Abstract
The West African Monetary Zone's human development, revenue leakage, and foreign debt load were the study’s topics. It aimed to investigate the importance of the West African Monetary Zone's foreign debt load and offer solutions that could improve both its efficacy and human development. Using an ex-post facto research design, a few macroeconomic and human development variables were utilized to accomplish the study's goal. The study's population and sample size consisted of the six (6) ECOWAS nations that compose the West African Monetary Zone. The country-specific and panel data descriptive statistics as well as the country-specific and panel data ARDL analytical methodologies were used to compile, evaluate, and test the data. The analysis showed that, although negatively in the Gambia, Guinea, and Liberia, both the external debt load and the external debt service payment to gross domestic product have a significant effect on the human development index. Additionally, the external debt burden significantly affects the human development index, albeit negatively in Ghana and Sierra Leone, and the external debt service payment to gross domestic product was non-significant. Furthermore, Nigeria's human development index is negatively and non-significantly affected by both the external debt burden and the external debt service payment to gross domestic product. This suggests that as the amount of money spent on debt servicing increases, the Human Development Index (HDI) components of education, health, and per capita income worsen. This also occurs when additional debt is taken on, particularly when it exceeds the size of the economies of the majority of West African Monetary Zone members. Lastly, both the external debt burden and the external debt service payment to gross domestic product have a considerable, albeit negative, impact on the human development index in the West African Monetary Zone. Based on the results, the study suggested that the economies of the West African Monetary Zone should always take the external debt thresholds into account when developing their external debt management strategies in order to lessen their dependency on external debt funding. To close the resulting spending imbalance, domestically generated revenue, particularly tax collection, should be redesigned and galvanized in a way that would significantly reduce tax avoidance and evasion. Additionally, the governments of West African Monetary Zone nations should look for loans with favorable terms and conditions following a thorough assessment rather than relying solely on necessity to lower the cost of the debt so as to reduce the adverse effects of external debt and the associated payment obligation. A healthy capital market will lower the rate of borrowing from outside sources.