Abstract

This study assessed external debts and the financing of education in Nigeria using time series data obtained from World Bank, and CBN Statistical Bulletin covering a period of 31 years from 1988 -2018. The model of the study was derived, while the data collected were analysed using the Ordinary Least Squares. Diagnostic tests such as Augmented Dickey- Fuller (ADF) unit root test, Johansen co-integration, Vector Error Correction (VEC) techniques of estimation, and Granger Causality tests were all performed. Findings revealed a significant long-run relationship between external debts and the financing of education; external debts have a significant effect (F=39.07055, p<.05) on the financing of education in Nigeria; external debt stock and external debt service payment have no significant effect on the financing of education; real GDP and Exchange rate have a significant effect on the financing of education in Nigeria respectively. Based on these findings, it was concluded that external debt is a big hindrance to the financing of education and consequently, the economic growth of Nigeria. It was recommended amongst others that the government should use borrowed funds from external sources for productive capital projects or development initiatives such as investment in education and the eradication of illiteracy.