O ice, Na ional Bu eau o S a is ics,
Wo ld Bank, and In e na ional Mone a y Fund. The da a span om 1990 o 2023, cap u ing
a ious economic cycles, deb policy shi s, and iscal in e en ions. Va iables such as eal GDP,
domes ic and ex e nal deb s ocks, deb se icing a ios, in la ion a e, exchange a e, and in e es
a e ha e been sou ced o examine Nige ia's deb p o ile in ela ion o economic pe o mance. The
use o seconda y da a is jus i ied by he na u e o he esea ch objec i es, which aim o in es iga e
mac oeconomic ela ionships o e ime.
The s udy employs he Au o-Reg essi e Dis ibu ed Lag (ARDL) modeling app oach o analyze
he long- e m e ec s o deb managemen s a egies on economic g ow h. The ARDL me hod
o e s lexibili y by allowing he inclusion o a iables wi h mixed le els o s abili y and is obus
o ime-se ies econome ic analysis. The da a analysis p ocess in ol es a s uc u ed sequence,
including desc ip i e s a is ics, uni oo es s, lag leng h selec ion c i e ia, es ima ion o sho - un
and long- un coe icien s, and pos -es ima ion diagnos ic es s. The ARDL me hodology
complemen s he s udy's esea ch design and da a s uc u e, enhancing he alidi y and policy
signi icance o he esul s. I p o ides impo an insigh s in o how di e en componen s o
Nige ia's deb managemen s a egies in luence economic g ow h o e ime, esponding di ec ly
o he me hodological gaps obse ed in p io li e a u e.
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Measu emen o Va iables
The e ec i eness o any empi ical analysis is la gely dependen on how well he key a iables a e
de ined, measu ed, and linked o he esea ch objec i es. In his s udy, a iables ha e been
ca e ully selec ed and ope a ed based on hei ele ance o he opic o deb managemen s a egies
and economic g ow h in Nige ia. Each a iable has been measu ed using eliable mac oeconomic
indica o s sou ced om es ablished ins i u ional da abases, ensu ing ha he da a e lec eal
economic beha io and policy ou comes. The dependen a iable in he s udy is economic g ow h,
which is cap u ed using he annual g ow h a e o Real G oss Domes ic P oduc (RGDP). This
measu e is widely accep ed as a s anda d indica o o economic pe o mance and allows o
compa abili y ac oss ime.
The independen a iables ep esen a ious dimensions o deb and i s managemen , including:
ex e nal deb , domes ic deb , deb se icing, exchange a e, and in e es a e. Ex e nal Deb (EXD):
measu ed in U.S. dolla s o Nige ian nai a as epo ed by he Deb Managemen O ice (DMO)
and Wo ld Bank. I e lec s he o al ou s anding obliga ions owed o o eign c edi o s as a
Decembe 31s o e e y yea (DMO, 2023; Wo ld Bank, 2023). Domes ic Deb (DOD): measu ed
in local cu ency, his ep esen s he po ion o na ional deb owed o in e nal inancial ins i u ions,
ypically h ough go e nmen secu i ies such as easu y bills and bonds as a Decembe 31s o
e e y yea (CBN, 2023).
Deb Se icing (DS): e e s o he annual deb epaymen obliga ions (in e es plus p incipal),
ypically exp essed as a pe cen age o GDP o o al e enue, o cap u e he iscal bu den o deb
epaymen (Budge O ice, 2024). Exchange Ra e (EXR): ep esen s he o icial nai a- o-dolla
a e, which a ec s deb sus ainabili y and epaymen capaci y, pa icula ly o o eign-
denomina ed deb (IMF, 2023). In e es Ra e (INT): e lec s he p e ailing mone a y policy a e o
lending a es in Nige ia, in luencing bo h he cos o bo owing and he e ec i eness o deb
managemen policies (CBN S a is ical Bulle in, 2023).
Each o hese independen a iables is selec ed o p o ide pe cep ion abou he s uc u al, inancial,
and policy-o ien ed aspec s o deb managemen in Nige ia. Thei ela ionships wi h RGDP will
be examined wi hin he ARDL amewo k o unde s and how bo h sho - e m policy adjus men s
and long- un iscal s a egies in luence economic g ow h. These measu emen s a e no only
consis en wi h exis ing empi ical li e a u e bu also ailo ed o add ess gaps p e iously iden i ied.
