Evaluating Savings Through Sustainable External Debt Management And Food Price Inflation In Selected African Countries
Main Article Content
Abstract
This study examined the effects of external debt burden and food inflation on savings in selected African countries over the period 2000 to 2022 using panel ARDL as the baseline estimator, with FMOLS and DOLS employed for robustness analysis. Savings were measured by gross national savings and current account balance, while external debt burden was proxied by the ratio of external debt, debt service ratio, debt per capita, and foreign exchange reserves. Food inflation was captured using the food price index, wholesale price index, and retail price index, with exchange rate and interest rate included as control variables. The ARDL results reveal that external debt burden exerts both positive and negative significant effects on savings, whereas food inflation consistently reduces savings. The error correction estimates indicate adjustment speeds ranging from 2 percent to 16 percent across the estimated models. The FMOLS and DOLS results confirm the robustness of the baseline findings. The study recommends prudent external debt management, timely debt servicing, and effective inflation control, particularly food inflation, to strengthen savings and improve economic welfare across African countries.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
References
Adjemian, M.K., Arita, S., Meyer, S., & Salin, D. (2023). Factors affecting recent food price inflation in the United States. Applied Economic Perspectives and Policy.
Agyeman, G., Sakyi, D., & Fosu Oteng-Abayie, E. (2022). External debt and economic growth in selected sub-Saharan African countries: The role of capital flight. Research in Globalization, 5(100091), 100091.
Akinlo, A. E. (2020). Impact of external debt on economic growth: A Markov regime switching approach. Journal of Applied Financial Econometrics, 1(2), 123–143. 2020.
Antoine, N., Stanislas, E.-B., & Rollfe, N. A. (2021). Effects of external public debt on economic growth: The case of the Republic of Congo. Open Journal of Business and Management, 09(4), 1997–2012.
Anwar, R., & Guha, A. (2023). A Study on Dynamics of Food Inflation in India. The Indian Economic Journal. https://doi.org/10.1177/00194662231186555
Arslanalp, S., Henry, P.B. (2004), Helping the poor to help themselves: Debt relief or Aid. http://www.gsbapps.stanford.edu/researchpapers/ library/RP1838.pdf.
Asafo, S. S. (2019). External debt and economic growth: Two-step system GMM evidence for sub-Saharan Africa countries. International Journal of Business, Economics & Management, 6(1), 39–48.
Azolibe, C. B. (2022). External debt accumulation and foreign direct investment inflows in sub-Saharan Africa: Analysing the interaction effects of selected macroeconomic factors. The Review of Black Political Economy, 49(3), 327–352.
Bakarr T.A., & Jalloh, T. (2021). External debt and economic growth nexus in the ECOWAS: A threshold analysis. International Journal of Business and Economics Research, 10(5), 178.
Bashir J.A. (2021). The effect of external debt on the economic growth in East Africa: ARDL bound testing methodology. Journal of Finance and Economics, 9(6), 221–230.
Bhattacharya, R. & Jain, R., (2020). Can monetary policy stabilise food inflation? Evidence from advanced and emerging economies. Economic Modelling, 89, pp.122-141.
Bob Hadji, S. (2022). External debt-economic growth nexus: The Sierra Leonean case (1973-2021). International Journal of Economics, Finance and Management Sciences, 10(2), 54.
Bulow, J., & Rogoff, K. (1990), Cleaning up third-world debt without getting taken to the cleaners. Journal of Economic Perspectives, 4, 31-42.
Chindengwike, J. D. (2021). The impact of foreign debts on economic growth in Tanzania. LAP Lambert Academic Publishing.
Chinezelum E., Akanegbu, B., & Muhammad, M.Y., (2023). Effect of Monetary Policy on Food Inflation in Nigeria: A NARDL Structural Approach, Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 13(5), pages 1-6.
Chowdhury, A.R. (2001), External debt and growth in developing countries: A sensitivity and causal analysis. Discussion Paper 95. World Institute for Development Economics Research (WIDER), United Nations University, Helsinki.
