A comparative assessment of external debt management and infrastructural developments: perspectives on Nigeria's economy, 1979–2020

Abstract

Purpose – The purpose of this study is to examine whether external debt procurements during the military and civilian regimes had a correlation with infrastructural developments using available data from Nigeria. Design/methodology/approach – The sample period covering 41 years, was divided into two periods representing the military and civilian regimes with respective secondary data secured from the World Bank Group online database. The study employed robust least square regression, autoregressive distributed lag and the error correction term to test the variables at the 0.05 significance level. Findings – The results affirmed that external debts shows positive and significant relationship with infrastructural developments proxy for capital investments during the short-run for both military and civilian regimes in Nigeria, while the outcome was only significant and negatively signed for the civilian regime in the long-run with 52.28% speed of convergence to long-run. This study concludes that external debt showed significant correlation with infrastructural development during the civilian regime better than the military regime in Nigeria and this conclusion applies globally. Research limitations/implications – Research period covered only 41 years, between 1979 and 2020 and focused on sub-Saharan African country – Nigeria. Practical implications – The research encourages civilian administration in governments and urged them to carefully appraise and contract external debts to finance self-liquidating priority projects. Social implications – The national economy and the masses suffer during military regime but are better off during civilian regime. Originality/value – Apart from adding to current literature, the work focused on a coverage period that comprehensively compares two different regimes of government – military and civilian administrations.

Keywords

• External debts
• Infrastructure
• Capital investments
• Development
• Debt servicing
• Nigeria