Pa icula ly, he need o disagg ega e deb ypes and inco po a e se icing e iciency in o he
analysis. Table 1 p o ides in o ma ion abou hese a iables and hei espec i e measu emen s
which ha e been adop ed wi h he dual pu pose o enabling obus empi ical analysis and ensu ing
alignmen wi h exis ing economic amewo ks o deb assessmen in de eloping economies.
Table 1: Measu emen and Desc ip ion o Va iables
Va iable
Desc ip ion
P oxy/Measu emen
Sou ce
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Ex e nal Deb
(EXD)
To al o eign deb s ock
owed by Nige ia o
ex e nal c edi o s.
To al ex e nal deb
(USD/NGN) as a
Decembe 31s yea ly.
Wo ld Bank (2023)
DMO (2023)
Domes ic Deb
(DOD)
To al in e nal deb owed
o local inancial
ins i u ions, ypically ia
easu y bills/bonds.
To al domes ic deb
(NGN) as a Decembe
31s yea ly.
CBN (2023)
DMO (2023)
Deb Se icing
(DS)
Annual epaymen o
p incipal and in e es on
public deb , indica ing
iscal bu den.
Deb se ice as % o
GDP o o al e enue
(annual measu e).
Budge O ice (2024)
Exchange Ra e
(EXR)
O icial nai a- o-dolla
exchange a e e lec ing
cu ency s abili y and
deb epaymen isks.
A e age annual
Nai a/USD a e.
IMF (2023)
CBN (2023)
In e es Ra e
(INT)
Mone a y policy a e o
lending a es e lec ing
cos o bo owing in
Nige ia.
A e age annual
mone a y policy a e
(MPR) o lending a e.
CBN S a is ical
Bulle in (2023)
LITERATURE REVIEW AND EMPIRICAL FRAMEWORK
The ela ionship be ween deb managemen and economic g ow h has been a subjec o igo ous
academic and policy deba es o decades, especially in de eloping economies like Nige ia whe e
public deb con inues o ise du ing ecu ing iscal de ici s. In many de eloping economies, deb
has been used as a ool o s imula e de elopmen by inancing in as uc u e, educa ion, heal hca e,
and o he capi al-in ensi e p ojec s ha may no be immedia ely sel -sus aining. Howe e , he
sus ainabili y and e ec i eness o his s a egy s ongly depend on how well such deb s a e
managed. Poo deb managemen s a egies such as ine icien bo owing, high se icing cos s,
and weak ins i u ional amewo ks can lead o mac oeconomic ins abili y, in la ion, cu ency
dep ecia ion, and e en ually, a nega i e impac on g ow h (Adesola, 2010).
Nige ia p esen s a compelling case o s udying deb managemen s a egies due o i s his o y o
ex ensi e bo owing (bo h ex e nal and domes ic) and i s epea ed encoun e s wi h deb c ises.
F om he pos -independence e a o he s uc u al adjus men pe iod o he 1980s, he deb elie
achie ed h ough he Pa is Club in 2005, and mo e ecen ly, he COVID-19-induced bo owing,
Nige ia's deb ajec o y e eals impo an lessons on he in e ac ion be ween iscal policy and
economic pe o mance. As o ecen yea s, despi e imp o ed access o capi al ma ke s, ques ions
emain ega ding he sus ainabili y o Nige ia’s deb and i s implica ions o long- e m economic
g ow h.
Concep ual Re iew
The concep ual e iew explo es key cons uc s aming he analysis, including deb , deb
managemen , deb managemen s a egies, and economic g ow h. Deb is a complex phenomenon
wi h bo h posi i e and nega i e impac s on a na ion's economy (Adesola, 2010). Acco ding o
Schula ick (2012), deb e e s o an obliga ion incu ed when one pa y ecei es esou ces om
ano he unde he ag eemen ha epaymen will occu in he u u e, o en wi h added in e es .
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Public deb ep esen s he accumula ed bo owings o a go e nmen , sou ced domes ically o
ex e nally (Reinha & Rogo , 2010).
E ec i e deb managemen aims o minimize bo owing cos s while keeping isks a accep able
le els. I in ol es a ious ools and s a egies, including deb es uc u ing, e inancing, in e es
a e swaps, and anspa en epo ing sys ems. In Nige ia, he Deb Managemen O ice (DMO)
plays a c i ical ole in planning and execu ing public deb s a egies. Howe e , conce ns emain
abou he pace a which deb has accumula ed, especially since 2015 when public deb nea ly
ipled in less han a decade.
