Public Debt Management and Economic Growth in Nigeria

Nigeria’s fiscal trajectory has reached a critical juncture, characterized by an exponential expansion of public debt surpassing ₦142 trillion by late 2023 and a shrinking fiscal space where debt servicing consumes a significant portion of retained revenue. This study critically examines the impact of public debt management on Nigeria’s economic growth over a 54-year period (1970–2023). Utilizing longitudinal data sourced from the Debt Management Office (DMO), the Central Bank of Nigeria (CBN), and the National Bureau of Statistics (NBS), the research employs an ex-post facto design and Ordinary Least Square (OLS) regression to analyze the relationship between Real GDP growth and three primary debt indicators: Domestic Debt Ratio (DDR), External Debt Ratio (EXDR), and the Growth Rate of Total Debt (GRTD). The theoretical framework synthesizes the Dual-Gap Theory, the Crowding-Out Hypothesis, and Keynesian Deficit Financing to identify the “tipping point” of fiscal sustainability. Empirical results reveal that public debt management exerts a statistically insignificant influence on economic growth, signaling a “multiplier failure” in the Nigerian economy. Specifically, the DDR shows a negative drag on growth (b = -0.358$), lending credence to the Crowding-Out effect, while EXDR and GRTD exhibit marginal, non-significant positive relationships. The study concludes that Nigeria’s borrowing lacks the “productive efficiency” required to drive sustainable expansion, suggesting that the challenge lies in the strategic allocation rather than the mere volume of debt. Policy recommendations include a moratorium on domestic debt for recurrent spending and a shift toward concessional, project-tied external borrowing.