Abstract:
Investments are a major channel to achieving growth and development in any nation, however, the pattern of the country's spending considering the narrow domestic revenue base have shown that large part of the generated revenue are used for recurrent expenditure as well as debt serving, while little funds are allocated to capital expenditure thereby not meeting the desired amount for investment in capital projects and infrastructural development. Poor domestic saving and investment causes higher debt and debt service payment which crowds out available resources for public investment. Consequently, the objectives of this study is to investigate the impact of domestic debt on public investment in Nigeria from 1984 to 2022. The data were estimated using the autoregressive distributed lag model. The findings revealed that domestic debt holdings by the CBN has a positive and insignificant impact on public investment, while domestic debt holdings by the deposit money bank and inflation rate have negative and insignificant impact on public investment. Therefore, the study recommended that the government or the policy makers should adhere strictly to the appropriate use of debt through efficient public investment, so that the debt service payment should not exceed the country's payment capacity.