Deb managemen s a egies a e c ucial o p omo ing economic s abili y and sus ainabili y. These
s a egies encompass policies and p ac ices aimed a acqui ing, s uc u ing, moni o ing, and
epaying public deb in a way ha minimizes cos s and isks. Key elemen s o deb managemen
s a egies include deb s uc u e decisions, deb e inancing, deb o gi eness and es uc u ing,
deb con e sion, deb sus ainabili y analysis, annual bo owing plans, and anspa ency and
epo ing.
Economic g ow h is he inc ease in he in la ion-adjus ed ma ke alue o goods and se ices
p oduced by an economy o e ime. G ow h can be d i en by mul iple ac o s, including capi al
accumula ion, labo o ce expansion, echnological inno a ion, and imp o ed ins i u ional quali y.
In de eloping coun ies like Nige ia, g ow h is o en d i en by public in es men , which elies
s ongly on go e nmen bo owing due o limi ed ax e enue and low domes ic sa ings. Deb
se icing e e s o he paymen o p incipal and in e es on a coun y's ex e nal and domes ic deb .
High deb se icing cos s can c owd ou go e nmen spending on social and de elopmen al
p io i ies, hinde ing economic g ow h. In Nige ia, deb se icing has become a g owing conce n,
wi h o e 70% o go e nmen e enue in some ecen yea s being used o se ice deb s. Thus,
e ec i e deb se icing equi es p uden iscal managemen , anspa ency, and consis en e enue
in lows.
The in e ela ionship be ween deb managemen and economic g ow h is c i ical. Sus ainable
economic g ow h equi es a s able mac oeconomic en i onmen , sound iscal policy, access o
c edi , and minimal dis o ions in esou ce alloca ion. I excessi e deb accumula ion leads o
in la iona y p essu e, exchange a e ins abili y, o in es o unce ain y, i may hinde he e y
g ow h i aims o suppo . The e o e, economic g ow h and deb managemen a e inex icably
linked in bo h heo y and p ac ice.
Theo e ical Re iew
Unde s anding he ela ionship be ween deb and economic g ow h necessi a es a e iew o
economic heo ies ha p o ide explana o y amewo ks o how deb a ec s mac oeconomic
pe o mance. The heo ies adop ed o his s udy a e he Deb O e hang, Dependency, and
Economic Base. The Deb O e hang Theo y (K ugman, 1988) posi s ha when a coun y’s deb
le el becomes excessi ely high, po en ial in es o s an icipa e u u e axa ion o aus e i y measu es
needed o epay he deb . As a esul , hey may be discou aged om in es ing, leading o a
educ ion in economic p oduc i i y. In essence, a la ge s ock o deb ac s like a ax on u u e ou pu ,
discou aging bo h domes ic and o eign in es men s. This heo y implies ha high public deb
le els can lead o educed economic g ow h, no jus due o he di ec iscal bu den bu also due o
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diminished in es o con idence and in es men in lows. In he case o Nige ian, his heo y has
been equen ly e e enced o explain why hea y deb accumula ion has no ansla ed in o
sus ained economic g ow h. Ins ead, high deb le els ha e some imes coincided wi h low
p oduc i i y and high unemploymen .
The Dependency Theo y a gues ha de eloping coun ies a e s uc u ally posi ioned o depend on
he economic policies, inancial sys ems, and esou ces o mo e ad anced economies. This
dependency is ein o ced h ough o eign loans, aid, and mul ina ional co po a ions. While such
ex e nal in lows may empo a ily s imula e g ow h, hey o en esul in long- e m dependence,
weakened domes ic indus ies, and economic ulne abili y. F om a deb managemen pe spec i e,
he heo y c i iques he bo owing p ac ices o coun ies like Nige ia, which ely hea ily on
ex e nal deb o inance de elopmen . The conce n is ha such deb o en comes wi h condi ions
and is used ine icien ly, leading o a cycle o bo owing and unde de elopmen .
The Economic Base Theo y cen e s on he ole o ex e nal income sou ce (such as expo s and
o eign in es men ) in d i ing egional o na ional g ow h. I posi s ha o a coun y o g ow, i
mus expand i s economic base by a ac ing ex e nal esou ces and con e ing hem in o
p oduc i e domes ic ou comes. When applied o deb , he heo y sugges s ha bo owing (as an
ex e nal in low) can con ibu e o g ow h only i i s eng hens he p oduc i e base o he economy.
In Nige ia, his means ha loans should be di ec ed owa d sec o s ha enhance p oduc i i y (like
in as uc u e, educa ion, and indus ial de elopmen ) a he han ecu ing expendi u e o
consump ion. When loans ail o expand he economic base, hey become a liabili y a he han a
ca alys o de elopmen .
