The Impact of Debt Service in Stimulating Economic Growth in Nigeria: Mediating on its role on Public Sector Financial Management
Keywords:Debt Service; Internal Debt; External Debt; Economic Growth
The study examined debt service and its impact on economic growth of the country. It
specifically examined the impact of debt servicing on economic using its role on public sector
financial management as a mediating factor. The study predicted on dependency theory, Keynesian
theory and neoclassic theory. Secondary data source was explored in presenting the facts of the
situation. The secondary data were obtained from the debt management office which covered the
period of 30 years spanning from 1990-2020. Data collated were analyzed using both descriptive and
covariance estimate method of analysis. Descriptive analysis conducted in the study include the mean,
standard deviation, Kurtosis, and Jarque-Bera statistics of each variable. The findings revealed among
other things that; there was presence of co-integration (long-run relationship) among the dependent
and all the explanatory variables which is a clear indication that working debt servicing has positive
and significant impact on economic growth of the country both in short and long run if properly
managed. It was concluded that debt servicing has significant impact on the economic growth due to
his positive relationship with gross domestic product, while exchange rate reflected a negative
significant relation to Gross domestic product. This study recommends among others that government
should ensure that any debt both internal and external debt should be deal that will open Nigeria to
greater trade and investment and can stimulate the economic growth of the country.
on Sustainable Economic Growth and Development: Lessons from Nigeria. Ibadan: MPRA Paper,
University of Ibadan.
Adesola, W. A. (2009). Debt Servicing and Economic Growth in Nigeria: An Empirical Investigation.
Journal of Social Science, 8(2), pp. 1-11.
Alfredo, S. & Franciso (2005). External Debt and Economic Growth in Latin America. PhD Thesis,
Department of Economics, Lund University, pp. 7-10.
Audu, I. (2004). The Impact of External Debt on Economic Growth and Public Investment: the Case
of Nigeria. Dakar, Senegal: African Institute for Economic Development and Planning (AIEDP).
Ayadi, F. S. (2008). The Impact of External Debt on Economic Growth: A Comparative Study of
Nigeria and South Africa. Journal of Sustainable Development in Africa, 10(3), pp. 234-2444.
Benedict, J. C.; Rina, B. & Toan, Q. N. (2003). External Debt, Public Investment and Growth in Low
Income Countries. IMF Working Paper, No. 03/249.
Butts, H. C. (2009). Short Term External Debt and Economic Growth-Granger Causality: Evidence
from Latin America and Caribbean. The Review of Black Political Economy, 36, pp. 93-111.
Chinaemerem, O. C. & Anayochukwu, O. B. (2013). Impact of Debt Servicing on Economic
Development in Nigeria. Research Journal of Finance and Accounting, 4(4), pp. 92-98.
Choong, C. K.; Evan, L.; Venus, L. K. & Puah, C. H. (2010). Does Debts Foster Economic Growth?
The Experience of Malaysia. African Journal of Business Management, 4(8), pp. 1564-1575.
Edo, S. E. (2002). The External Debt Problem in Africa: A Comparative Study of Nigeria and
Morocco. African Development Review, 14(2), pp. 221-236.
Iyoha, M. A. (1996). External Debt and Economic Growth in Sub-Saharan African Countries: An
Econometric Study. AERC Workshop, Karachi, pp. 9-24.
Karagol, E. (2002). The Causality Analysis of External Debt Service and GNP: The Case of Turkey.
Central Bank Review, 2(1), pp. 39-64.
Malik, S.; Hayat, M. K. & Hayat, M. U. (2010). External Debt and Economic Growth: Empirical
Evidence from Pakistan. International Research Journal of Finance and Economics, Issue 44, pp. 88-
Mohammed, M. & Ahmed, A. (2005). The Impact of External Debt on Economic Growth: An
Empirical Assessment of the Sudan. Eastern Africa Social Science Research Review, 21(2), pp. 53-
Muhammad, K. J. & Hira, B. (2012). Impact of External Debt Service Payment on the Investment of
Pakistan. Proceedings of 2 nd International Conference on Business Management.
Nazifi, A. D. (2014). The Impact of Nigeria’s Debt Stock and Its Servicing on Social Services
Provision: 19802010. Developing Country Studies, 4(10), pp. 187-193.
Ogunmuyiwa (2011). Does Debt Promote Economic Growth in Nigeria? Current Research Journal of
Economic Theory, 3(1), pp. 29-35.
Shabbir, S. (2009). Does Debt Service Affect Economic Growth: Evidence from Developing
Countries. http://aysps. gsu. edu/sites/default/files/documents/ECON MA shabbirS. pdf.
Sulaiman, L. A. & Azeez, B. A. (2012). Effect of Debt Servicing on Economic Growth in Nigeria.
Journal of Economics and Sustainable Development, 3(8), pp. 71-79.
Tajudeen, E. (2020). Public Debt and Economic Growth in Nigeria: Evidence from Granger
Causality. American Journal of Economics, 2(6), pp. 101-106.
Victor, U. I.; Joseph, F. & Godoo, M. (2016). The Relationship between External Debt and Economic
Growth in Nigeria. International Journal of Economics and Management Sciences.
Villanueva, D. & Mariano, R. S. (2006). External Debt Adjustment and Growth. SMU Economics and
Statistics Working Paper 07-2005.
Were, M. (2001). The Impact of External Debt on Economic Growth in Kenya: An Empirical
Assessment. UNU-WIDER Research Paper, DP2001/116.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.