Debt and Growth Prospects of a Debtor Country: The Case of Nigeria
Abstract
The main thrust of this study was to investigate the effect of domestic debt and interest rate on the economic growth of Nigeria as well as examine the crowding-out effect of private investment given the interest in the country. Data used were secondary and primary and were analysed and tested using relevant econometric analytical technique as well as Chi-square technique. The result shows a positive significant relationship between domestic debt and economic growth and an inverse relationship between interest rate and economic growth in Nigeria. It was also shown that high interest rate reduces private sector investment, thus leading to decline in gross domestic product. Therefore, the paper emphasizes the need for Nigerian government to maintain a growth-inducing level of domestic debts always and it should be ensured that these financial resources are productively deployed and utilized so that they do not constitute any drain on the future resources. The government should also formulate and implement financial policies that enhance investment-friendly rate of interest and as well take into consideration those other factors which negatively affect investment in the country.
References
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30. Sheikh, M. R., Faridi, M. Z., and Tariq, K. (2010). “Domestic Debt and Economic Growth in Pakistan: An Empirical Analysis”. Pakistan Journal of Social Sciences, 30 (2), 373-387.
31. Solis, L., and Zedillo,E. (1985). The Foreign Debt of Mexico. In Gordon W. S. and J. T. Cuddington (eds.). International debt and the developing countries. A Symposium; Washington D. C.: The World Bank.
32. Udoka, C. O., and Roland, A. (2012). The Effect of Interest Rate Fluctuation on the Economic Growth of Nigeria, 1970-2010. International Journal of Business and Social Science, 3(20), 295- 302.
33. Umar, M., Kari, U. G., and Bapi, U. (2014). ICT Infrastructure and Small and Medium Scale Enterprises (SMEs) in Nigeria: An Impact Assessment of Microfinance Banks. Journal of Good Governance and Sustainable Development in Africa, 2(2),31-44
34. World Bank and International Monetary Fund (2001). “Developing Government Bond Markets, a Handbook”. Word Bank, Washington.
2. Ajayi, E. A. (1989). Nigerian debt management experience. Abuja: Central Bank Nigeria.
3. Asogwa, R.C. (2005). Domestic government debt structure, risk characteristics and monetary policy conduct, evidence from Nigeria. Access from: http://www.inf.org/external/np/res/seminars/2007/macro/pdf/asogwa.pdf
4. Babu, J. O., Kiprop, S., Kalio, A. M., andGisore, M. (2015). Effect of Domestic Debt on Economic Growth in the East African Community. American Journal of Research Communication, 3(9), 73-95. www.usa-journals.com.
5. BusinessNews Staff (2016). MPR: Banks raise interest rates on existing loans. http://businessnews.com.ng/2016/07/30/mpr-banks-raise-interest-rates-on-existing-loans/
6. Christensen, J. (2005). “Domestic Debt Markets in Sub-Saharan Africa”, IMF Staff Papers, Volume 52, Number 3, Page 518-538.
7. Debt Management Office (2015). Domestic Debt Stock by Instruments as at 31 March 2015. https://dmo.gov.ng/debtprofile/domestic-debts/debt-stock. Accessed 28/09/2016.
8. Debt Management Office (2016). Domestic Debt Stock by Instrument as at June 30, 2016. https://dmo.gov.ng/debtprofile/domestic-debts/debt-stock/1502-domestic-debt-stock-by instrument-as-at-30th-june-2016/file. Accessed 23/09/2016.
9. Elmendorf, D. W., and Mankiw, G. N. (1998). Government Debt (NBER Working Paper 6470). Cambridge, MA: National Bureau of Economic Research.
10. Fischer, S., and Easterly, W. (1990). “The Economics of the Government Budget Constraint”. The World Bank Research Observer, 5(2), 127-42.
11. Gistarea (2015). Contributions of Small Scale Business Enterprises to Economic Development. http://www.gistarea.com/contributions-small-scale-business-enterprises-economic-development-2/
12. Ikhide, S.I., and Alawode, A.A. (2001). ‘Financial Sector Reforms, Microeconomic Instability and the Order of Economic Liberation: The Evidence from Nigeria’, Afr. Econ. Res. Paper 112: ISBN 9966-944-53-2.
13. Kumar, M. S., and Woo, J. (2010). Public Debt and Growth (IMF Working Paper 10/174). Washington, D.C.: IMF.
14. Maana, I., Owino, R., and Mutai, N. (2008). Domestic Debt and its Impact on the Economy – The Case of Kenya. Paper Presented During the 13th Annual African Econometric Society Conference in Pretoria, South Africa from 9th to 11th July 2008.