Derindag, O.F., Chang, B.H., Gohar, R., Wong, W.K., & Bhutto, N.A. (2023). Food prices response to global and national factors: Evidence beyond asymmetry. Cogent Economics & Finance, 11(1). https://doi.org/10.1080/23322039.2023.2187128
Ehikioya, I. B., Omankhanlen, A.E., Osuma, G.O. & Inua, O.I., (2020). Dynamic relations between public external debt and economic growth in African countries: a curse or blessing? Journal of Open Innovation, Technology, Market, and Complexity, 6(3), p. 88,
Elbadawi, I.A., Ndulu, B.J., & Ndung’u, N. (1997), Debt overhang and economic growth in Sub-Saharan Africa. In: Iqbal, Z., Kanbur, R., editors. External Finance for Low-income Countries. Washington, DC: International Monetary Fund.
Epaphra, M., & Mesiet, W. (2021). The external debt burden and economic growth in Africa: A panel data analysis. Theoretical and Applied Economics, XXVIII (2), 175–206.
Fosu A.K. (1996). The Impact of External Debt on Economic Growth in Sub-Saharan Africa. Journal of Economic Development, 21(1), 93–118.
Gachunga, M. J. (2019). The impact of external debt on economic growth in sub-Saharan Africa. https://papers.ssrn.com/abstract=3455583
Getinet, B. (2020). The impact of public external debt on economic growth in Ethiopia: The ARDL approach to co-integration. Journal of Economics & Sustainable Development, 11(11), 25–39.
Ginn, W. & Pourroy, M., (2019). Optimal monetary policy in the presence of food price subsidies. Economic Modelling, 81, pp.551-575.
Greene, J., & Villanueva, D. (1991), Private investment in developing. IMF Staff Papers, 38, 33-58.
Guei, K. M. (2019). External debt and growth in emerging economies. International Economic Journal, 33(2), 236–251. https://doi.org/10.1080/10168737.2019.1590727
Hameed, A., Ashraf, H., & Chaudhary, M.A. (2008), External debt and its impact on economic and business growth in Pakistan. International Research Journal of Finance and Economics, 20, 132-140.
Hasan A.N. & Mashi, M. (2018). Determinants of food price inflation: evidence from Malaysia based on linear and nonlinear ARDL. MPRA Paper No. 91517. Retrieved from https://mpra.ub.unimuenchen.de/91517/ on September 5, 2019.
Headey, D., & Ruel, M. (2023). Food inflation and child undernutrition in low- and middle-income countries. Nature Communications, 14. https://doi.org/10.1038/s41467-023-41543-9
Hoti, A., Shkurti, A., & Rehman, S. (2022). Impact of external debt on economic growth in Western Balkan countries. Academic Journal of Interdisciplinary Studies, 11(2), 192.
Iddrisu, A.A. & Alagidede, I.P., (2020). Monetary policy and food inflation in South Africa: A quantile regression analysis. Food Policy, 91, p.101816.
Ismaya, B.I. & Anugrah, D.F. (2018). Determinant of Food Inflation: The Case of Indonesia. Bulletin of Monetary Economics and Banking, 21(1), 81-94.
Jarju, I., Nyarko, E., Adams, K., Haffner, O., & Odeniran, O. S. (2016). The relationship between external debt and economic growth in the West African monetary zone: A panel data analysis. West African Monetary Institute.
Krugman, P. (1988), Financing vs. forgiving a debt overhang: Some analytical notes. Journal of Development Economics, 29, 253-268.
Lau, E., Moll de Alba, J., & Liew, K.-H. (2022). Debt and economic growth in Asian developing countries. Economic Analysis and Policy, 76, 599–612.
Law, S. H., Ng, C. H., Kutan, A. M., & Law, Z. K. (2021). Public debt and economic growth in developing countries: Nonlinearity and threshold analysis. Economic Modelling, 98, 26–40.
Levy-Livermore, A., & Chowdhury, K. (1998). Handbook on Globalisation of the World Economy. Cheltenham, UK: Edward Elgar Publishing Limited.
Makun, K. (2021). External debt and economic growth in Pacific Island countries: A linear and nonlinear analysis of Fiji Islands. Journal of Economic Asymmetries, 23(e00197), e00197.
Manasseh C. O, Abada F. C, Okiche E. L, Okanya O, Nwakoby I. C, Offu P, Ogbuagu, A. R., Okafor, C. O., Obidike, P. C., & Nwonye, N. G. (2022). External debt and economic growth in Sub-Saharan Africa: Does governance matter? PLoS ONE 17(3): e0264082.
