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Financing Economic Growth and Development in Nigeria between 1981-2017

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  • Olubunmi Edward Ogunlusi

Abstract

This study examines financing economic growth and development in Nigeria. Specifically, the study investigates different financing sources available to Nigerian government as well as the impact they have on the economic growth between the period of 1981 and 2017. The study is based on secondary data sourced from the CBN statistical bulletin and the World Bank Data. The data were analysed using unit root test, descriptive statistics, correlation coefficient matrix and OLS regression analysis. Against the backdrop of the aforementioned details, the overall finding of the study suggests significant relationship between financing and economic development and growth. Thus, the following recommendations are proffered: it is incumbent on the government to implement strategies and policies that will encourage the individuals or households to save. Many strategies and policies are available that can enhance the households’ saving rate such as the increasing the interest rate on saving and so on. The government should further harness this option by procuring only needed domestic debt but should be wary of exceeding the acceptable limit. It is also important that the funds generated from this line of credit be invested judiciously and on the productive sector. The result also indicates that foreign debt significantly impacting on economic growth. However, caution must be taken in harnessing this credit line because of the substantial costs incurred in servicing the loans. Nigeria is currently servicing its foreign loans using huge funds that could have been used for funding developmental projects.

Suggested Citation

  • Olubunmi Edward Ogunlusi, 2019. "Financing Economic Growth and Development in Nigeria between 1981-2017," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(3), pages 71-79, September.
    • Handle: RePEc:khe:scajes:v:5:y:2019:i:3:p:71-79
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    References listed on IDEAS

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    1. A P Thirlwall, 2002. "The Mobilization of Savings for Growth and Development in Developing Countries," The IUP Journal of Applied Economics, IUP Publications, vol. 0(1), pages 7-30, November.
    2. Sebastine Ugochukwu Ugwuegbe & I.G Okafor & Christian Azino Akarogbe, 2016. "Effect of External Borrowing and Foreign Aid on Economic Growth in Nigeria," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(4), pages 155-175, April.
    3. Thobeka Ncanywa & Marius Mamokgaetji Masoga, 2018. "Can public debt stimulate public investment and economic growth in South Africa?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1516483-151, January.
    4. Lefteris Tsoulfidis, 2007. "Classical economists and public debt," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 54(1), pages 1-12, March.
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    More about this item

    Keywords

    Finance; economic growth gross domestic product; domestic debt; foreign debt; domestic savings;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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