Remigius Chinwoke Ejinkonye (PhD)
Department of Banking and Finance, College of Management Sciences,
Evangel University, Akaeze, Ebonyi State.
E-mail: rejinkonye@evangeluniversity.edu.ng
(Corresponding author)
&
Edith Nkiruka Mazeli (PhD)
Department of Banking and Finance, Faculty of Management Sciences,
Chukwuemeka Odumegwu Ojukwu University, Igbariam, Anambra State.
E-mail: edithmazeli@yahoo.com
&
Zakari Muhammed Uloghobui (MSc)
Department of Banking and Finance, School of Financial Studies,
Auchi Polytechnic, Auchi, Edo State.
E-mail: zakarimuhammed2001@yahoo.com


ABSTRACT

The study examined the nexus between government capital expenditure and economic growth in
Nigeria for the period 1981 to 2021. Nigerian economy is facing challenges of dwindling revenue
from crude oil on which the country highly rely for sustenance and inadequate diversification of
the productive sectors of the economy. This economic downturn is adversely affecting funding of
projects hence there is reliance on borrowing to help finance her infrastructural needs. This could
be why the desired economic growth is not being observed. The dependent variable was gross
domestic product, while independent variables were administration, social & community services,
economic services and transfers capital expenditures. The specific objectives were to determine
the relationship of: administration capital expenditure (ADCAEXP) and gross domestic product;
social & community services capital expenditure (SCSCAEXP) and gross domestic product;
economic services capital expenditure (ESCAEXP) and gross domestic product and transfers
capital expenditure (TRCAEXP) and gross domestic product. The model used was GDPt = b0+b1
ADCAEXPt+b2 SCSCAEXPt+b3 ESCAEXPt+b4 TRCAEXP + et. The research design was ex-postfacto, data sourced from the CBN statistical bulletin and analyzed using ordinary least square
regression. The hypotheses were tested at 5% level of significance using Eviews10 software. The
findings showed that administration capital expenditure had positive and significant effect (prob.

