IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 9 NO. 9 2024
DOI: 10.56201/ijefm.v9.no9.2024.pg145.160

---

Impact of Debt Servicing on Poverty Reduction Efforts in Nigeria

Najira Agasa Nuhu

---

Abstract

Debt plays a significant role in the development of the global economy. Nigeria’s debt profile has continued to rise amidst dwindling revenue which has continued to drain the resources meant for capital projects. However, this has put the country at the verge of high debt service risk which could lead to the country’s loan default, thus draining its reputation on the global scene. The paper therefore investigated the impact of debt service on poverty reduction efforts in Nigeria. To achieve this objective, Vector Autoregressive technique was employed on time series data for the period 1986 to 2023. Findings from the paper revealed that debt service, debt stock and exchange rate had positive and insignificant impact on poverty in Nigeria. The paper recommended among other policies that government should channel all borrowed funds into productive activities that are investment yielding to accommodate more unemployed people to reduce the incidence of poverty. In addition, the government should endeavor to cut down their rate of borrowing for recurrent spending to reduce the amount of accumulated debt stock in the country. All leakages from the government coffers should be blocked to ensure transparency in the execution of capital projects in the country where investors can leverage on for growth and development.

keywords:

Debt Service, Poverty, Debt Stock, Exchange Rate,

---

References:

:
Ajayi, I. E. & Edewusi, D. G. (2020). Effect of public debt on economic growth of

nigeria: An Empirical Investigation. International Journal of Business and Management

Review 8(1), 18-38.
Central Bank of Nigeria. (1999). Nigeria’s Development Prospects: Poverty Assessment And

Alleviation Study. Central Bank of Nigeria in Collaboration with the World Bank,

Committee Main Report, Abuja.
Debt Management Office (2021). Press Release: Public Debt Data as at December 31, 2020.

Retrieved 27th May, 2021, from https://www.dmo.gov.ng/news-and-events/dmo-in-the-

news/press-release-public-debt-data-as-at-december-31-2020
Debt Management Office (2021). Nigeria’s Total Public Debt Portfolio As At December 31,
Edom, G. O., Inah, E. U., Emori, E. S. & Enya G. (2015) Small and Medium Enterprises

Financing and Poverty Reduction in Nigeria: An Empirical Analysis. Journal of

Economics and Sustainable Development 6 (11) 91-100



Ehikioya, B. I., Omankhanlen, A. E., Osuma, G. O. & Inua, O. I. (2020). Dynamic relations

between public external debt and economic growth in African Countries: A Curse or

Blessing? Journal of Open Innovative: Technology, Market and Complexity 6(88), 1-16.
Ezema, C. A., Nwekwo, N. M., & Agbaji, B. C. (2018). Impact of external debt and its services

burden to economic growth in Africa: Econometric Evidence from Nigeria 1990-2016.

International Journal of Academic Research in Economics and Management Sciences,

7(3), 232–250.
Idris, M. and Ahmad, T.S. (2017). The Productivity of Public Debt Borrowing and Economic

Growth in Sub-Saharan Region: The Nigerian Context. International Journal of

Economics, Commerce and Management, 5(6), 340-373.
International Debt Statistics (2019). Nigeria-Total debt service. Retrieved 27th April, 2021 from
https://www.indexmundi.com/facts/nigeria/total-debt-service
Krugman, P. (1988). Financing vs forgiving a debt overhang: Some Analytic notes. Journal

of Development Economics, 29, 253-268
Lawanson, A. O. (2014). Impact of External Debt Accumulation and Capital Flight on

Economic Growth of West African Countries. AERC Research Paper 279 African

Economic Research Consortium, Nairobi.
Lawrence, U. & Nsikak, E. (2015). Agricultural expenditure and poverty alleviation in Nigeria.
European Journal of Business and Management, 7(21), 29-44.
Matthew, A. & Mordecai, B. D. (2016). The impact of domestic debt on agricultural output in

Nigeria (1985-2014). British Journal of Economics, Management & Trade, 13(3), 1-12.
Morrill, R.L & Wohlenberg, E.H. (1971). The Geography of Poverty. New York: McGraw Hill.
Ndemange, F. N. (2018). The Impact of External Debt Servicing on Capital Formation and Gross

Domestic Product in Kenya. A Master thesis submitted to the department of applied

economics at of Kenyatta University.
National Bureau of Statistic (2023). The social and economic profile of Nigeria.
Ngerebo, T. A. (2014). Domestic Debt and Poverty in Nigeria: An Empirical Time Series

