Thesis Abstract

Abstract
This research project aims to investigate the impact of external debts on economic growth in Nigeria. The study is motivated by the ongoing debate surrounding the effects of external debt on the economic development of countries, especially in the context of developing nations like Nigeria. The research will employ a quantitative approach, utilizing statistical analysis to examine the relationship between external debts and economic growth in Nigeria over a specific period. The study will utilize secondary data sourced from reputable sources such as the World Bank and the Central Bank of Nigeria. Variables such as external debt levels, GDP growth rates, inflation rates, exchange rates, and other relevant economic indicators will be analyzed to determine the impact of external debts on economic growth. The research will also consider factors such as debt servicing costs, borrowing conditions, and the utilization of borrowed funds in the Nigerian economy. Through regression analysis and other statistical techniques, the study aims to provide empirical evidence on the relationship between external debts and economic growth in Nigeria. The findings of this research are expected to contribute to the existing body of knowledge on the subject and provide insights for policymakers, economists, and other stakeholders in understanding the implications of external borrowing on the Nigerian economy. The significance of this research lies in its potential to inform policy decisions regarding external borrowing and debt management in Nigeria. By understanding how external debts impact economic growth, policymakers can make informed decisions on borrowing practices, debt repayment strategies, and the allocation of borrowed funds to maximize economic development outcomes. Additionally, the findings of this study may also have implications for other developing countries facing similar challenges related to external debts and economic growth. Overall, this research project seeks to deepen our understanding of the relationship between external debts and economic growth in Nigeria. By examining the empirical evidence and statistical analysis, the study aims to shed light on the complex dynamics of external borrowing and its implications for economic development. The findings of this research have the potential to influence policy decisions and contribute to the ongoing discourse on debt sustainability and economic growth in Nigeria.

Thesis Overview

Nigeria’s debt profile has been on the increase over the years, and the country may soon reach a debt threshold that would affect economic growth negatively. This may lead the economy to a debt trap. The study empirically examines the impact of external debt on economic growth in Nigeria. Descriptive and econometric analytical tools were used in data analyses. Data on  Real Gross Domestic Product (RGDP), External Debt Stock, External Debt Service Payment, and Exchange Rate were collected from Central Bank of Nigeria Statistical Bulletin, 2014 and Debt Management Office 2014, various issues. Diagnostic tests were conducted using Augmented Dickey Fuller Unit Root Test, Co-integration, and Error Correction Model. Threshold Autoregressive model was used to test the level of debt sustainability in Nigeria within the period under review. The independent variable was RGDP, while the explanatory variables were External debt stock, External Debt Service Payment, and Exchange Rate. The study showed that External Debt had a positive and significant relationship with Real Gross Domestic Product in the long run. The research shows that Nigeria is not in a debt trap and external debt is sustainable in Nigeria.  The study recommended amongst others, utilization of external debt in to productive sectors of the economy rather than recurrent expenditure, currently Nigeria is not in a debt trap, therefore can still borrow for growth purposes and that the current trend in external debt is still viable. The country can borrow within the stipulated threshold. This will affect economic growth positively.