INVITATION:

The Dean, School of Economics under the College of Business and Management Sciences (CoBAMS), cordially invites you to the PhD Public Defense of the following candidate:

Name of the Candidate: Mr. Isabirye Swaliki Kisige

Title of Thesis:

External debt, public and private investment, and economic growth in Heavily Indebted Poor Countries in Sub Saharan Africa

Date: Tuesday 4th August 2026.

Time: 2:00pm – 5:00pm

Venue:

Conference Room, College of Business and Management Sciences
(CoBAMS), Makerere University

ABSTRACT

This study examined how external public debt affects public investment,
private investment, and economic growth in Highly Indebted Poor
Countries within Sub-Saharan Africa over the period 2000 to 2024. The
analysis was guided by three objectives: to identify the determinants of
public investment with emphasis on external debt; to assess the effect
of public investment on private investment and determine whether the
relationship is linear or nonlinear; and to examine the direct and
indirect effects of external public debt on economic growth.

To address these objectives, the study employed two complementary
econometric approaches. The first objective was estimated using the
two-step System Generalized Method of Moments estimator to account for
endogeneity and dynamic fiscal behavior. The second and third objectives
were analyzed using the Pooled Mean Group estimator under the
Autoregressive Distributed Lag framework, given the evidence of long-run
relationships among the variables.

The results showed that public investment is influenced by its previous
levels, meaning that once countries commit to infrastructure programmes,
they tend to continue investing over time due to ongoing project and
policy commitments. Public investment was also shaped by external public
debt, economic growth, domestic revenue mobilization, and political
stability. External public debt exhibited a nonlinear effect: moderate
borrowing supported public investment, but once debt exceeded
approximately 56 percent of GDP, additional borrowing reduced the
capacity to finance new capital projects.

Public investment was found to stimulate private investment in the long
run, confirming a complementary relationship. However, this effect
weakens once public investment surpasses an estimated threshold of about
16 percent of GDP, particularly where fiscal pressures are pronounced.
Furthermore, external public debt contributed positively to economic
growth at low to moderate levels but demonstrated an inverted U-shaped
relationship at higher levels, with the turning point occurring around
23 to 24 percent of GDP. The results also revealed that debt contributes
to growth only when it is directed toward productive investment rather
than consumption or debt servicing.

Overall, the findings underscore that public investment, private
investment, and economic growth in HIPCs can benefit from external
borrowing when debt levels remain within economically sustainable bounds
and when borrowed resources are allocated to productive capital
formation. The study recommends that governments in Sub-Saharan African
HIPCs maintain public investment within the range of 10-12 percent of
GDP, where the crowding-in effect on private investment is strongest,
and avoid scaling investment beyond absorptive capacity. External public
debt should be kept below approximately 55 percent of GDP to preserve
its supportive role in private investment, and below 23-24 percent of
GDP to avoid debt overhang effects on economic growth. Strengthening
public investment efficiency, improving debt management frameworks,
expanding domestic revenue mobilization, and deepening domestic credit
markets are therefore essential to ensure that external borrowing
translates into productive capital formation and sustainable long-term
development.

Supervisors:

Dr. John Mutenyo
Dr. John Bosco Oryema

Your presence and participation will be highly appreciated as we support the student in this important academic milestone.