Foreign Debt and Infrastructural Development in Nigeria

Abstract

Despite, the external loans the Nigerian government has been receiving all this while, Nigeria continues to record a high rate of unemployment among the active labor force, high poverty rate, low per capita income, inadequate power, and water supply, inadequate social amenities, bad road network, high budget deficit, high rate of corruption in all government parastatal. Hence, this study examined the effect of foreign debts on Nigeria's Infrastructural developments. The study made use of Auto-regressive Distributed Lag (ARDL), using annual time series from 1983-2019. Collected from CBN statistical bulletin, National Bureau Statistics (NBS), World Development Indicators (WDI) databank, and UNCTAD Database. The ARDL long-run coefficient reveals that BMFI and BBFI have a negative and positive insignificant and significant effect on INFRA in Nigeria, while the control variables of FDI and TOPEN has a positive and negative significant effect on INFRA in NigeriaThe findings give credence to the dual gap theory postulation, that external debt is a phenomenon that can improve the level of growth of an economy. Conclusively, the government should make sure that the foreign debt received from international organizations is used for the infrastructural development in the country and proffer policies and innovations that will help in recovering the foreign debts in the country.