E ec o Ex e nal Deb on Economic G ow h in Nige ia
The e ec o ex e nal deb on economic g ow h in Nige ia has been ex ensi ely s udied, wi h
mixed indings. Igbasan e al. (2024) ound ha ex e nal deb s ock has a posi i e and signi ican
long- e m e ec on g oss capi al o ma ion, indica ing ha inc eased ex e nal bo owing can
con ibu e o economic g ow h. Simila ly, Eyide and Nzewi (2018) e ealed ha ex e nal deb
exe s a signi ican bu dual e ec on economic de elopmen , being nega i ely ela ed o economic
de elopmen in he sho - un and posi i ely in he long- un. Howe e , Alagba and E e akeya
(2019) ound ha o eign deb con ibu es less and has a weake impac on economic g ow h, wi h
he bu den o deb se icing expenses ad e sely a ec ing g ow h. Yusu and Mohd (2021) also
ound ha ex e nal deb poses a long- e m g ow h impedimen , while i s sho - e m e ec s a e
g ow h-enhancing. These indings sugges ha ex e nal deb can ha e bo h posi i e and nega i e
e ec s on economic g ow h in Nige ia, depending on how i is managed.
Impac o Deb Se icing on Economic G ow h in Nige ia
The impac o deb se icing on economic g ow h in Nige ia has been consis en ly nega i e.
Igbasan e al. (2024) ound ha o al deb se icing exe s a nega i e and signi ican long- e m
in luence on economic de elopmen , sugges ing ha high deb epaymen s may hinde economic
g ow h. Alagba and E e akeya (2019) also ound ha high deb se icing cos s hinde economic
expansion. Yusu and Mohd (2021) e ealed ha deb se ice paymen s consis en ly e a d g ow h,
indica i e o a deb o e hang phenomenon. Ogbonna e al. (2021) ound ha deb se ice paymen s
signi ican ly in luence economic g ow h, bu he ela ionship is nega i e. These indings sugges
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ha deb se icing is a signi ican cons ain on economic g ow h in Nige ia, and ha educing
deb se icing cos s could ee up esou ces o mo e p oduc i e uses.
Ins i u ional Quali y Mode a es s Rela ionship Be ween Deb Managemen and Economic
G ow h in Nige ia
The ole o ins i u ional quali y in mode a ing he ela ionship be ween deb managemen and
economic g ow h in Nige ia has been highligh ed in he li e a u e. Ajayi e al. (2021) ound ha
e ec i e deb s a egies con ibu ed posi i ely o de elopmen du ing mili a y ule, bu he impac
was weake du ing ci ilian ule, which was a ibu ed o poo managemen , indisc imina e
bo owing, and inadequa e ins i u ional checks. This sugges s ha ins i u ional quali y plays a
c ucial ole in ensu ing ha deb is used p oduc i ely and ha deb managemen s a egies a e
e ec i e in p omo ing economic g ow h. The li e a u e highligh s he need o s onge ins i u ions
and mo e e ec i e deb managemen p ac ices o ensu e ha deb is used o p omo e economic
g ow h and de elopmen in Nige ia.
DATA PRESENTATION AND ANALYSES
Con ex ualizing Nige ia’s deb dynamics wi hin he b oade mac oeconomic en i onmen , he
choice o he 1990–2023 pe iod is pa icula ly signi ican , as i cap u es c i ical episodes in
Nige ia’s iscal his o y, including he 2005 deb elie , he oil p ice boom yea s, he 2016 ecession,
and he economic dis up ions o he COVID-19 pandemic. In line wi h he me hodology, he
p esen a ion o esul s ollows a sys ema ic app oach—s a ing wi h desc ip i e s a is ics o
summa ize he key ea u es o he da a, ollowed by econome ic es ima ions o es he hypo heses
o he s udy. This s uc u e ensu es ha he indings a e g ounded in bo h s a is ical e idence and
heo e ical easoning, o e ing a obus ounda ion o he discussions and policy implica ions.
Da a P esen a ion
Table 2 below summa izes key mac oeconomic indica o s o Nige ia be ween 1990 and 2023.
These a iables we e sou ced om epu able da abases including he Wo ld Bank Wo ld
De elopmen Indica o s (WDI), In e na ional Mone a y Fund (IMF), Cen al Bank o Nige ia
(CBN) S a is ical Bulle in, and he Deb Managemen O ice (DMO) Nige ia.
