FOREIGN DEBT AND POVERTY INCIDENCE IN NIGERIA
Abstract
This study examined the relationship between foreign debt and poverty incidence in Nigeria
covering the period 1990 to 2024. Secondary data were sourced from the Central Bank of Nigeria
(CBN) Statistical Bulletin and World Bank Development Indicators. The Ordinary Least Squares
(OLS) technique was employed using Eviews package to analyze the data. The dependent variable is
the poverty rate (proxy for poverty incidence), while the independent variables are exchange rate,
debt servicing, and debt-to-GDP ratio. The findings showed that exchange rate has a positive and
significant impact on poverty rate in Nigeria while debt-to-GDP ratio has a negative and
insignificant impact on poverty rate in Nigeria. The findings also showed that debt servicing has a
positive and significant impact on poverty rate in Nigeria. The study therefore concluded that
foreign debt plays a significant role in poverty reduction in Nigeria. Based on these findings, the
study recommends that Nigeria should adopt prudent debt management strategies, ensure foreign
loans are directed towards productive and poverty-reducing sectors, diversify revenue sources to
reduce dependence on external borrowing, and stabilize the exchange rate to strengthen poverty
alleviation efforts.
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