Abstract:

After about three decades of IMF debt relief initiatives for the Heavily Indebted Poor Countries (HIPC) in 1996, economic growth in Africa has remained elusive. Debt accumulation rises against the backdrop of low revenue capacity. This rapid debt accumulation has not always translated into robust economic growth in the region. This study examined the impact of disaggregated external debt on economic growth in ECOWAS member states from 1993 to 2023. The study extensively covers the period of significant economic shock, such as the 2018 global financial shock, COVID 19, and the persistent geopolitical crisis. The objectives were to empirically determine the impact of external debt, multilateral debt, Bilateral debt, Official development assistance (ODA) and External debt servicing on economic growth in the ECOWAS Region during these periods. To eliminate obvious errors in related study, this study uniquely adopted the PMG (Pooled Mean Group) ARDL model, which stands out due to its robust capabilities to address long term impact and the speed of adjustment from the short run equilibrum while ensuring the reliability and validity of the results. The study also employed pre-tests, such as the ADF and PP stationarity tests, the causality test, and the co-integration test, to ensure the reliability of the estimates. Also, post-estimation tests for normality and cross-section dependence were employed in the study. The key finding from the ARDL analysis was the presence of a stable long-run equilibrium, as evidenced by a significant and negative error correction term, indicating that the system corrects for short-term deviations and converges back to its long-term relationship. The result of the long-run regression estimate revealed that only ODA has a statistically significant long-run impact, although the magnitude of this effect is negligible. The insignificant negative impact of EDS on long-term growth suggests that current debt repayment policies are not a major drag on the economy. Additionally, the short run analysis revealed that none of the variables are statistically significant. This indicates long term policies are imperatives for debt management. The study recommended that the ECOWAS government should collaborate with development partners to align ODA with national development plans. Funds should be targeted at sectors with high multiplier effects to ensure that ODA translates into tangible economic gains. Also, policymakers should implement prudent and sustainable debt management strategies by negotiating for more favourable loan terms, exploring debt-restructuring options, and boosting domestic revenue to reduce reliance on external borrowing, thereby securing long-term economic stability.

Keywords:

External debt, Economic growth, ECOWAS, Official development assistance (ODA).

How to Cite:

Ile Chidiogo Mary, Benedict Akanegbu and Anigwe John Onwubiko. Impact of Disaggregated External Debt on Economic Growth in Ecowas Member States (1993 – 2023). [ref]: vol.24.2026. available at: https://refpress.org/ref-vol24-a7