An In-depth analysis of government debt to GDP of the three selected African countries and its effects on their Economy

Abstract

This study investigated the effects of Government debt to the GDP of the 3 selected African Countries and the negativity on their economy using data from 2012-2020. The provable/empirical results showed that debt effects enhanced growth only on a short term and hindered growth in the long term. Debt servicing has negative impacts on the borrower country’s economy because It takes a large benefit from the domestic economy to transfer to the foreign economy. Therefore, the country foregoes some spectacular multiplier accelerator effects. Debt servicing, including interest payments and repayments, may also be a real leakage from an indebted country. The study suggested that government should channel the borrowed funds on both infrastructural development and the productive base of the economy, that will improve long-term economic growth, expand the revenue base, and strengthen the capacity to repay outstanding debts when due. Government should put in place a debt management mechanism that will prevent the government from default.