Public Debt and Sustainable Development: Evidence from Nigeria

Abstract

This study investigated Public Debt and Sustainable Development in Nigeria utilizing Domestic Debt and External Debt as dimensions of Public Debt and Gross Domestic Product per Capita, Life Expectancy at Birth and Primary School Enrollment as the measures of Sustainable Development. The study used secondary data from 1970-2019 sourced from Debt Management Office of Nigeria, Central Bank of Nigeria and the World Bank. The study employed econometric tests such as Unit Root Test, Johansen Co-integration Test and Vector Error Correction Model for the diagnostic data analysis. This study found that in Nigeria, domestic debt has a negative and insignificant effect on Gross Domestic Product per Capita; domestic debt has a negative and insignificant effect on Life Expectancy at Birth and domestic debt has a positive and significant effect on Primary School Enrollment. Furthermore, it found that in Nigeria, external debt has a positive but insignificantly effect on Gross Domestic Product per Capita; external debt has no significant effect on Life Expectancy at Birth and finally, external debt has a negative and insignificant effect on Primary School Enrollment. Hence, concludes that of the two dimensions of public debt only domestic debt is significant in boosting sustainable development in Nigeria. Therefore, recommends that Government should reduce maximally external debt; urgently start pleading for debt forgiveness/cancellation from the creditors especially from external creditors like World Bank, African Development Bank and China and have a deep cut on cost of governance.