THE EFFECT OF EXTERNAL DEVT ON THE NIGERIA ECONOMIC GROWTH (1989-2010)
- Project Research
- 1-5 Chapters
- Abstract : Available
- Table of Content: Available
- Reference Style: APA
- Recommended for : Student Researchers
- NGN 3000
BACKGROUND OF THE STUDY
The accumulation of external debt is a common phenomenon of the third World countries at the stage of economic growth and development where the supply of domestic savings is low, current account payment deficit is high and import of capital is needed to increase domestic resources. The management of Nigeria’s external debt has been a major macroeconomic problem especially since the early 1980s. For many years now, the country’s debt has been growing in spite of the efforts being made by the Government to manage and minimize its crushing effects on the nation’s economy. Such efforts range from the various refinancing and restructuring agreements to debt conversion programme and the deliberate allocation of substantial resources towards servicing the debt. Of particular concern to the authorities, is the heavy debt burden it imposes when compared with the country’s debt service capacity. In recent years, however, some observers have held different perceptions about Nigeria’s capacity or otherwise to service her debt. This is largely because of the improved income to the country arising from export of crude 2 oil, Nigeria’s major export. Moreover others have argued that bad governance, especially during the military rule,largely accounted for the mismanagement of the Nigerian economy and therefore, the people should bear the brunt. Whatever position one holds, what appears undisputableis the increasingly large debt service requirement which imposes considerable stress on the Nigerian economy even when the improved resource inflow is factored into the country’s cash flows. Indeed, the issue of sustainability of Nigeria’s debt profile continued to be the focus of research and public debate until the recent initiative of the Paris Club of Creditors which appears to address the issue in a more meaningful way. Even then the conditions and adequacy of the debt relief have continued to generate further debate. The objective of this paper is to review Nigeria’s external debt and the burden it imposes, and use the various indicators and prevailing global economic circumstances to justify the need for substantial debt relief for the country. However, during the late 70s and early 80s, commercial banks began playing a big role in international lending by recycling surplus OPEC ‘’petrodollars’’ and issuing general purpose loans to less developed countries to provide balance of payment support and expansion of export sectors. While foreign borrowing can be highly beneficial providing the resources necessary to 3 promote economic growth and development, it has its cost. In recent years, these costs have greatly outweighed the benefits for many developing nations. The main cost associated with the accumulation of a large external debt is ‘’debt serving’’. Debt servicing is the payment of liquidation of the principal and accumulated interest. It is a contractually fixed exchange on domestic real income and savings as the debt grows or as interest rate raise. Debt service payment must be made with foreign exchange. In other words, debt service obligation can be met only through export earnings. However, should the composition of import change or should the composition of export change or should interest rate rise causing ballooning of debt service payment or should export earnings diminish, debt servicing difficulties are likely to arise. This has been the experience of most of the heavily indebted third World nations. In order to solve the problem, several external debt-financing options were adopted under the Structural Adjustment Programme (SAP) in 1986. Since the introduction of this programme, Nigerians have been plunged into one hardship after another ranging from the devaluation of the naira through Second Tie Foreign Exchange Market (SFEM) now Foreign Exchange Market (FEM) to the rising prices of commodities, inflation etc. SAP as an economic 4 restructuring program is capable of alleviating the country’s debt trap, a miracle Nigerian’s are waiting to see. Specifically, as part of the programmatic approach to reduce the burden of external debt, embargo on new loans, limit on debt service payment, debt restricting and debt conversion have been adopted in recent years.
Related Project Materials
GLOBALIZATION AND THE NIGERIAN ECONOMY: THE BABANGIDA PERIOD
ABSTRACT
This study was carried out to examine Globalization and the Nigerian economy the Babangida per...
A STUDY ON THE IMPACT OF CHILD LABOUR ON SCHOOL ATTENDANCE AND ACADEMIC PERFORMANCE
BACKGROUND STUDY
In Nigeria, the main instrument for social change is western education. Education is t...
STUDENTS SATISFACTION WITH LEARNING ENVIRONMENT IN DISTANCE LEARNING UNIVERSITIES IN NIGERIA
ABSTRACT
The study examined students satisfaction with learning environment in distance learning universities in Nigeria...
PATTERN OF INSTAGRAM USAGE AMONG UNDERGRADUATE STUDENTS
ABSTARCT
This study examines the Pattern of Instagram Usage Among Undergraduate Students of Delta State...
An Implementation of the Past Question Paper Archive System Model (A case study of Baze University)
ABSTRACT
The proposed thesis is designed to be an online Baze University past question archiving system. The use of technologies has beco...
DETERMINATION OF SELF-EMPLOYMENT SKILLS NEEDED BY BUSINESS EDUCATION STUDENTS IN COLLEGES OF EDUCATION IN SOUTH-WEST, NIGERIA
Background of the Study
Education is the bed rock of a nation‟s economy. It is the suitable legacy with which a child s...
EFFECT OF TAX EVASION AND TAX AVOIDANCE ON ECONOMIC DEVELOPMENT
ABSTRACT
This Research work attempts to look at the effect of Tax evasion and avoidance on economic development of Niger...
A CRITICAL ANALYSIS OF THE ROLE OF MULTINATIONAL COMPANIES IN DEVELOPING COUNTRIES
ABSTRACT
The main objective of this study was to look, at international business management and assess...
PROFICIENCY IN ENGLISH LANGUAGE AS A DETERMINANT OF STUDENTS ACADEMIC PERFORMANCE
ABSTRACT
The study examined proficiency in English language as a determinant of students academic performance in seconda...
THE EFFECTIVENESS OF DIETARY INTERVENTION STRATEGIES (AS PART OF PRIMARY HEALTH CARE) AIMED AT REDUCING OBESITY PREVALENCE AMONGST ADULTS
BACKGROUND OF THE STUDY
Obesity, a global health concern, is defined as having a body mass index (BMI)...
