Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Domestic Debt and Infrastructure Financing in Nigeria: A Multi- Variant Analysis of Transportation Expenditure

URANTA, Joseph Apawari and Lucky Anyike Lucky

Abstract

This study investigated the relationship between domestic debt and infrastructural financing of public transportation expenditure in Nigeria from 1986 to 2023.Time series data were sourced from Central Bank of Nigeria Statistical Bulletin, Nigeria Bureau of Statistics and Debt Management Office. Public transportation expenditure was used as dependent variables while Treasury Bonds, Treasury Bills and FGN Bonds are the independent variables. The study employed Unit Root, Co-integration, Error Correction Model and Granger Causality techniques in analysing secondary data. The unit root test revealed that Domestic Debt and transportation expenditure were integrated as order 1 or I (1), meaning it is non-stationary at original level. The estimated model found that 63 per cent variation in public expenditure on transport was detected from the domestic debt variables; the model is statistically significant by the value of f-probability. The results further found that federal government Treasury bond have positive effect while treasury bills and federal government bonds have positive effect on public expenditure on transport. From the findings, we conclude that domestic debt affects the growth of public expenditure on transportation. We recommend improve fiscal discipline and efficiency in public spending to ensure that funds allocated for infrastructure projects are used effectively. Implement robust project appraisal, monitoring, and evaluation mechanisms to reduce wastage and corruption in public spending. Given the bidirectional causality between transportation Expenditure and FGN Bonds, prioritize healthcare financing to meet the growing healthcare needs of the population. Explore ways to enhance healthcare infrastructure and service delivery without overreliance on debt financing.

