EXTERNAL DEBT AND ECONOMIC GROWTH IN NIGERIA

This study examines the effect of external debt on economic growth in Nigeria for the period 2000–2024. The specific objectives were to investigate the effect of external debt stock on the Nigerian economy, determine the effect of external debt service payments on economic growth, and examine the effect of exchange rate on the economy. The study adopted an ex-post facto research design, relying on secondary data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin, Debt Management Office (DMO) Annual Reports, and National Bureau of Statistics (NBS). Data were analyzed using econometric techniques with the aid of EViews software. The empirical results revealed that external debt stock has a positive and significant effect on economic growth in Nigeria, indicating that judicious borrowing can enhance economic performance when appropriately managed. However, external debt servicing exhibited a negative but statistically insignificant relationship with economic growth, suggesting that high debt servicing obligations may crowd out funds meant for productive investment. Additionally, the exchange rate was found to have a positive and significant relationship with economic growth during the study period. The study concludes that external debt, when effectively utilized and prudently managed, can contribute positively to economic growth in Nigeria. It therefore recommends that policymakers should prioritize the efficient management and productive use of borrowed funds, invest in fixed assets that promote long-term growth, and ensure that regulatory authorities monitor the country’s debt sustainability and repayment capacity to avoid debt distress.