Assessing the effects of external borrowing on infrastructural development in Nigeria from 2015-2021

Abstract

Government has the objective to provide basic infrastructure to its citizens across the nooks and crannies of the country. Generally, the existence of infrastructure facilitates socio economic development. External borrowing is one of the sources that Nigeria depends on generating income to provide and finance infrastructure in the country. The study adopted Debt Overhang Theory in examining the effects of external borrowing on infrastructural development in Nigeria from 2015-2021. This research adopted qualitative research method by producing narrative and textual description of the study phenomena. To be more specific,
this type of research is majorly explanatory. The study purposively sampled thirty-four (34) key informants. Seven (7) from the management staff of the Debt Management Office, eight (8) from the Infrastructure Concession Regulatory Commission as well as nineteen (19) management staff of the Federal Ministry of Finance Abuja. The finding of this study revealed that External borrowings are a major source of public receipts in Nigeria. External debt has both positive and negative effects on Nigerian economy generally and on infrastructural development particularly. On the positive note, external debt provides the country with
increased funding, Improved infrastructure quality, the necessary funds to invest in infrastructure projects such as roads, bridges, schools, and hospitals. However, Nigeria is trapped on a debt treadmill as they are forced to take new loans to pay old ones. The study recommends that external borrowings when taken should be used exclusively for profitable productive capital investments that can be liquidated rather than recurrent expenditure.