Debt Burden and Sustainable Development: An Evaluation of the Nigeria Railway Modernization Project

Abstract

This work investigated the sustainability or otherwise of the Nigeria public debt as it relates to the Nigeria railway modernization project. We set up two hypotheses: Ho1: That the current investment effort by the Nigeria government in the Nigeria railway modernization project has led Nigeria into huge external unsustainable public debt. Ho2: That Nigeria public debt stock is unsustainable. Two measures as found in the literature: debt servicing-to-export ratio and debt servicing to-GDP ratio were tested against data obtained from the CBN Statistical Bulletin to validate or invalidate our hypothesis. The analysis give an inconclusive result– Debt servicing-to-export ratio gave an overwhelmingly negative result, while the debt servicing-to-GDP was positive. We are therefore unable to confirm the sustainability or otherwise of Nigeria public debt as it relates to the railway modernization project. However by conjecture, these authors believe that the Nigeria public debt relative to the Nigeria modernization project is not likely to be sustainable. We recommend that government at all levels increase surveillance over borrowed fund for infrastructural development from being diverted to private use.