Volume 61, Issue 338, May - August 2025

Public Debt and Economic Growth in Nigeria

Oluwafemi Ayodele^♦, Christopher Nyong Ekong, Paul Atanda Orebiyi

Department of Economics, Faculty of Social Science, University of Uyo, Uyo, Nigeria

^♦Corresponding Author
Department of Economics, Faculty of Social Science, University of Uyo, Uyo, Nigeria

ABSTRACT

This study investigates the impact of public debt on economic growth in Nigeria and to examine if debt service exert a statistically significant positive or negative effect on with economic growth in Nigeria using time series data covering 1981 to 2024 collected from the Central Bank of Nigeria Statistical Bulletin, National Bureau of Statistics and World Bank data. The study employed multiple regression analysis using the Autoregressive Distributed Lag (ARDL) model, complemented by descriptive statistics. The findings revealed that domestic debt exerts an adverse influence on economic growth in Nigeria. Specifically, a one percent increase in domestic debt is associated with a 0.03 percent decline in economic growth. Similarly, the coefficient for external debt was also negative, indicating that external borrowing adversely affects Nigeria’s economic performance. These results suggest that both domestic and external debt, when not efficiently managed, can hinder the country's growth trajectory. Based on the results of the study, it is recommended that the government should ensure its domestic debts are effectively controlled. The government should also moderate its external debt as the economy seems too weak to absorb shocks from external debt service.

Keywords: Public debt, domestic debt, external debt, economic growth JEL classification: H63, O40, E62, O55, F34

Discovery, 2025, 61, e22d3131

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DOI: https://doi.org/10.54905/disssi.v61i338.e22d3131

Published: 07 August 2025