PUBLIC DEBTS AND ECONOMIC DEVELOPMENT IN NIGERIA (1980-2023)

Abstract

The main objective of the study is to examine the effects of public debt on economic
development. Human development index was used to proxy economic development while
external debt, internal debt and debt servicing were used to proxy public debt. This study
employs ex post facto research design using time series data for the periods under study
(1980-2023). Data for this study is completely secondary in nature, sourced from various
issues of Central Bank of Nigeria (CBN) Statistical Bulletins and World Development
Indicator (WDI). The ARDL long-run estimates show that while External Debt (EXD) has a
negative but statistically insignificant effect on human development, Debt Servicing (DTS)
significantly harms human development by diverting resources from key sectors. Internal
Debt (IND) has a small, statistically insignificant positive effect, suggesting it does not
meaningfully impact human development on its own. Overall, high debt servicing costs
negatively affect long-term growth, indicating a need for better management of both
external and internal debt. To address the findings, focus on three key recommendations: 1)
Improve management of debt servicing costs to prevent resource diversion from critical
sectors like education and healthcare. 2) Reallocate resources to enhance human
development by funding essential services despite debt obligations. 3) Increase
transparency in debt management to build trust and ensure that debt practices support longterm growth and development.