Public Debt and Capital Development: An Empirical Analysis of Agricultural and Livestock Capital Development in Nigeria

Despite Nigeria’s vast expanse of fertile land, the potential of agricultural and livestock capital development to drive sustainable economic growth remains largely underutilized. Although public debt has been extensively examined in relation to overall economic growth, there is limited empirical evidence on how such borrowing specifically supports agricultural and livestock capital development in Nigeria. This study addresses this gap by investigating the effect of public debt on agricultural and livestock capital development as a critical sector of the Nigerian economy from 1994 to 2024. Time-series data were sourced from the National Bureau of Statistics, the Central Bank of Nigeria, the Debt Management Office, the Budget Office of the Federation, and the Ministry of Budget and Economic Planning. The findings reveal a significant relationship between public borrowing, debt servicing costs, and agricultural capital formation. In the short run, debt servicing costs exert a significant positive influence on agricultural and livestock capital development; however, when debt servicing costs are lagged by two to three periods, the relationship becomes negative and remains statistically significant. The study contributes to the literature by emphasizing the need for government and policymakers to ensure the optimal utilization of public debt to strengthen agricultural and livestock capital development, thereby fostering economic growth and improving citizens’ standard of living.