An assessment of the impact of public debts on development in Nigeria (2003-2020)

Abstract

This study assessed the impact of public debt on development of Nigeria. It specifically investigated
the relationship between human development index, per capital income, growth rate and public debt in
Nigeria from 2003 to 2020. This study adopted quantitative research design. Relevant data regarding the
variable’s under-study were extracted from the Debt Management Office (DMO-2020) and UNESCO
Institute of Statistics (2020) while regression model was used to analyze the data. The study revealed
among other things that; there is presence of co-integration (long-run relationship) among the variables
in the model. The t-statistics of -2.297997 with 0.0388 p-value implies negative and significant relationship
exists between foreign debt and human development index, t-statistics of 2.557340 with 0.0239
p-values implies positive and significant relationship exists between foreign debt and per capital income
and also t-statistics of -0.658730 with p-value of 0.5216 implies negative and insignificant relationship
existence between foreign debt and growth rate. The overall result of the f-statistics of 4.109504 with
Prob.(F-statistic) of0.029617 shows that all the explanatory variables jointly have significant impact on
foreign debt both in the short and long run. The study concluded that there is significant relationship
between public debt and development in Nigeria, depending on the variable of interest. Likewise, the
study recommended among other things that government should ensure efficiency and effectiveness in
the public debt management due to the negative and significant influence of human development index
on development both in the long run and short run, also the negative and insignificant influence of
foreign debt on development in Nigeria which is a pure indication of poor public debt management in
the country. Also, the component governments in Nigeria should reduce it public borrowing as it has a
significant inverse effect on the development of the country in the long run.
Key words: Public debt, Per capital income, Human Development Index, Growth rate and Development.