Investigation. European Journal of Accounting Auditing and Finance Research, 2(5), 33-
Nweze, N.J. & Ojowu, O. (2002). Poverty, Well-being and Wealth Generation in Benue State, A

Draft Report. Unpublished Material.
Ogboru, I. (2009). Reflections on External Debt, Corruption and Nigerian Economy. Jos: Jos

University Press Limited.
Ohiomu, S. (2020). External Debt and Economic Growth Nexus: Empirical Evidence from

Nigeria. Retrieved from https://doi.org/10.1177/0569434520914862
Omodero, C. O. & Alpheaus, O. E. (2019). The effect of foreign debt on the economic growth

of Nigeria. Management Dynamics in the Knowledge Economy, 7(3), 291-306.
Ovie, F. F. & Akpomuvie, O. B. (2011). An appraisal of poverty alleviation programmes in

Nigeria. Journal of Research in National Development, 9(1), 286-304.
Oyedele, O., David, J.O. & Omojola, S.O. (2016). Effects of Public Debt on Economic Growth

in Nigeria (1970-2011). European Journal of Business and Management. 8(12), 52-61.



Ozigbu, J. C. (2018). Public debt sustainability and incidences of poverty: empirical evidence

from Nigeria. International Journal of Development and Economic Sustainability 6(3),

12-26.
Pattillo, C. H. & Ricci, P. L. (2011). External debt and growth. Review of Economics and

Institutions, 2(3), 2-15.
Pettinger,
T.
(2012).
Debt
Burden
Ratio.
Retrieved
24th
June
2021,
from

http://www.economicshelp.org/blog/glossary/debt-burden-ratios/.
Rafindadi, A. A. & Musa, A. (2018). An Empirical Analysis of the Impact of Public Debt

Management Strategies on Nigeria’s Debt Profile. International Journal of Economics

and Financial Issues. 9(1), 125-137.
Rivi, M. T., Ogboru, I. & Rivi, D. J. (2020). An analysis of the long-run relationship between

corruption and debt sustainability in Nigeria. Journal for Social Sciences, 4(2), 72-88.
Said, Y. & Yusuf, A. O. (2018). Public Debt and Economic Growth: Evidence from Tanzania.

Journal of Economics, Management and Trade, 21(7), 1-12.
Sansa, N. A. (2020). Analysis of the impact of public debt on economic growth and poverty in

Tanzania. Electronic Research Journal of Social Sciences and Humanities 2(1), 154-167
Shahid, M., Shah, M. & Sadiqa, B. A. (2019). Foreign debt and debt servicing relief effect

implications in pakistan: a poverty reduction strategy. Global Economic Review 3, 34-
DOI: 10.31703/ger.2019 (IV-IV).03
Udoka, C. O. & Anyingang, R. A. (2010). Relationship between External Debt Management

Policies and Economic Growth in Nigeria (1970-2006). International Journal of

Financial Research, 1(1), 1-19.
Umaru, A., Hamidu, A. A & Musa, S. (2013). External Debt and Domestic Debt impact on

the growth of the Nigerian Economy. MPRA Paper No. 75122, Retrieved 29th May,
Uniamikogbo, S. O. (1997). Poverty Alleviation under Nigeria’s Structural Adjustment

Program: A Policy Framework in Poverty Alleviation in Nigeria. Ibadan: Pat Mag Press.
UNDP Human Development Report (2002). UNDP, Choices: The Human Development

Magazine.WorldDevelopmentReport

1998/99.http://web.ng.undp.org/documents/NHDR2002/NHDR_SUMMARY_2002.pdf.
World Bank (2002). Nigeria, poverty in the midst of plenty: The challenge of growth with

inclusion. Washington DC: World Bank
World Bank (2017). World Bank development Report. Retrieved 27th April, 2021 from

http://www.data.worldbank.org/country/nigeria Washington, D.C. IBRD/World Bank.
World Bank (2019). World Bank development Report. Retrieved 27th April, 2021 from

http://www.data.worldbank.org/country/nigeria Washington, D.C. IBRD/World Bank.
Yusoff, N. (2017). Connection between promoting economic growth and reducing poverty

in urban area of northern corridor economic region. International Journal of


Multidisciplinary Research and Modern Education, 3(2), 2454-6119.

DOWNLOAD PDF

---

Back