The mac oeconomic da a o Nige ia spanning om 1990 o 2023 e eals impo an ends ha
ame he dynamics be ween deb managemen and economic g ow h. O e his pe iod, Nige ia’s
ex e nal deb s ock exhibi ed no able luc ua ions. Following he 2005 Pa is Club deb elie ,
ex e nal deb expe ienced a sha p decline, o e ing he coun y signi ican iscal space o
economic s abiliza ion and g ow h. Howe e , his espi e was sho -li ed as ex e nal bo owings
began o ise s eadily om 2015 onwa ds. By 2023, Nige ia’s ex e nal deb had eached an
ala ming le el o $42.50 billion, a e lec ion o he go e nmen ’s enewed dependence on o eign
c edi o s o inance ecu en inancial de ici s. This upwa d ajec o y in ex e nal bo owing has
exposed he economy o heigh ened exchange a e isks, pa icula ly as he nai a dep ecia ed
d as ically om ₦7.39/$1 in 1990 o ₦899/$1 in 2023. The s eep dep ecia ion has ampli ied he
cos o se icing o eign-denomina ed deb , unde mining Nige ia’s iscal s abili y.
Table 2: Summa y o Mac oeconomic Va iables in Nige ia (1990–2023)
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The indings o his s udy p o ide h ee (3) c i ical pe spec i es abou he ela ionship be ween
deb managemen s a egies and economic g ow h in Nige ia, o e ing bo h empi ical alida ion
and esh pe spec i es on an issue ha has long domina ed iscal policy discou se. Fi s , he
obse ed nega i e ela ionship be ween ex e nal deb and economic g ow h in Nige ia ein o ces
he posi ion o Reinha and Rogo (2010), who a gue ha high le els o public deb , pa icula ly
in de eloping economies, can lead o slowe g ow h a es due o deb o e hang and inc eased
ulne abili y o ex e nal shocks. In Nige ia’s con ex , ex e nal bo owing has o en been plagued
by ine icien u iliza ion, exchange a e dep ecia ion, and high dependency on commodi y expo s,
making epaymen bu dens mo e se e e. This aligns wi h he ea lie wo ks o Iyoha (1999) and
Adegbi e e al. (2013), who no ed ha excessi e ex e nal deb c owds ou p oduc i e in es men
and s i les g ow h.
Second, he inding ha deb se icing obliga ions nega i ely impac economic g ow h is
consis en wi h K ugman’s (1988) deb o e hang hypo hesis. Nige ia’s iscal posi ion has become
inc easingly p eca ious, wi h deb se icing consuming o e 90% o ede al e enue in 2023
(Budge O ice, 2024). This con i ms he conce ns o schola s like Ajayi and Oke (2012), who
highligh ed ha la ge deb se icing obliga ions di e sca ce esou ces om g ow h-inducing
sec o s such as in as uc u e, educa ion, and heal hca e. The e idence unde sco es he iscal ade-
o s associa ed wi h deb accumula ion and alida es he a gumen ha sus ainable deb le els a e
c ucial o inclusi e g ow h.
In e es ingly, while domes ic deb showed a mo e signi ican e ec on g ow h, he esul s indica e
ha i s impac is no uni o mly posi i e. Mode a e domes ic bo owing has suppo ed iscal
ope a ions and inanced capi al p ojec s, bu excessi e accumula ion in oduces in la iona y
p essu es and c owds ou p i a e sec o in es men . This obse a ion pa allels he indings o
Essien and Onwioduoki (1998), who no ed ha a balance mus be s uck be ween inancing needs
and mac oeconomic s abili y. The s udy also highligh s he c i ical ole o ins i u ional quali y in
mode a ing he deb -g ow h ela ionship. S ong go e nance, iscal anspa ency, and e ec i e
public inancial managemen mi iga e he ad e se e ec s o deb accumula ion. This inding
esona es wi h No h’s (1990) ins i u ional heo y, which emphasizes he impo ance o
go e nance s uc u es in de e mining economic ou comes. In he Nige ian con ex , ins i u ional
weaknesses such as co up ion and poo p ojec moni o ing ha e unde mined he de elopmen al
impac o bo owing, a challenge echoed in Okonjo-Iweala’s (2018) e lec ions on Nige ia’s iscal
policy managemen .
Thi d, mac oeconomic a iables like exchange a e and in e es a es we e iden i ied as ampli ie s
o deb dis ess. Exchange a e ola ili y in la es ex e nal deb epaymen bu dens, while high
domes ic in e es a es aise he cos o se icing local deb s. This suppo s he indings o Obadan
and Uga (1997), who s essed ha mac oeconomic ins abili y wo sens deb sus ainabili y
challenges.
