EFFECT OF EXTERNAL DEBT ON MILITARY EXPENDITURE IN NIGERIA

This study examined the effect of external debt on military expenditure in Nigeria using annual time series data spanning from 2000 to 2024. The study was motivated by the rising level of insecurity in Nigeria and the increasing dependence on external borrowing to finance military operations and other government obligations. Secondary data were sourced from the Central Bank of Nigeria (CBN), World Development Indicators (WDI), and Debt Management Office (DMO). Military expenditure was modeled as a function of external debt, debt servicing, and budget balance within the framework of the Autoregressive Distributed Lag (ARDL) technique. Preliminary tests using the Augmented Dickey-Fuller (ADF) unit root test revealed a mixed order of integration among the variables, thereby justifying the use of the ARDL approach. The Bounds cointegration test confirmed the existence of a long-run relationship among the variables. The empirical findings indicated that external debt had a negative and statistically significant effect on military expenditure in Nigeria in the long run, while debt servicing and budget balance exhibited negative but insignificant relationships with military expenditure. The error correction mechanism showed that deviations from short-run equilibrium were corrected at a speed of 56.6% annually. Diagnostic tests further confirmed the absence of serial correlation and heteroscedasticity, while the stability test revealed that the model was stable over the study period. The study concluded that excessive external borrowing undermines the government’s capacity to sustainably finance military expenditure and maintain national security. Consequently, the study recommended prudent debt management, fiscal discipline, and efficient allocation of budgetary resources toward security and developmental needs in Nigeria.