An Appraisal of Debt Stock and Nigeria Economy: The Consequences

Abstract

This article appraises the effect of public debt on oil trade balance, unemployment, and human development in Nigeria over the period 2013–2023. Using secondary data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and World Bank Development Indicators, the article employed an ex post facto research design and estimated models using the Ordinary Least Squares (OLS) method. Descriptive statistics revealed persistent increases in both domestic and external debt, alongside rising unemployment, currency depreciation, and low human development outcomes. The regression results showed that public debt had no statistically significant effect on oil trade balance and human development index. However, external debt exerted a positive and significant effect on unemployment, while exchange rate depreciation worsened both unemployment and oil trade balance. Domestic debt was consistently insignificant across all models, suggesting weak linkages between internal borrowing and developmental outcomes. The findings underscore that debt accumulation in Nigeria has not translated into meaningful economic transformation. Instead, external debt obligations and exchange rate instability remain critical sources of macroeconomic vulnerability. The article concludes that prudent debt management, economic diversification, exchange rate stabilization, and improved governance in debt utilization are imperative for ensuring that borrowing contributes to sustainable growth and welfare improvement.