EXTERNAL DEBT AND NIGERIAN'S ECONOMIC GROWTH, (1975 -1995).
EXTERNAL DEBT AND NIGERIAN'S ECONOMIC GROWTH, (1975 -1995).
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Date
1999
Authors
MGBE, INNOCENT
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Abstract
This work traced the origin o Nigeria external debt to 1958 when a loan
of U.S. $28 million was contracted for railway construction. The thesis
established within theoretical framework the justification for external borrowing
which is basically the existence of the saving-investment gap and that of the
foreign exchange gap. Growth and development will seriously be retarded in
any economy with these gap. Thus, the need to fill these gaps.
We have therefore consciously employed the external borrowing
approach to sec how far external debt has contributed to economic growth in
Nigeria and also to show the structure and magnitude of Nigeria's external debt
as well as her debt servicing capacity.
We discovered that the structure has changed from what it was in late
1970s and early 1980s to what it is today. That is, borrowing pattern has been
gradually shifting from short-term to medium and to long-term periods. We also
noted that the source has changed significantly from mutilateral to private and
international capital markets (ICM) which were characterised by high and
floating interest charges and that this and other factors contributed to the
astronomical increase in the magnitude of debt since 1980s.
We also, from the examination of various debt ratios, proved that the debtServicing capacity of the country has been on the decline since 1980s and this is
as a result of poor economic planning, debt management and utilisation
problems as well as corrupt practices.
From our empirical estimation we discovered that external debt exerted
positive impact on real GDP from 1975 to 1995. On the other hand debt
servicing exerted negative impact on real GDP. When the two effects were
considered simultaneously it was found that the negative effect of debt servicing
out weighted the positive effect of external borrowing..
Based on our findings, we recommended that debt management strategies
that would adequately take care of the existing debt problems should be put in
place for any meaningfully economic growth to take place and that further loans
must be for viable projects. Finally, we suggest that debt servicing ratio be
peged between 7% to 10% of export earnings
Description
A THESIS SUBMITTED TO THE POSTGRADUATE SCHOOL, AHMADU
BELLO UNIVERSITY ZARIA, IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF
SCIENCE IN ECONOMICS
DEPARTMENT OF ECONOMICS.
FACULTY OF SOCIAL SCIENCES
AHMADU BELLO UNIVERSITY, ZARIA.
1999
Keywords
EXTERNAL,, DEBT,, NIGERIAN'S,, ECONOMIC