Manasseh, C. O., Abada, F. C., Ogbuabor, J. E., Egele, A. E., Urama, C. E., Okoro, O. E. U., & Josaphat, U. J. O. (2019). External debt and economic growth: An empirical analysis. The Social Sciences, 14(2), 55–67.
Mbah, C.C., Orjime, S.M., & Mgbemena, E.M. (2022). Agricultural productivity, food prices and inflation in Nigeria. Journal of Management, Economics, and Industrial Organisation, 6(3), 113-126.
Moh’d AL-Tamimi, K. A., & Jaradat, M. S. (2019). Impact of external debt on economic growth in Jordan for the period (2010-2017). International Journal of Economics and Finance, 11(4), 114.
Mumba, C. S., & Li, J. H. (2020). The impact of external debt on economic growth: Evidence from Southern Africa. Journal of Finance and Economics, 8(3), 135–141. https://doi.org/10.12691/jfe-8-3-6
Nwakoby, I. C., Manasseh, C. O., Nwakoby, J. O., Logan, C. S., & Okanya, O. C. (2026a). Linking debt sustainability, green infrastructure innovation, exchange rate volatility, and output growth in Sub-Saharan Africa. Energy Technologies and Environment, 4(1), 10–35. https://doi.org/10.58567/ete04010002
Nwakoby, I. C., Manasseh, C. O., Nwakoby, J. O., Logan, C. S., Okanya, O. C., & Okeke, C. G. (2026b). Impact of external debt, capacity utilization and digital infrastructural architecture on national savings in African debt distressed countries. Review of Business and Economics Studies, 14(1), 111–134. https://doi.org/10.26794/2308-944X-2026-14-1-111-134
Ohiomu, S. (2020). External debt and economic growth nexus: Empirical evidence from Nigeria. The American Economist, 65(2), 330–343.
Omotor, D. G., Musa, B. Y., & Elu, J. (2020). External debt, governance, and economic growth: The African case. In Advances in African economic, social and political development (pp. 85–97). Springer International Publishing.
Pattillo, C., Poirson, H., & Ricci, L. (2002), External Debt and Growth. Working Paper, 02(69). Washington, DC: International Monetary Fund.
Qureshi, I., & Liaqat, Z. (2020). The long-term consequences of external debt: Revisiting the evidence and inspecting the mechanism using panel VARs. Journal of Macroeconomics, 63(103184), 103184.
Reehan Hameed, M., Sarwar, G., Adil, S., Batool, H., & Hussain, I. (2021). Impact of public debt on economic growth: An empirical investigation from South Asian countries. Humanities & Social Sciences Reviews, 9(2), 173–184.
Ring, T. S., Abdullah, M. A., Osman, W. S. M., Hamdan, R., Hwang, J. Y. T., Mohamad, A. A., Hassan, M. K. H., & Khalid, F. D. (2021). Impact of external debt on economic growth: The role of institutional quality. International Journal of Academic Research in Economics and Management Sciences, 10(3).
Sachs, J. (1988), The debt overhang of developing countries. In: Calvo, A.G., Findlay, R., Kouri, P., de Macedo, J., editors. Debt, Stabilization and Development: Essays in Memory of Carlos Diaz Alejandro. Oxford: Basil Blackwell. p80-102.
Sachs, J. (1989), Developing Country Debt and the World Economy. National Bureau of Economic Research. The University of Chicago. United States of America.
Sandow, J. N., Oteng-Abayie, E. F., & Duodu, E. (2022). External debt and economic growth in sub-Saharan Africa: Does heterogeneity in the quality of public sector management make a difference? Heliyon, 8(9), e10627.
Shkolnyk, I., & Koilo, V. (2018). The relationship between external debt and economic growth: Empirical evidence from Ukraine and other emerging economies. Investment Management & Financial Innovations, 15(1), 387–400.
Wang, F. (2009), The effects of foreign borrowing policies on economic growth: Success or failure? Journal of Economic Policy Reform, 12(4), 273-284.
World Bank (2020). International Debt Statistics.
Yasar, N. (2021). The causal relationship between foreign debt and economic growth: Evidence from Commonwealth independent states. Foreign Trade Review, 56(4), 415–429.
Zaghdoudi, T. (2020). Threshold effect in the relationship between external debt and economic growth: A dynamic panel threshold specification. Journal of Quantitative Economics, 18(2), 447–456.