Federal Government Foreign Loans and Economic Development in Nigeria 2018–2024

Student: Frank Okeoghene Edewor (Project, 2025)
Department of Political Science
University of Nigeria, Nsukka, Enugu State

Abstract

This study set out to analyze the impact of external debt on Nigeria’s economic growth. Data were collected from secondary sources, including GDP, external debt services, debt stock, external reserves, and exchange rate, covering the period 1985–2015.

Using ordinary least squares regression, ADF unit root test, Johansen cointegration, and error correction tests, the study found that debt service payments have a negative and insignificant impact on economic growth, while external debt stock has a positive and significant effect. External reserves and exchange rates also had positive and significant effects on growth.

The ADF test showed all variables were stationary at first difference, while Johansen cointegration revealed a long-run relationship between external debt and GDP. The causality test indicated unidirectional causality between external debt and GDP.

The study recommends that government should apply external loans to infrastructural development, improve the business environment, initiate proper debt management policies, and substitute external borrowing for human capital development.

Key Words: Economic growth, external debt, dependency theory, debt servicing, external reserve, exchange rate.

Keywords
federal government foreign loans economic development nigeria
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