PUBLIC DEBT

Nigeria, as one of the largest economies in Africa, has long faced significant challenges in harnessing its public debt for sustainable development, particularly in human capital development. The role of governance quality in shaping the relationship between public debt and human capital development is a fundamental but often overlooked aspect of the discourse. The aim of this study was to investigate the relationship between public debt, governance quality and human capital development in Nigeria. The data used in this study were collected from secondary sources including Central Bank of Nigeria (CBN) Statistical Bulletins, World Development Indicators and World Governance Indicators (WGI) databases. The study employed a vector autoregressive (VAR) model and autoregressive distributed lag (ARDL) estimations using annual data from 1997 to 2024 to estimate three models corresponding to the study’s hypotheses.The study found that in the absence of effective governance systems, the long-term effects of public debt on human capital were more detrimental. Shocks to debt variables showed persistent negative response in human capital indicators, particularly in settings were governance quality was weak. Conversely, better-governed environments exhibited more resilient and favourable human capital outcomes, demonstrating the pivotal role of institutional quality in mitigating debt-related vulnerabilities. The study recommended strengthening institutional quality, prioritizing productive debt use and restructuring debt servicing frameworks to free up fiscal space for social investment

This study examines how public debt influences economic growth in Nigeria, drawing on twenty years of data covering both domestic and external borrowing. Nigeria has increasingly relied on public debt to fund development, yet rising debt-servicing obligations have created concerns about the country’s fiscal stability and the crowding-out of essential public investment. The study reviews major theories of debt and growth, highlights Nigeria’s historical borrowing patterns, and analyzes whether public debt contributes to or slows down long-term economic performance. Using secondary data from the Central Bank of Nigeria, the National Bureau of Statistics, the Debt Management Office, and international development institutions, the research assesses the relationship between public debt, debt servicing, GDP growth, and government investment. The findings show that while public debt can support growth when properly utilized, Nigeria’s high debt-servicing burden reduces the resources available for capital expenditure and weakens the overall impact of debt on economic performance. Evidence also suggests that persistent borrowing, weak non-oil revenue, and macroeconomic instability limit the growth-enhancing potential of public debtThis study examines how public debt influences economic growth in Nigeria, drawing on twenty years of data covering both domestic and external borrowing. Nigeria has increasingly relied on public debt to fund development, yet rising debt-servicing obligations have created concerns about the country’s fiscal stability and the crowding-out of essential public investment. The study reviews major theories of debt and growth, highlights Nigeria’s historical borrowing patterns, and analyzes whether public debt contributes to or slows down long-term economic performance. Using secondary data from the Central Bank of Nigeria, the National Bureau of Statistics, the Debt Management Office, and international development institutions, the research assesses the relationship between public debt, debt servicing, GDP growth, and government investment. The findings show that while public debt can support growth when properly utilized, Nigeria’s high debt-servicing burden reduces the resources available for capital expenditure and weakens the overall impact of debt on economic performance. Evidence also suggests that persistent borrowing, weak non-oil revenue, and macroeconomic instability limit the growth-enhancing potential of public debt