Econometric Analysis...

This study investigates the relationship between external debt and capital expenditure in Nigeria, focusing on how debt indicators influence public investment capacity and macroeconomic stability. Using annual time-series data covering 31 observations, the descriptive statistics reveal wide variability among key fiscal and macroeconomic indicators. The mean capital expenditure (₦1071.27 billion) suggests moderate investment activity over the years, while external debt (mean ₦16,857.05 billion) and domestic debt (mean ₦8,422.80 billion) highlight Nigeria’s growing dependence on borrowing to fund developmental projects. The standard deviation of external debt (₦12,867.97 billion) and domestic debt (₦12,238.47 billion) indicates significant fluctuations in debt accumulation, reflecting fiscal volatility. The debt servicing variable recorded a mean of ₦255.13 billion but a sharp maximum of ₦7,800 billion, suggesting a heavy repayment burden that likely crowds out capital spending. Additionally, the Human Development Index (HDI) maintained an average of 0.49, implying slow progress in social and infrastructural development despite increased debt accumulation. Exchange rate and inflation rate averages of ₦210.46 and 17.82% respectively reflect macroeconomic instability accompanying debt growth. Skewness and kurtosis results show that debt servicing, domestic debt, and exchange rate are highly skewed and leptokurtic, indicating the presence of extreme fluctuations in fiscal data. The Jarque-Bera test confirms non-normal distribution for most macroeconomic variables, supporting the need for robust econometric estimation in further analysis. Overall, the descriptive analysis demonstrates that Nigeria’s external borrowing has grown substantially but has not consistently translated into proportional capital expenditure or improved development outcomes. This suggests inefficiencies in debt utilization and highlights the importance of transparent debt management, prioritization of capital projects, and effective fiscal reforms to ensure that external borrowing contributes meaningfully to sustainable economic growth.