Effect of external debt on expected years of schooling: The case of Nigeria and Ghana


Abstract views: 445 / PDF downloads: 136

Authors

  • Veronica Brendan Edeminam Premiere Urgence Internationale, Nigeria
  • Osman Nuri Aras Tishk International University, Iraq

DOI:

https://doi.org/10.31039/ljss.2022.3.66

Keywords:

External debt stock, expected years of schooling, education, debt servicing stock, Nigeria, Ghana

Abstract

This study investigates the effect of public debt on expected years of schooling in Nigeria and Ghana using annual time series data from 1990 to 2019 sourced from World Bank, and United Nations Development Programme. Trend analysis was done for external debt stock and expected years of schooling variables. Other variables in the study are external debt servicing stock and real effective exchange rate. Pre-econometric test for unit root was undertaken using Phillips-Perron and Augmented Dickey-Fuller unit root test methods. Econometric test for long run cointegration was undertaken using long run form and bounds test method within the ARDL framework. The long run cointegration test showed absence of long run cointegration among the variables for Nigeria, but there was long run cointegration among the variables for Ghana. The test for causality using Granger causality showed unidirectional causality from expected years of schooling to external debt stock for Ghana. In both countries, borrowing for infrastructural projects is prioritized over borrowing for investment in social sectors. Even where there is an investment in the social sector using external debt, it is not enough to create a significant effect. As recommendation from the findings, external debt should be used to improve expected years of schooling as much as it is used for infrastructural investment. This is because of the importance of developing the manpower that will manage the infrastructure that is financed by external debt.

References

Abdulkarim, Y. (2021). The impact of government debt on economic growth in Nigeria. Cogent Economics and Finance, 9(1), 1-19. https://doi.org/10.1080/23322039.2021.1946249

ADB. (2021). African economic outlook 2021: Debt resolution and the nexus between governance and growth. African Development Bank. https://www.afdb.org/sites/default/files/2021/03/09/aeo_2021_-_chap3_-_en.pdf

Allwell, O. (2021, April 11). How much money does Nigeria owe China?. Quartz Africa. https://qz.com/africa/1994765/how-much-debt-does-nigeria-owe-china/.

Aspromourgos, T. (2018). Keynes, public debt, and the complex of interest rates. Journal of the History of Economic Thought, 40(4), 493-512. https://doi.org/10.1017/s1053837217000578

Blanchard, O. (2019). Public debt and low interest rates. American Economic Review, 109(4), 1197-1229. https://doi.org/10.3386/w25621

Blessy, A. (2019). Impact of exchange rate depreciation on external indebtedness: Evidence from a sample of emerging economies. Proceedings of the 51st International Academic Conference, Vienna, Institute for Financial Management and Research, India. https://doi.org/10.20472/iac.2019.051.004

Boateng, N. A. (2014). Does public expenditure matter for education outcomes? Development Southern Africa, 31(4), 535-552. https://doi.org/10.1080/0376835x.2014.906299

Charles, U. O., Sylvester, C. E., Stephen, K. D., & Emilia, M. M. (2016). Government education spending and education outcome in Nigeria. International Journal of Economics, Finance and Management Sciences, 4(4), 223-234. https://doi.org/10.11648/j.ijefm.20160404.18

Damilola, F. O., Olabisi, O., & Bolanle, A. (2021). Impact of Osun elementary school feeding and health programme (OMEALS) on the enrolment and retention of rural primary school pupils in Osun State, Nigeria. Preprints, 1-13. http://dx.doi.org/10.20944/preprints202111.0496.v1

Databank. (2022). Metadata Glossary. The World Bank. Retrieved February 9, 2022, from https://databank.worldbank.org/metadataglossary/millennium-development-goals/series/DT.TDS.DECT.EX.ZS

David, W. (2021, November 4). Ghana’s worsening debt market access means IMF relief needed: Economists. The Africa Report. https://www.theafricareport.com/142654/ghanas-worsening-debt-market-access-means-imf-relief-needed-economists/

Debt Management Office. (2019). Nigeria’s debt management strategy, 2020–2023. Debt Management Office, Nigeria. Retrieved February 11, 2022, from https://www.dmo.gov.ng/publications/other-publications/debt-management-strategy/3163-nigeria-s-debt-management-strategy-2020-2023-draft/file

Debt Management Office. (2020). External and domestic borrowing guidelines for federal governments, state governments, and the federal capital territory and their agencies. Debt Management Office, Nigeria. Retrieved February 15, 2022, from https://www.dmo.gov.ng/publications/other-publications/borrowing-guidelines/3174-revised-external-and-domestic-borrowing-guidelines-for-the-federal-government-state-governments-fct-and-their-agencies-2020/file

