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Domestic Debt Sustainability and Private Sector in Nigeria: Implications on Employment

Author

Listed:
  • Abiola John Asaleye*

    (Economics Department, College of Business and Social Sciences, Landmark University, Nigeria)

  • Adenike Omowumi Oladipo

    (Department of Centre for Lifelong Learning, Covenant University, Nigeria)

  • Barnabas Olusegun Obasaju

    (Economics Department, College of Business and Social Sciences, Landmark University, Nigeria)

Abstract

A strand of literature supported sourcing of fund internally via debt relative to foreign debt. The principal and interest on such internal debt is a reinvestment into the economy which would frequently have a chain investment effects. This study investigates the domestic debt sustainability level, crowding out effect and its implication on employment in Nigeria. Through the application of Maastricht Treaty Indicators, it was revealed that the domestic debt level in Nigeria is not sustainable. The long-run equation, using employment as the dependent variable showed that there is a negative relationship with domestic debt, employment, aggregate output and credit to private. The correlation analysis shows that aggregate output has a negative relationship with employment and credit to the private sector. The findings were in line with previous studies that emphasised the need for broad-based growth in Nigeria. The implications of the result showed that the gradual increase in domestic debt in Nigeria has a crowding-effect on the private investment which had resulted in negative implications on employment generation through the private sector. Hence, the study recommended the need for a proper channel of investment through domestic debt with the aim to increase the productive capacity of the economy, Among others.

Suggested Citation

  • Abiola John Asaleye* & Adenike Omowumi Oladipo & Barnabas Olusegun Obasaju, 2018. "Domestic Debt Sustainability and Private Sector in Nigeria: Implications on Employment," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 842-848:5.
    • Handle: RePEc:arp:tjssrr:2018:p:842-848
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    References listed on IDEAS

    as
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