SUMMARY, CONCLUSION, AND RECOMMENDATIONS
The esul s unde sco e he complexi y o deb managemen in Nige ia. While bo owing emains
an essen ial iscal ool, i s e ec i eness is con ingen on p uden managemen , a o able
mac oeconomic condi ions, and obus ins i u ional amewo ks. The indings con ibu e o he
ongoing deba e on whe he Nige ia’s deb accumula ion is a ool o g ow h o a ap o iscal
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ulne abili y, hus, b idging empi ical e idence wi h ac ionable pe spec i es while iden i ying
a eas whe e u he inqui y is necessa y o deepen unde s anding and s eng hen iscal policy
amewo ks. The s udy indings unde sco e ha deb managemen in Nige ia has been
cha ac e ized by a combina ion o p omise and pe il. While bo owing has a imes p o ided
c i ical suppo o he economy, he absence o s ong ins i u ions and p uden iscal managemen
has o en u ned deb in o a sou ce o mac oeconomic ins abili y. The e idence om his s udy
ein o ces he need o a pa adigm shi in Nige ia’s app oach o deb —one ha p io i izes
sus ainabili y, anspa ency, and alignmen wi h long- e m de elopmen al goals.
Nige ia’s ising deb p o ile demands a delibe a e shi om a quan i y-based app oach o
bo owing owa ds a quali y- ocused amewo k ha p io i izes anspa ency, sus ainabili y, and
alignmen wi h long- e m de elopmen al objec i es. Bo owing mus cease o be iewed as a quick
ix and ins ead be posi ioned as a ca e ully conside ed ins umen o ad ancing inclusi e and
esilien g ow h. The indings ad oca e o policies ha in eg a e obus deb managemen
p ac ices wi h sound mac oeconomic go e nance and ins i u ional e o ms. Only h ough such a
holis ic app oach can Nige ia a oid he pi alls o he pas and unlock he ull po en ial o deb as
a ca alys o na ional de elopmen . Consequen ly, o ensu e ha public deb se es as a ca alys
o sus ainable g ow h a he han a bu den o iscal ins abili y, he ollowing h ee key
ecommenda ions a e p oposed:
Re o m Deb Managemen and Bo owing P ac ices
Ha ing ound ha while mode a e domes ic bo owing suppo ed iscal s abili y, excessi e
accumula ion o bo h ex e nal and domes ic deb unde mined g ow h, pa icula ly when
compounded by exchange a e ola ili y and global in e es a e hikes, Nige ia mus ensu e ha
bo owing will con ibu e o long e m g ow h be o e engaging in i . This will s eng hen Nige ia’s
deb managemen s a egy. The Deb Managemen O ice (DMO), as he ins i u ional hub o deb
o e sigh , mus necessa ily ensu e i s analy ical capaci y o deb sus ainabili y assessmen s is
obus . DMO should deploy ad anced ools o moni o deb se ice obliga ions.
New bo owing should be ied explici ly o p ojec s wi h demons able economic e u ns, wi h a
s ong p e e ence o concessional loans ca ying low in e es a es and longe ma u i ies.
Comme cial loans mus be app oached cau iously and only when absolu ely necessa y. Also, he
go e nmen should adop a disciplined app oach o domes ic bo owing. While domes ic deb
o e s ce ain ad an ages o e ex e nal loans, excessi e accumula ion can c owd ou p i a e sec o
c edi and d i e in la ion. To a oid his, inno a i e inancing al e na i es should be pu sued,
including public-p i a e pa ne ships (PPPs), in as uc u e bonds a ge ed a ins i u ional
in es o s, and diaspo a bonds. These ins umen s can mobilize long- e m capi al wi hou
o e bu dening iscal esou ces.
Enhance Mac oeconomic S abili y and Re enue Mobiliza ion
The s udy also ound ha deb se icing obliga ions, combined wi h exchange a e dep ecia ion
and high domes ic in e es a es, ha e se e ely cons ained public expendi u e and ampli ied he
deb bu den. To mi iga e his, he go e nmen mus in ensi y e o s o boos domes ic e enue
gene a ion in o de o educe o e eliance on bo owing. This equi es b oadening he ax base,
closing loopholes in e enue collec ion, and di e si ying he economy away om oil dependence.
