EFFECT OF EXTERNAL DEBTS ON STANDARD OF LIVING IN NIGERIA

Abstract

This paper is focused on the link between external debts and the standard of living in Nigeria. The standard of living in Nigeria has been on the decline over the years, primarily or partly due to the huge external debt and loss of funds used in servicing the debts. A good chunk of the debts appears to have been used for the wrong purposes. The main objective of the paper is thus to empirically examine the effect of external debts on the standard of living in Nigeria. The research covered the period between 1994 and 2021. Using the co-integration framework, the findings revealed that external debts has a positive and significant impact on the per capital income. Also, debt service has a negative and significant impact on the per capital income. The Balance of Payment (BOP) has a positive but insignificant impact on the standard of living. The Rate of Inflation (INF) has a negative and significant impact on the standard of living. The study recommends amongst others that externally borrowed funds should be channeled into economic and social programmes that will focus primarily on standard of living in Nigeria.