Effects of Government’s Borrowing on Nigerian Infrastructural Development

This study evaluates the effects of government’s borrowings on infrastructural development in Nigeria. Infrastructural development has been proxied with capital spending of the federal government of Nigeria. The study embraced only secondary data as the sole source of data collection; quantitative data for the three variables of the study were sourced from Central Bank of Nigeria statistic bulletin. Data were analyzed using the Ordinary Least Square (OLS) Regression analysis to determine the relationship of the variables. Findings from the analyses show a short term relationship among the variables. The study further reveals that a positive relationship exists between federal government capital expenditure and domestic debt; while no significant relationship between capital expenditure and foreign debt was found. The implication of the findings is that increases in Domestic debt of the federal government leads to an increase in capital expenditure (Infrastructural development) (at the short run) while federal government foreign debt hitherto has not resulted to any improvement in capital spending (infrastructural development). The study thus concludes that the external/foreign debt has not contributed significantly in the development of Nigerian’s infrastructure and that the huge external debt profile of Nigeria even before the debt forgiveness of 2005 to date is not justifiable and is uncalled for. It suggested that external loans should be restricted to specified identifiable infrastructural or productive projects.