Duro, A., & Ayodele, O. O. (2009). New directions in the Nigerian educational system. Comtemporary Issues in Education Research, 2(2), 33-44. https://doi.org/10.19030/cier.v2i2.1095

Ekaette, S. O., Owan, V. J., & Agbo, D. I. (2019). External debts and the financing of education in Nigeria from 1988 – 2018: Implication for effective educational management. Journal of Educational Realities(JERA), 9(1), 55-68. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3457810

Emiliana, V., & Chelsea, C. (2015). When education expenditure matters: An empirical analysis of recent international data. Comparative Education Review, 59(2), 289-304. https://doi.org/10.1086/680324

Emilio, C., & Enrico, L. (2009). The politics of external debt in developing countries. Working Paper Series, Department of Economics, University of Milan, 176, 1-22. https://ideas.repec.org/p/mib/wpaper/176.html

Fatas, A., Ghosh, A. R., Panizza, U., & Presbitero, A. F. (2018). The motives to borrow. IMF Workig Paper No: 2019(101), International Moetary Fund. https://doi.org/10.5089/9781498312103.001

Fincke, B., & Greiner, A. (2015). Public debt and economic growth in emerging market economies. South African Journal of Economics, 83(3), 357-370. https://doi.org/10.2139/ssrn.2449222

Fosu, A. K. (2007). Fiscal allocation for education in Sub-Saharan Africa: Implications of the external debt service constraint. World Development, 35(4), 702-713. https://doi.org/10.1016/j.worlddev.2006.06.008

Fosu, A. K. (2010). The external debt?servicing constraint and public?expenditure composition in Sub?Saharan Africa. African Development Review, 22(3), 378-393. https://doi.org/10.1111/j.1467-8268.2010.00252.x

Gitana, D., & Agn?, S. (2018). Education and economic development in the selected European union countries. European Journal of Sustainable Development, 7(2),3 14-28. https://doi.org/10.14207/ejsd.2018.v7n2p14

Human Progress (2022). Education index: Expected and mean years of schooling 1980 – 2013. Retrieved February 21, 2022, from https://www.humanprogress.org/dataset/education-index/

Igudia, P. O. (2021). Impact of external debt servicing on human capital development in Nigeria: 1960 to 2019. International Journal of Business & Law Research, 9(3), 38-55. https://seahipaj.org/journals-ci/sept-2021/IJBLR/full/IJBLR-S-4-2021.pdf

International Monetary Fund (2016). Heavily indebted poor contries (HIPC) initiative and multilateral debt relief initiative (MDRI)-statistical update. Policy Papers, 16(19), 1-46. https://doi.org/10.5089/9781498345873.007

Jeroen, S., & I?aki, P. (2019). The subnational human development database. Scientific Data, 6, (190038), 1-15. https://dx.doi.org/10.1038%2Fsdata.2019.38

John, N. N. U. (2016). Education corruption and teacher absenteeism in Nigeria. Independent Journal of Management and Production, 7(2), 546-556. http://dx.doi.org/10.14807/ijmp.v7i2.428

Khemais, Z. (2018). Is the relationship between external debt and human development non-linear? A PSTR approach for developing countries. Economics Bulletin, 38(4), 2194-2216. https://econpapers.repec.org/RePEc:ebl:ecbull:eb-18-00571

Mehwish, K., Yigu, L., & Stefan, T. (2019, April 16). Education in Ghana. WENR - World Education News + Reviews. https://wenr.wes.org

Ministry of Finance. (2021). 2021-2024 medium-term debt management strategy (MTDS). Ministry of Finance, Republic of Ghana. Retrieved February 11th, 2022, from https://mofep.gov.gh/sites/default/files/news/2021-2024-Ghana-MTDS.pdf

Mutiu, A. O., Abdulfatai, A. A., & Rasheed, O. O. (2020). External debt, investment and economic performance in Sub-Saharan Africa. Trends in Agricultural Economics, 13(1), 1-10. https://dx.doi.org/10.3923/tae.2020.1.10

Naeem, J., & Sherbaz, S. (2016). Indebtedness and poverty; The case of Pakistan. The Pakistan Development Review, 55(41-II), 823-835. https://doi.org/10.30541/v55i4i-iipp.823-835

Ndubuisi, P. (2017). Analysis of the impact of external debt on economic growth in an emerging economy: Evidence from Nigeria. African Research Review, 11(4), 156-173. https://doi.org/10.4314/afrrev.v11i4.13

OECD (2012). Equity and quality in education: Supporting disadvantaged students and schools. OECD Publishing. http://dx.doi.org/10.1787/9789264130852-en

Ombati, F. O., & Masese, A. (2015, July 27). Education For All in Sub-Saharan Africa: A Mirage?. Caltura Critica. https://www.culturacritica.cc/2015/07/education-for-all-in-sub-saharan-africa-a-mirage/?lang=en