Keywords

Domestic DebtInfrastructure FinancingMulti-Variant Analysis Transportation

References

Abdulkarim, Y., and Saidatulakmal, M. (2021). The impact of government debt on economic growth in Nigeria. Cogent Economics and Finance, 9(1). DOI: 10.1080/23322039.2021.1946249. Achibong, E. P., Ogana, J. F., Edet, A. F., and Enamhe, D. C. (2023). Health care financing and services utilization in Cross River State, Nigeria. Global Journal of Social Sciences, 22, 9-24. Adejuwon, K. D., James, K. S., and Soneye O. A. (2010). Debt Burden and Nigerian Development. Journey of Business and Organisational Development, 2, 103-113. Ademola, E. O., and Oluwaeyi, A.A. (2013). Relationship between Domestic Debt, Macro- economic indices and viability of the Construction Sector in Nigeria’, International Journal of Economics, Finance and Management Sciences, 1(16), 266-272 Adesoye A. B. (2014). Infrastructural financing in Nigeria: Growth implications. Journal of Economics and Sustainable Development, 5(5), 8-17. Adesoye, A. B., Maku, E. O., and Atanda, A. A. (2011). Strategic development financing mix and economic growth in Nigeria. Pakistan Journal of Business and Economic Review, 8(1), DOI:10.3923/pjssci.2011.8.12. Adofu I., and Abula M. (2010). Domestic debt and the Nigerian economy. Current Research Journal of Economic Theory, 2(1), 22-23. Ajayi, L.B., and Oke, M. O. (2012). Effect of External Debt on Economic Growth and Development of Nigeria. International Journal of Business and Social Science, 3 (12), 297- 304. Ajayi, O. (1984). Financial and Legal Implications of the Nigerian Capital Market. Even Brothers Ltd. Ali Abbas, S.M., and Jacob, E.C. (2007). The Role of Domestic Debt Markets in Economic Growth: An Empirical Investigation for Low-income Countries and Emerging Markets. International Monetory Fund, WP/07/127. Alison, J. (2003). Key Issues for Analysing Domestic Debt Sustainability, (2003 edn.). Debt Relief International Publication. Altayhgil, Y.B., and Akkay R.C. (2013). The effect of the domestic debt on the financial development: A case study for Turkey. International Journal of Economics and Finance, 5(5). Published by Canadian Center of Science and Education, pp 64, ISSN 1916-1916- 971X E-ISSN 1916-9728. Amakom U.S. (2003). Nigeria Public Debt and Economic Growth: An Empirical Assessment of Effects on Poverty. African Institute for Applied Economics Enugu, Nigeria. Aminu U., Ahmadu A. H., and Salihu M. (2013). External debt and domestic debt impact on the growth of the Nigerian economy. International Journal of Educational Research, 2(1). ISSN: 2306-706370. Anirudha, B. (2012). Government Debt and Economic Growth in India. Centre for Economic Studies and Planning (CESP). Jawaharlal Nehru University (JNU) New Delhi. Asiri, M. A., & Odularu, G. (2020). Trade Facilitation and Logistics Performance in Saudi Arabia: Lessons and Policy Directions for Nigeria in the Digital Age. Doi:10.1007/978- 3-030-34552-5_3. Asogwa, R.C., (2005). Domestic Government Debt Structure, Risk Characteristics and Monetary Policy Conduct, Evidence from Nigeria. www.imf.org. http://www.imf.org/external/np/res/seminars/2005/macro/pdf/asogwa.pdf: Audu, I., and Abula, M. (2001). Domestic debt and the Nigerian economy. Current Research Journal of Economic Theory, 2(1), 22-26. Bandiera, L., & Tsiropoulos, V. (2019). A framework to assess debt sustainability and fiscal risks under the Belt and Road Initiative. World Bank Policy Research Working Paper, (8891). Baridam, D. M. (2001). Research Methods in Administrative Sciences (3rd Edition). Sherbrooke Associates. Barro, R. J. (1979). On the determination of the public debt. Journal of Political Economy, 87 (5), 940-971. Barro, R. J. (1974). Are Government Bonds Net Wealth? Journal of Political Economy, 82, 1095- Bhattacharjee, A., & Das, J. (2020). Examining the Nexus between Indian and US Stock Market: A Time Series Analysis. Available at SSRN 3560386. Bildirici, M., and Ersin, O. O. (2007), Domestic Debt, Inflation and Economic Crisis: A Panel Co-integration Application to Emerging and Developed Economies. Applied Econometrics and International Development, 7(1). Brooks, C. (2009). Introductory Econometrics for Finance. Cambridge University Press. Carlos, B.C., Gustavo, A.M. and Tuan, M. L. (2014). Measuring the Impact of Debt-Financed Public Investment. The World Bank Poverty Reduction and Economic Management Framework, Policy Research Working Paper. Cecilia, B., Karlis S., and Vivien, F. (2008). Financing Public Infrastructure in Sub-Saharan Africa: Patterns, Issues, and Options. Africa Infrastructure Country Diagnostic (AICD). Charles, O. (2012). Domestic Debt and the Growth of Nigerian Economy. Research Journal of Finance and Accounting, 3(5). Chris, O. U., and Samson, O. (2012). Public debt and the crisis of development in Nigeria: Econometric investigation. Asian Journal of Finance and Accounting, 4(2), 231-43 Christabell, M. (2013). The relationship between public debt and economic growth in Kenya. International Journal of Social Sciences and Project Planning Management, 1(1), 65-86. Cho, S. (2011). Issues and policy implications of Monetary Stabilization Bills, Korea Capital Market Institute (written in Korean). In: Yi, J. (2014). Treasury bills and Central Bank bills for monetary policy. Procedia - Social and Behavioral Sciences, 109, 1256 – 1260. Clark, C. (1954). Limits of Taxation: A Rejoinder. The Review of Economics and Statistics, 36(1), Codjia, M. (2017). Definition of Domestic Debt. bizfluent.com. https://bizfluent.com/facts- 6828714-definition-domestic-debt.html. Cowan, K., Levy-Yeyati, E., Panizza, U., and Sturzenegger, F. (2006). “Sovereign Debt in the Americas: New Data and Stylized Facts. Inter-American Development Bank, Research Department, Working Paper #577. Dalton, H. (2003). Principles of public finance: The Principle of Maximum Social Advantage. Routledge. Datar, A., Mukherji, A., and Sood, N. (2007). Health infrastructure and immunization coverage in rural India. Indian Journal of Medical Research, 125, 31-42. Debt Management Office [Nigeria] (2023). Bonds. www.dmo.gov.ng. https://www.dmo.gov.ng/fgn-bonds. Ebi, B. O., Abu M., and Clement, O. D. (2013). The Relative Potency of External and Domestic Debts on Economic Performance in Nigeria. European Journal of Humanities and Social Sciences, 27(1). ISSN 2220-9425 1415 El-Mahdy, A. M. and Torayeh, N. M. (2009). Debt sustainability and economic growth in Egypt. International Journal of Applied Econometrics and Quantitative Estudies, 6(1), 1-31. Emmanuel, C. M., Pius, C., and Greenwell, M. (2013). Impact of government sectoral expenditure on economic growth in Malawi. Journal of Economics and Sustainable Development, 4(2), 71-78. Fay, M., Martimort, D., and Straub, S. (2018). Funding and financing infrastructure: The joint- use of public and private finance. Policy Research Working Paper 8496, World Bank Group. FGN (2023). Federal Government Domestic Debt Stock by Instrument as at March 31. Debt Management Office. Gangolli, L. V., Duggal, R., and Shukla, A. (2005). Review of Healthcare in India. Cehat. Gbosi, A.N. (1998). The impact of Nigeria’s domestic debt on macroeconomic environment. First Bank Review Journal. In: James, A.A., Magaji, S., Ayo, A.A., and Musa, I. (2016). The Impacts of Domestic Debt on Economic Performance in Nigeria (1970 - 2013). Journal of Economics and Sustainable Development, 7(8), 54-64. Global Development Finance (2004). The Challenge of Financing Infrastructure in Developing Countries. documents1.worldbank.org. https://documents1.world bank.org/curated/en/357741468128409068/pdf/288100PAPER0v110GDF02004.pdf Godfrey, K. P., and Cyrus, M. M. (2013). Domestic debt and economic growth nexus in Kenya. Current Research Journal of Economic Theory, 5(1),

More Articles from IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH

Effect of Monetary Policy on Profitability of Deposit Money Banks in Nigeria

Author: Stephanie Nguhemen Gbande, Mike T. Soomiyol, Timothy Tyona, Gaius Msendoo Asombo

Cognitive Diversity and Performance of Deposit Money Banks in Nigeria

Author: 1Nwangwu, Okwudiri Iheanyi, 2 Pepple, Grace Jamie PhD

Banking Innovations and Industrial Sector Performance in Nigeria: Evidence from ARDL Model

Author: Peter Ngbede Ajam, Abiodun Edward Adelegan, Benson Emmanuel

Environmental Sustainability and Entrepreneurial Performance in Nigeria: A Case Study of Enugu State

Author: i, Azolike Nkiru Nkechi, ii, Okwor Emmanuel Ejimnkonye, iii, Eneaniofu Daniel Mmaduakonam