Co-Integration Approach to Analysing The Impact of External Debt Management on Economic Growth of Nigeria

Biradawa Kayadi; Confidence Chinwe Opara; Christy Twaliwi Zwingina; Udeme Okon Efanga

doi:10.47747/ijfr.v2i2.336

Authors

Biradawa Kayadi Department of Banking and Finance, University of Maiduguri
Confidence Chinwe Opara Department of Banking and Finance, Michael Okpara University of Agriculture, Umudike
Christy Twaliwi Zwingina Department of Business Administration Bingham University Karu Abuja
Udeme Okon Efanga Department of Banking and Finance, University of Calabar

DOI:

https://doi.org/10.47747/ijfr.v2i2.336

Keywords:

External debt, External debt management, External debt service payment, Balance of payment, Exchange rate, Economic growth

Abstract

This study examined the impact of External debt management on economic growth of Nigeria. Using annual time series data collected over the period of 33 years (1986 – 2018). The data for the study were collected from the CBN statistical bulletin annual report. The variables on which data are collected include: Real Gross Domestic Product, External Debt, External Debt service, Balance of Payment and Exchange Rate. Data were analyzed using the Ordinary least squares (OLS) multiple regression analysis. It proceeded with Descriptive statistics; Augmented Dickey Fuller (ADF) unit root test, Co-integration test and Auto-Regressive Distributed Lag (ARDL). The study revealed that impact of external debt management on economic growth of Nigeria over the period under review was statistically significant with external debt, external debt service payment and balance of payment but statistically insignificant with exchange rate. The study recommended that governments should establish and adopt an optimal balance between external debt acquisition and application /allocation of the acquired funds to productive projects for the purpose of making a high output and a steady economic growth. The management should live up to expectation by encouraging efficient commitment of borrowed funds to productive projects so as to comply with debt serving agreement and outright payments, measures such as improving exports should be implemented to ensure that local currencies are stable.

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