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Author(s): Edozie Confidence Chukwuedozie.

Volume/Issue: Volume 9, Issue 2 (2026)

Page No: 170-181

Journal: African Journal of Economics and Sustainable Development (AJESD)

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Abstract:

External debt sustainability is a critical issue for developing countries, particularly those with emerging economies like Nigeria, as it directly influences economic stability, growth, and development. This study examined the impact of external debt sustainability on economic growth in Nigeria covering the period 1986-2024. Data for the study were extracted from the Central Bank of Nigeria (CBN) statistical bulletin. Data for the study was analyzed with the linear regression of the Ordinary Least Squares (OLS) technique and the Granger causality analysis. The major findings of the study are that There exists a negative and insignificant relationship between external debt sustainability and economic growth in Nigeria ( = -0.000206, p-value = 0.4955 > 0.05) and there is a bi-directional causality relationship between external debt sustainability and economic growth in Nigeria (p-value = 0.0005 < 0.05 and 0.0071 < 0.05). The study concludes that external debt plays a crucial role in an economy. The optimal utilization of external debt by the government would avoid debt overhang and crowding out of investments which will boost economic growth. The study therefore recommends that the government should ensure economic and political stability in order to enjoy the benefits of external debt and make the debt burden minimal. This can be achieved through overhauling the security and political system for the better and government should acquire external debt largely for economic reasons rather than social or political reasons. This would increase the productivity of the nation.

Keywords:

Data; Development; External debt; Economic growth; Sustainability.

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