IMPACT OF EXTERNAL DEBT SERVICING ON ECONOMIC GROWTH OF GHANA AND NIGERIA (2000-2015)

Abstract

The aim of this study is to ascertain the impact of external debt servicing on economic growth of Ghana and Nigeria. The specific objectives were to assess the impact of total external debt and also determine the impact of debt servicing on economic growth of Ghana and Nigeria. Ex-post facto research design was adopted for the study. The model proxied real Gross Domestic Product as the dependent variable while total external debt and debt servicing were used as independent variables. Secondary data were obtained from Central Bank of Nigeria statistical bulletin, Debt management office Nigeria and Debt management division of ministry of finance Ghana. The regression analysis based on Ordinary least square (OLS) was used to test the hypotheses. Two hypotheses were tested. Findings from the study revealed that total external debt had a significant negative impact on the economic growth of Ghana while its negative impact in Nigeria was not significant, while debt servicing had a significant negative impact on both Ghana and for Nigeria. The study therefore concludes that the Governments of Ghana and Nigeria should henceforth seek better terms of external loan repayment which include longer period of moratorium ranging from 10 or more years before the maturity of the debts.