Does External Debt Cause Economic Growth? An Experience from ECOWAS Member Countries

West Africa countries had been ranked among the poorest sub-regions in the world due to inadequate capital to bridge the gap between savings and investments. The scholars suggested foreign capital flows especially external debt will solve this chronic problem. This study employed panel data from 1980 to 2015 to investigate causal effect between external debt and economic growth among ECOWAS member countries using Debt Overhang Theory. The result shows the existence of long and short run causality between external debt and economic growth economic integrated member countries. We concluded the availability of this foreign capital flows (External debt) will stimulate investments if it is judiciously used productively. A main challenge to the policy makers is ensuring efficiency in delivery of services and increased productivity of public investments and eradication of corruption. In addition, creating enable environment and political will to spur investor confidence for both local and foreign investments.