Foreign Debt Accumulation and Inclusive Growth in Nigeria

Abstract

The study examined foreign debt accumulation and inclusive growth in Nigeria using time series data for the period of 1981 to 2019. The study used the sum of Gini coefficient and GDP per capita as proxy for inclusive growth being the dependent variable while foreign debt, foreign debt service payment and exchange rate were the independent variables. The study used ARDL as its estimation technique. The study result revealed that foreign debt had negative impact on inclusive growth in Nigeria. Based on its major finding, the study concluded that increase in led to decrease in inclusive growth in Nigeria. The study based on the finding, recommended that Nigerian government should ensure that borrowing from the rest of the world is reduced to the barest minimum in order to achieve the desired level of economic growth in Nigeria. This is necessary because as a country continues to borrow from the rest of the world, the productive capacity of economy might be reduced due to mismanagement of the foreign debt. Therefore, due to mismanagement and misappropriation of public fund such as foreign debt, there is need for the Nigerian government to change her borrowing orientation by encouraging production and discouraging consumption so as to boost savings and investment for capital accumulation towards achieving the desired level of inclusive growth in Nigeria.