Federal Capital Expenditure and its impact on Economic Growth in Nigeria; 1980-2010

Abstract

The fact remains in the heart of many people that high federal capital expenditure will lead to economic growth, especially in developing country like Nigeria. This paper therefore, is an attempt to empirically ascertain that fact by investigating the impact of federal capital expenditure on economic growth in Nigeria from 1980-2010. To establish this empirical fact we employed multiple regression model of Ordinary Least Squares using secondary data. From the result, the Total Capital Expenditure (TCE), Capital expenditure on administration (ADM), capital expenditure on social community services (SCS) and capital expenditure on transfers (TRF) have positive impact on economic growth in Nigeria; this implies increase in these variables will cause positive change in economic growth. On the contrary, Capital expenditure on economic (ECO) has a negative impact on economic growth in Nigeria. One of the major challenges of poor utilization of federal capital expenditure is the issue of mismanagement of funds, the author recommends that government should increase its funding of anti-graft or anti-corruption agencies like the Economic and Financial Crime Commission (EFCC), and the Independent Corrupt Practices Commission (ICPC) in order to arrest and penalize those who divert and embezzle public funds especially funds for capital expenditures.

Keywords: Capital Expenditure, Economic Growth, Nigeria, Resources