External Debt Burden and the Capital Accumulation of Nigeria: A Co Integration Approach (1980 - 2012)

The study investigated the impact of external debt burden on capital accumulation of Nigeria for the period of 1980 – 2012. The study used time series data on external debt burden, capital formation proxied by Gross Fixed Capital Formation (GFCF) and gross domestic product. It assumes that external debt helps in accumulating capital necessary to induce growth by restoring credibility to existing and new creditors. Data sourced for the study were from the Central Bank of Nigeria (CBN) statistical bulletin and economic report of various issues, Debt Management Office (DMO), International Monetary Fund (IMF) reports and World Bank Reports and publications, Ministry of Finance (MoF) and the National Bureau of Statistics (NBS). The study employed the econometric tools of OLS estimation procedure. Estimation results showed that there is a statistically significant impact of external debt burden on gross fixed capital formation and gross domestic product. The total external debt stock has a positive effect of about 68percent. In all, it was recommended that caution is a necessity if further borrowing is to be sort. Keywords: External debt, Gross Fixed Capital Formation, Gross Domestic Produc