Paper short abstract:

This paper argues that the Nigerian Stock Exchange (NSE) would be a strategic tool to reduce the dependency on external debt and promote the growth of the national economy.

Paper long abstract:

The global financial crisis in 2008 had a devastating impact on the finances of the global south, particularly sub-Saharan Africa. In 2017, Africa's debt-to-GDP ratio exceeded the IMF's 55% benchmark, reaching 56%. Despite having a debt relief of $18 billion in 2005, Nigeria has continued to be heavily indebted due to external borrowing for development funding. Evidence reveals a consistent increase in the nation's debt-to-GDP ratio, which has been exacerbated by economic shocks and COVID-19, reaching alarming levels that hinder sustainable growth. Statistical trends indicate that the nation's fiscal health is being significantly impacted by the unsustainable accumulation of debt through conventional reliance on external loans. Addressing this challenge requires a paradigm shift towards domestic financial resources as the way forward. The Nigerian Stock Exchange (NSE), therefore, offers an innovative solution to the issue of external debt as it provides a reliable platform to raise funds for development projects, without adding to the national debt burden. In 2023, the NSE's market capitalisation exceeded $47.260 billion, indicating a significant amount of funds available to local investors. Relying on statistical evidence such as Nigeria's GDP growth rates, stock market capitalisation, and debt levels, this paper argues that the NSE would be a strategic tool to address Nigeria's rising debt crisis by reducing the dependency on external debt and promoting the growth of the national economy.