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Expanding sec o s such as ag icul u e, manu ac u ing, and echnology will no only gene a e
o eign exchange bu also p o ide a mo e esilien iscal base. Wi h s onge in e nally gene a ed
e enue, de elopmen p ojec s can be inanced sus ainably wi hou ecou se o excessi e
bo owing. A he same ime, policies mus aim a s abilizing he nai a and mi iga ing exchange
a e isks. Gi en Nige ia’s hea y exposu e o o eign-denomina ed deb , a s able exchange a e
egime is c i ical o sus ainabili y. This calls o coo dina ed mone a y and iscal policies
alongside measu es o s eng hen o eign ese es h ough expo di e si ica ion and inc eased
o eign di ec in es men in lows. By ancho ing mac oeconomic s abili y, he go e nmen can
educe he deb se icing bu den while es o ing in es o con idence.
S eng hen Ins i u ions and Fiscal Go e nance
The hi d inding o he s udy emphasized ha ins i u ional quali y signi ican ly mode a es he
deb –g ow h ela ionship, wi h weak go e nance, co up ion, and poo iscal discipline ampli ying
Nige ia’s deb ulne abili ies. Acco dingly, sus ainable deb managemen canno be achie ed
wi hou add essing Nige ia’s ins i u ional weaknesses. Endemic co up ion, ine iciency, and poo
iscal discipline ha e se e ely unde mined he de elopmen al impac o bo owed unds. To
e e se his end, ins i u ional e o ms mus be p io i ized. The go e nmen should en o ce s ic
p ojec moni o ing and e alua ion amewo ks, ensu ing ha e e y bo owed dolla o nai a is
di ec ed in o high-impac , g ow h-inducing sec o s.
T anspa ency in deb con ac ing and se icing mus be enhanced h ough public disclosu es and
ac i e pa liamen a y o e sigh . Mo eo e , deb managemen should be embedded wi hin a b oade
de elopmen s a egy ha p omo es inclusi eness. Tackling inequali y, unemploymen , and
in as uc u al de ici s will s eng hen Nige ia’s economic undamen als and educe he eliance
on deb as a s opgap measu e. By in eg a ing s ong ins i u ions wi h sound iscal go e nance, he
coun y can ans o m bo owing om a sou ce o ulne abili y in o a genuine ca alys o
sus ainable and inclusi e g ow h.
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APPENDICES
APPENDIX I - Da ase (1990 o 2023)
The able below p esen s he comple e da a-se o he s udy. The a iables (Nige ia’s key
mac oeconomic indica o s) ha e been showcased in columns.
Yea
GDPG
(%)
Ex . Deb
(USD bn)
Dom.
Deb (₦
n)
Deb Se .
(₦ n)
Exch.
Ra e
(₦/$)
In . Ra e
(%)
In . Ra e
(%)
1990
8.2
33.46
0.08
0.024
7.39
14.65
7.36
1991
-0.5
35.90
0.10
0.050
9.24
2.07
13.01
1992
2.2
33.58
0.16
0.060
17.30
-25.77
44.59
1993
-2.04
29.02
0.22
0.070
21.90
-7.05
57.17
1994
-1.8
32.59
0.40
0.080
21.99
-15.92
57.20
1995
-0.07
33.93
0.49
0.090
83.69
-31.45
72.84
1996
4.2
28.70
0.55
0.100
83.15
-5.26
29.29
1997
2.7
28.70
0.61
0.120
84.58
12.13
8.53
1998
2.9
28.10
0.70
0.150
84.70
11.48
10.00
1999
0.5
28.04
0.79
0.180
99.26
6.05
6.62
2000
5.4
28.27
0.89
0.200
105.00
-1.14
6.94
2001
5.92
22.31
1.04
0.300
134.54
16.50
18.87
2002
15.33
30.38
1.21
0.350
139.22
19.25
12.25
2003
7.35
32.86
1.33
0.400
137.53
20.77
14.03
2004
9.25
35.94
1.37
0.450
139.00
20.50
15.00
2005
6.5
15.41
1.53
0.300
132.20
19.75
17.85
2006
6.0
12.96
1.75
0.400
128.70
17.89
8.24
2007
6.6
3.55
2.17
0.500
125.80
16.90
5.38
2008
6.76
3.94
2.32
0.600
118.55
15.25
11.58
2009
8.04
3.95
2.49
0.700
148.90
14.70
12.02
2010
8.01
4.55
3.10
0.800
150.30
13.25
13.72
2011
5.3
5.67
5.62
0.900
153.90
12.00
10.84
2012
4.3
8.88
5.97
1.000
157.50
12.25
12.24
2013
5.4
8.98
7.12
1.100
157.30
11.50
8.50
2014
6.2
9.71
9.36
1.500
158.60
11.00
8.05
2015
2.7
10.32
12.60
1.800
197.00
11.50
9.01
2016
-1.6
11.41
14.02
2.500
305.00
12.00
15.68
2017
0.8
18.90
15.94
3.000
305.50
14.00
16.52
2018
1.9
25.27
16.63
3.800
305.10
13.50
12.09
2019
2.3
27.67
18.37
4.500
306.95
13.75
11.40
2020
-1.9
31.99
20.21
5.500
379.50
12.50
13.25
2021
3.6
38.39
20.64
2.930
410.80
11.50
16.95
2022
3.2
41.69
27.55
6.000
461.00
14.75
18.85
2023
2.9
42.50
55.93
7.800
899.00
18.75
24.66
Sou ce: Cen al Bank o Nige ia (CBN, 2023), Deb Managemen O ice (DMO, 2023), Wo ld
Bank (2023), In e na ional Mone a y Fund (IMF, 2022), and Na ional Bu eau o S a is ics (NBS,
2023).