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326. https://doi.org/10.1002/jae.616

Phillipe, B., Montfort, M., & Boileau, L. (2002). The choice between external and domestic debt in financing budget deficits: The case of Central and West African countries, IMF Working Papers, 2(79), 1-28. https://doi.org/10.5089/9781451850215.001

Salsman, R. M. (2017). The political economy of public debt: Three centuries of theory and evidence. Edward Elgar Publishing, USA. https://doi.org/10.4337/9781785363382

Samuel, A., Wilhemina, J. D., & Anim, A. A. (2016). Educational reforms in Ghana: Past and present. Journal of Education and Human Development, 5(3), 158-172. https://doi.org/10.15640/jehd.v5n3a17

Sansa, N. A. (2020). Analysis of the impact of public debt on economic growth and poverty in Tanzania. Electronic Research Journal of Social Sciences and Humanities, 2(1), 154-167. https://dx.doi.org/10.2139/ssrn.3567844

Shrestha, B., & Bhatta, G. R. (2018). Selecting appropriate methodological framework for time series data analysis. The Journal of Finance and Data Science, 4(2), 71-89. https://doi.org/10.1016/j.jfds.2017.11.001

Stephen, O. (2021, September 7). Nigeria’s debt is sustainable, but dangers loom on the horizon. The Conversation. https://theconversation.com/nigerias-debt-is-sustainable-but-dangers-loom-on-the-horizon-166372

Stephen, M., Olivier, M., & Sun?ica, V. (2011). The crime reducing effect of education. The Economic Journal, 121(552), 463-484. https://doi.org/10.1111/j.1468-0297.2011.02430.x

Tasleem, H. (2021). Impact of public debt on health and education in SAARC countries. Journal of Education and Social Studies, 2(2), 52-58. https://doi.org/10.52223/jess.20212203

Terry, O. (2021, October 21). Ghana: African Development Bank extends $75 million loan to Ghana infrastructure investment fund for portfolio expansion. African Development Bank. https://www.afdb.org/en/news-and-events/press-releases/ghana-african-development-bank-extends-75-million-loan-ghana-infrastructure-investment-fund-portfolio-expansion-46434

Thao, P. T. P. (2018). Impacts of public debt on economic growth in six ASEAN countries. Ritsumeikan Annual Review of International Studies, 17(3), 63-88. http://www.ritsumei.ac.jp/ir/isaru/assets/file/raris/raris-17-04_PHAM_Thi_Phuong_Thao.pdf

Tilak, J. B. (1990). External debt and public investment in education in Sub-Saharan Africa. Journal of Education Finance, 15(4), 470-486. https://www.jstor.org/stable/40703837

Tsoulfidis, L. (2007). Classical economists and public debt. International Review of Economics, 54, Article 1. http://dx.doi.org/10.1007/s12232-007-0003-8

UNDP (2019). Beyond income, beyond averages, beyond today: Inequalities in human development in the 21st century. Human Development Report 2019. United Nations Development Programme. https://doi.org/10.18356/838f78fd-en

UNESCO (2016). Education 2030: Incheon declaration and framework for action for the implementation of sustainable development goal 4: Ensure inclusive and equitable quality education and promote lifelong learning. UNESCO. Retrieved August 17, 2021, from https://unesdoc.unesco.org/ark:/48223/pf0000245656

Victor, O., Beattie, S. D., Michael, F., & Francisco, D. C. (2011). Ghana school feeding program: Re-tooling for a sustainable future. Technical Report – Haas Business School. 1-25. http://dx.doi.org/10.13140/RG.2.1.4299.9527

Were, A. (2018). Debt trap? Chinese loans and Africa's development options. South African Institute of International Affairs, 66, 1-12. https://media.africaportal.org/documents/sai_spi_66_were_20190910.pdf

World Bank (2022). International debt statistics. World Bank. Retrieved February 2, 2022, from https://datatopics.worldbank.org

World Education Services (2017, March 7). Education in Nigeria. WENR - World Education News + Reviews. https://wenr.wes.org

Yuriy, B., Halyna, M., Iryna, R., & Iveta, K. (2020). An analysis of intellectual potential and its impact on the social and economic development of European countries, Journal of Competitiveness, 12(1), 22-38. https://doi.org/10.7441/joc.2020.01.02

Downloads

Published

2022-03-22

How to Cite

Brendan Edeminam, V., & Nuri Aras, O. (2022). Effect of external debt on expected years of schooling: The case of Nigeria and Ghana. London Journal of Social Sciences, (3), 1–18. https://doi.org/10.31039/ljss.2022.3.66

Issue

Section

Articles