EXTERNAL CREDIT AND POVERTY REDUCTION IN NIGERIA

Abstract

This study examined the effect of external credit on poverty reduction in Nigeria from 1999 to 2022. Utilizing time series data from the Central Bank of Nigeria's Statistical Bulletin and the World Bank Database, the analysis focused on the effects of explanatory variables (International Monetary Fund Credit, African Development Bank Credit, and World Bank Credit) on the dependent variable (Human Poverty Index). The Auto Regressive Distributed Lag (ARDL) model was employed for the analysis, revealing that external credit variables had a positive and significant effect during the study period. The study recommends that Nigeria should improve governance and accountability by implementing stringent anti-corruption measures to prevent the misallocation and mismanagement of external credit. Effective allocation of funds is critical, directing external credit towards sectors that have a direct effect on poverty reduction. Adopting cautious debt management strategies ensures the terms and conditions of external credit are sustainable. Lastly, reevaluating loan conditions by engaging with creditors to reassess the conditionalities attached to external credit is necessary to support long-term development goals