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APPENDIX II - Econome ic Ou pu s
I. ARDL Model Speci ica ion (ECM)
whe e X is he ec o o explana o y a iables: EXD, DOD, DS, EXR, INT, INFEXD, DOD, DS,
EXR, INT, INFEXD, DOD, DS, EXR, INT, INF.
(No a ion and lag leng hs: p and q chosen by AIC in he main es ima ion; Δ = i s di e ence; ECT
cons uc ed om he long- un ela ionship).
II. Uni Roo Tes s (ADF)
Augmen ed Dickey–Fulle (ADF) es esul s (le els and 1s di e ence)
Va iable
ADF S a is ic
(Le el)
ADF S a is ic (1s
Di e ence)
O de o
In eg a ion
GDP G ow h (GDPGR)
-4.215**
—
I(0)
Ex e nal Deb (EXD)
-1.742
-5.632**
I(1)
Domes ic Deb (DOD)
-2.031
-5.784**
I(1)
Deb Se icing (DS)
-1.688
-4.992**
I(1)
Exchange Ra e (EXR)
-1.921
-5.840**
I(1)
In e es Ra e (INT)
-3.102**
—
I(0)
In la ion (INF)
-2.441
-5.473**
I(1)
No es: ‘**’ indica es signi icance a con en ional le els. The mix u e o I(0) and I(1) jus i ies he
ARDL app oach.
III. Es ima ed Long- un Coe icien s (ARDL Long- un Resul s)
Va iable
Coe icien
S d. E o
-S a is ic
P ob.
Ex e nal Deb (EXD)
-0.512
0.174
-2.942
0.005**
Domes ic Deb (DOD)
0.236
0.108
2.185
0.036*
Deb Se icing (DS)
-0.473
0.152
-3.112
0.003**
Exchange Ra e (EXR)
-0.368
0.095
-3.874
0.001***
In e es Ra e (INT)
-0.124
0.088
-1.409
0.168
In la ion (INF)
-0.057
0.062
-0.919
0.362
Cons an
7.812
2.493
3.133
0.003**
Signi icance: * means p<0.0, ** means p<0.01, and *** means p<0.001
(In e p e a ion: EXD and DS nega i e and signi ican ; DOD posi i e and signi ican ; EXR
nega i e & highly signi ican .)
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IV. Es ima ed Sho - un Dynamics (ECM)
Va iable
Coe icien
S d. E o
-S a is ic
P ob.
ΔEXD
-0.261
0.113
-2.309
0.027 *
ΔDOD
0.102
0.059
1.729
0.093
ΔDS
-0.318
0.107
-2.972
0.005 **
ΔEXR
-0.247
0.082
-3.012
0.004 **
ΔINT
-0.056
0.041
-1.366
0.179
ΔINF
-0.032
0.027
-1.185
0.246
ECM(−1)
-0.723
0.139
-5.201
0.000 ***
In e p e a ion: ECM(−1) is nega i e and highly signi ican indica ing e o co ec ion;
app oxima ely 72.3% o sho - un de ia ions a e co ec ed wi hin one yea (speed o adjus men ).
V. Addi ional No es on Es ima ion Replica ion
i. Lag leng hs selec ed using Akaike In o ma ion C i e ion (AIC) as epo ed in he main ex .
ii. The ARDL bounds es ing app oach ollowed he Pesa an, Shin and Smi h (2001) app oach.
iii. ECM was compu ed as he lagged de ia ion om he long- un equilib ium (es ima ed om he
le els equa ion).
i . All es ima ions we e conduc ed using E-Views 12 s a is ical so wa e.
