Debt Practices and Economic Development in Nigeria

This study delves into the intricate relationship between debt practices and economic development in Nigeria. Spanning the years from 1981 to 2022, the study employs secondary data sourced from the Central Bank of Nigeria Statistical Bulletin. This article stands apart by considering both domestic and foreign debt, while also acknowledging the moderating impact of inflation rate—a dimension often neglected in prior research. The study employed the stationarity test, Johansen cointegration and error correction mechanism and analytical techniques. The study reveals that while domestic debt exerts a positive influence on human development, external debt showcases a negative correlation. Furthermore, the study underscores the adverse effect of inflation on human development, shedding light on the significance of price stability for economic progress. The recommendations drawn from the findings underscore the importance of prudent debt management, investment in domestic projects, inflation control, fiscal discipline, and long-term planning. By embracing these recommendations, Nigeria can navigate the complexities of debt practices to foster sustainable economic development and improved human well-being.