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ABSTRACT
This work evolved out of the need to provide an in-depth understanding of the economics
of debt in Nigeria. This study aims at analysing the effectiveness of external debt on
economic growth within a span of 1981-2010. The broad objective of this work is
specified to evaluate the impact of external debt stock and debt servicing on economic
growth. In all, the models were to show the growth relationship between the independent
variables-inflation rate, exchange rate, interest rate, government expenditure, external
debt stock and external debt service and the dependent variable-gross domestic product
(GDP). The data were collected from CBN Statistical Bulletin 2010 and the Debt
Management Office (DMO) quarterly report. The Engle & Grenger Cointegration and
Ordinary Least Square (OLS) were employed in the cause of this study. The Augmented
Dickey Fuller test (ADF) shows that the variables are stationary and reliable for
forecasting. The choice of OLS is most appropriate for the study in terms of goodness of
fit and significance of regression coefficients. The result of the analyses showed that
rising external debt stock inhibits the pace of economic growth of Nigeria by increasing
the cost of its servicing beyond the debt sustainability limit while external debt servicing
was found not to impair economic growth.
Summary and policy recommendations were presented in line with our stated objectives
and facts then conclusions were made. It was found that external debt stock rises rapidly
due to accrued compound interest and loans were secured for dubious projects. Part of the
policy recommendations were that Nigeria should increase its export base by investing
borrowed funds in productive ventures and she should also seek fixed interest payment,
varying amortization schemes and multi-year rescheduling.  

TABLE OF CONTENTS

Title Page…………………………………………………………………………….i

Approval Page………………………………………………………………………..ii

Dedication……………………………………………………………………………iii

Acknowledgement…………………………………………………………………...iv

Table of Contents…………………………………………………………………….v

Abstract………………………………………………………………………………vii

CHAPTER 1: INTRODUCTION

1.1: Background of the Study………………………………………………..1

1.2: Statement of the Problem………………………………………………..3

1.3: Objectives of the Study…………………………………………………4

1.4: Statement of Hypothesis………………………………………………..4

1.5: Significance of the Study……………………………………………….4

1.6: Scope and Limitations of the Study…………………………………….5

REFERENCES………………………………………………………………6

CHAPTER 2: LITERATURE REVIEW

2.1: History of Nigeria’s Debt Crisis…………………………………………8

2.2: External Debt Management in Nigeria…………………………………..10

2.3: Opinions on External Debt Management of Nigeria…………………….16

2.4: Impact of External Debt on Economic Growth…............……………….18

2.5: Limitations of Previous Studies………………………………………….20

REFERENCES………………………………………………………………..226

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Research Methodology………………………………………………….24

3.2: Model Specification…………………………………………………….24

3.3: Analytical Techniques…………………………………………………..25

3.4: Data Required and Sources……………………………………………..28

CHAPTER 4: DATA PRESENTATION AND ANALYSIS

4.1: Presentation and Analysis of Results……………………………………29

4.2: Evaluation and Interpretation of Results………………………………...34

4.3: Evaluation of Research Hypothesis………………………………………37

CHAPTER 5: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1: Summary of Findings……………………………………………………38

5.2: Conclusion……………………………………………………………….39

5.3: Recommendations……………………………………………………….39

BIBLIOGRAPHY…………………………………………………………………..41

APPENDIX 1

APPENDIX 2

APPENDIX 3

APPENDIX 4

APPENDIX 5

APPENDIX 67