EXTERNAL DEBT AND GROWTH DYNAMICS IN SELECTED WEST AFRICAN COUNTRIES

Abstract

This study investigates the growth implications of external debt in six selected West African countries Nigeria, Ghana, Mali, Senegal, Côte d’Ivoire, and Burkina Faso covering the period 1990–2024. Anchored on a quantitative research design within a dynamic panel framework, the study applies the System Generalized Method of Moments (GMM) to account for endogeneity and dynamic interactions. The population comprises all West African states, while the sample is restricted to the six largest economies, representing over 85% of the region’s output. The study relies on secondary data sourced from the World Development Indicators (WDI), covering GDP growth, external debt stock, debt service, and macroeconomic controls. The findings reveal that external debt stock exerts a significant negative effect on economic growth, while debt servicing is positive but statistically insignificant. Real effective exchange rate appreciation further undermines growth, whereas foreign direct investment supports GDP performance. These results highlight the inefficiency of debt utilization and its limited role in stimulating growth dynamics. The study recommends that ECOWAS governments restructure borrowing strategies by linking new debt strictly to growth-enhancing projects, thereby strengthening the capacity of external debt to positively influence long-term growth dynamics in the sub-region.