15. Mckinnon, R.I. (1973). ‘Money and Capital in Economic Development’. Washington, D.C.: Brookings Institutiion.
16. Mbire, B., and Atingi, M. (1997). Growth and Foreign Debt: The Ugandan Experience. African Eco Research Consortium Research Paper No. 66. Nairobi, Kenya: The African Economic Research Consortium.
17. Nwankwo, A. (2011). Federal Government Plans N794billion Local Debt to Finance 2012 deficit. The Nation News Paper of 17th Dec. 2011.
18. Nyong.M. (2007). Government Size, Political Freedom and Economic Growth in Nigeria, 1960-2000. Journal of third world studies, 13(1), 87-93.
19. Obamuyi, T. M. (2009). An Investigation of the Relationship between Interest Rates and Economic Growth in Nigeria, 1970 – 2006. Journal of Economics and International Finance, 1(4), 093-098.
20. Ojima, D., and Emerenini, F. M. (2015). Impact of Interest Rate on Investment in Nigeria. Developing Country Studies, 5(3), 103- 109.
21. Ojo, J.A.T. (1976). ‘The Nigerian Financial System’, University of Wales Press, Cardiff.
22. Okwu, A.T, Obiwuru, T.C., Obiakor, R.T., Oluwalaiye, O.B. (2015). Domestic Debt and Economic Growth in Nigeria: Data-Based Evidence. Greener Journal of Economics and Accountancy, 5(1):001-012, http://doi.org/10.15580/GJEA.2016.1.101516164
23. Omoh, G. (2015). N12 trillion Debt Profile worsens Nigeria’s woes. Vanguard Newspaper.
24. http://www.vanguardngr.com/2015/07/n12trn-debt-profile-worsens-nigerias-woes/ Accessed 28/09/2016.
25. ONUBU, I., AND ABIOYE, O. (2016). CBN RAISES INTEREST RATE TO 14%, WARNS BANKS. HTTP://PUNCHNG.COM/CBN-RAISES-INTEREST-RATE-14-WARNS-BANKS/
26. Onyeiwu, C. (n.d.). Domestic Debt and the Growth of Nigerian Economy. www.unilag.edu.ng/opendoc.php?Domestic%20Debt%20And%20The%20Growth...
27. Saifuddin, M.D. (2016). Public Debt and Economic Growth: Evidence from Bangladesh. Global Journal of Management and Business Research, 1(6),65-73.
28. Sanusi J. O. (2003). Management of Nigeria’s Domestic Debt. Abuja: Debt Management Office.
29. Shaw, E. (1973). Financial Deepening in Economic Development. New York: Oxf. Univ. Press.
30. Sheikh, M. R., Faridi, M. Z., and Tariq, K. (2010). “Domestic Debt and Economic Growth in Pakistan: An Empirical Analysis”. Pakistan Journal of Social Sciences, 30 (2), 373-387.
31. Solis, L., and Zedillo,E. (1985). The Foreign Debt of Mexico. In Gordon W. S. and J. T. Cuddington (eds.). International debt and the developing countries. A Symposium; Washington D. C.: The World Bank.
32. Udoka, C. O., and Roland, A. (2012). The Effect of Interest Rate Fluctuation on the Economic Growth of Nigeria, 1970-2010. International Journal of Business and Social Science, 3(20), 295- 302.
33. Umar, M., Kari, U. G., and Bapi, U. (2014). ICT Infrastructure and Small and Medium Scale Enterprises (SMEs) in Nigeria: An Impact Assessment of Microfinance Banks. Journal of Good Governance and Sustainable Development in Africa, 2(2),31-44
34. World Bank and International Monetary Fund (2001). “Developing Government Bond Markets, a Handbook”. Word Bank, Washington.
Published
2017-05-19
How to Cite
OKON, Emmanuel Okokondem; OSINIMU, Otaro Joy.
Debt and Growth Prospects of a Debtor Country: The Case of Nigeria.
International Journal of Social Sciences, Humanities and Education, [S.l.], v. 1, n. 2, p. 125-140, may 2017.
ISSN 2521-0041.
Available at: <http://ijsshe.com/index.php/ijsshe/article/view/15>. Date accessed: 27 may 2023.
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This work is licensed under a Creative Commons Attribution 4.0 International License.
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