  1. The independent variables used to proxy capital expenditure were agriculture, education,
    health, economic infrastructure, while GDP proxied economic growth. The OLS technique was
    used to analyze the data. They found out that capital expenditures on agriculture did not exert any
    significant influence on growth; health capital expenditures had negative and insignificant effect;
    expenditures on economic infrastructure had significant positive impact.
    Methodology
    The “ex-post facto” research design was adopted in this study. Quantitative time series
    annual data as regards the Nigerian economy was sourced from Central Bank of Nigeria statistical
    bulletin, 2021 edition. The secondary data used was for the period 1981 to 2021. The study used
    multiple regression model and the relationship expressed as:
    Logos: African Journal of Philosophy and Studies. Vol. 6, 2023
    http://www.africanjournalofphilosophy.com
    119
    Yt = b0+b1X1+b2X2+b3X3 … + bnXn + e
    Where: Y = dependent variable
    b0 = intercept term
    b1, b2, b3 = parameters or coefficients of the model
    X1, X2, X3 = independent or explanatory variables.
    e = error term
    The functional relationship of effect of government capital expenditure on Nigeria’s
    economic growth can be specified in the following model:
    GDP = f(ADCAEXP, SCSCAEXP, ESCAEXP, TRCAEXP)
    The models were explicitly defined as follows:
    GDPt = b0+b1 ADCAEXP t+b2 SCSCAEXP t+b3 ESCAEXPt+b4 TRCAEXP + et
    Where:
    GDP = Gross domestic product
    ADCAEXP = Administration capital expenditure
    SCSCAEXP = Social and community services capital expenditure
    ESCAEXP = Economic services capital expenditure
    TRCAEXP = Transfers capital expenditure
    The independent variables used to proxy capital expenditure were administration
    (ADCAEXP), social & community services (SCSCAEXP), economic services (ESCAEXP) and
    transfers (TRCAEXP) while gross domestic product (at current basic prices) was the dependent
    variable and used to proxy economic growth.
    Administration capital expenditure (ADCAEXP) is total government administration
    expenditure on general administration, defence, internal security, national assembly. Social and
    community services capital expenditure (SCSCAEXP) is total government capital on education,
    health, other social and community services. Economic services capital expenditure (ESCAEXP)
    is total government capital expenditure on agriculture, road & construction, other economic
    services. Transfers capital expenditure (TRCAEXP) is total government capital expenditure on
    public debt, debt servicing, pensions & gratuities, FCT/other CFR charges,
    contingencies/subventions. Gross domestic product (GDP) is the total output of goods and services
    produced in the Nigerian economy for a given period of time usually one year.
    Ordinary least square regression analysis was used to test the hypothesis at 5% level of
    significance. The processing software used was Eviews10. The a priori expectations of the study
    Logos: African Journal of Philosophy and Studies. Vol. 6, 2023
    http://www.africanjournalofphilosophy.com
    120
    are that the independent variables (ADCAEXP, SCSCAEXP, ESCAEXP and TRCAEXP) will
    have positive and significant effect on the dependent variable (GDP).
    Decision Criteria: The hypotheses were tested based on 5% level of significance. The decision
    rule was to accept the null hypothesis if the t-statistic is less than 2.0 or p-value greater than 0.05.
    Null hypothesis was rejected if the t-statistic is greater than 2.0 or p-value is less than 0.05.
    Presentation of Data:
    The table below showed the data obtained for the dependent and independent variables.
    YEAR
    ADCAEXP
    (N’B)
    SCSCAEXP
    (N’B) ESCAEXP (N’B) TRCAEXP (N’B) GDP (N’B)
    1981 0.72 1.30 3.63 0.92 139.31
    1982
    0.39 0.97 2.54 2.52 149.05
    1983
    1.10 1.03 2.29 0.47 158.75
    1984
    0.26 0.24 0.66 2.94 165.85
    1985
    0.46 1.15 0.89 2.96 187.83
    1986
    0.26 0.66 1.10 6.51 198.12
    1987
    1.82 0.62 2.16 1.78 244.68
    1988
    1.90 1.73 2.13 2.59 315.62
    1989
    2.62 1.84 3.93 6.65 414.86
    1990
    2.92 2.10 3.49 15.55 494.64
    1991
    3.35 1.49 3.15 20.36 590.06
    1992
    5.12 2.13 2.34 30.18 906.03
    1993
    8.08 3.58 18.34 24.50 1,257.17
    1994
    8.79 4.99 27.10 30.04 1,768.79
    1995
    13.34 9.22 43.15 55.44 3,100.24
    1996
    14.86 8.66 117.83 71.58 4,086.07
    1997
    49.55 6.90 169.61 43.59 4,418.71
    1998
    35.27 23.37 200.86 49.52 4,805.16
    1999
    42.74 17.25 323.58 114.46 5,482.35
    2000
    53.28 27.97 111.51 46.70 7,062.75
    2001
    49.25 53.34 259.76 76.35 8,234.49
    Logos: African Journal of Philosophy and Studies. Vol. 6, 2023
    http://www.africanjournalofphilosophy.com
    121
    2002
    73.58 32.47 215.33 0.00 11,501.45
    2003
    87.96 55.74 97.98 0.01 13,556.97
    2004
    137.77 30.03 167.72 15.73 18,124.06
    2005
    171.57 71.36 265.03 11.50 23,121.88
    2006
    185.22 78.68 262.21 26.27 30,375.18
    2007
    226.97 150.90 358.38 23.04 34,675.94
    2008
    287.10 152.17 504.29 17.33 39,954.21
    2009
    291.66 144.93 506.01 210.20 43,461.46
    2010
    260.20 151.77 412.20 59.70 55,469.35
    2011
    231.80 92.85 386.40 207.50 63,713.36
    2012
    190.50 97.40 320.90 265.90 72,599.63
    2013
    283.65 154.71 505.77 164.27 81,009.96
    2014
    229.63 111.29 393.45 48.75 90,136.98
    2015
    226.81 82.98 348.75 159.82 95,177.74
    2016
    147.72 68.80 278.95 158.14 102,575.42
    2017
    328.94 167.66 542.19 203.51 114,899.25
    2018
    446.25 203.42 753.49 278.94 129,086.91
    2019
    591.26 264.69 994.19 438.86 145,639.14
    2020
    417.14 186.74 701.40 309.61 154,252.32
    2021
    635.73 303.66 1,102.46 480.61 176,075.50
    Source: CBN statistical bulletin
    Descriptive Statistics
    GDP ADCAEXP SCSCAEXP ESCAEXP TRCAEXP
    Mean 37550.91 140.1835 67.62812 254.0765 89.88425
    Median 8234.494 53.27950 30.03252 200.8619 30.17550
    Maximum 176075.5 635.7288 303.6626 1102.465 480.6115
    Minimum 139.3105 0.262700 0.237600 0.656300 0.000000
    Std. Dev. 50434.86 167.3193 80.03301 277.2859 121.2011
    Skewness 1.284324 1.293415 1.185235 1.278570 1.703950
    Kurtosis 3.459285 4.102039 3.634651 4.326509 5.253613
    Jarque-Bera 11.63186 13.50638 10.28743 14.17676 28.51644
    Probability 0.002980 0.001167 0.005836 0.000835 0.000001
    Sum 1539587. 5747.525 2772.753 10417.13 3685.254
    Sum Sq. Dev. 1.02E+11 1119830. 256211.3 3075499. 587588.6
    Logos: African Journal of Philosophy and Studies. Vol. 6, 2023
    http://www.africanjournalofphilosophy.com
    122
    Observations 41 41 41 41 41
    The descriptive statistics showed a mean value of 77,550.91; 140.1835; 67.62812; 254.0765 and
    89,88425 for gross domestic product, administration capital expenditure, social and community
    services capital expenditure, economic services capital expenditure and transfers capital
    expenditure respectively. The data used was for a period of 41years.
    Regression output and interpretation.
    Dependent Variable: GDP
    Method: Least Squares
    Date: 08/16/23 Time: 18:53
    Sample: 1981 2021
    Included observations: 41
    Variable Coefficient Std. Error t-Statistic Prob.
    C -237.7909 3753.345 -0.063354 0.9498
    ADCAEXP 305.3656 114.5290 2.666273 0.0114
    SCSCAEXP -51.49996 209.6165 -0.245687 0.8073
    ESCAEXP -63.47059 52.26137 -1.214484 0.2325
    TRCAEXP 162.3276 50.61368 3.207188 0.0028
    R-squared 0.895724 Mean dependent var 37550.91
    Adjusted R-squared 0.884138 S.D. dependent var 50434.86
    S.E. of regression 17167.27 Akaike info criterion 22.45325
    Sum squared resid 1.06E+10 Schwarz criterion 22.66222
    Log likelihood -455.2916 Hannan-Quinn criter. 22.52934
    F-statistic 77.30959 Durbin-Watson stat 1.240442
    Prob(F-statistic) 0.000000

Estimation Command:

LS GDP C ADCAEXP SCSCAEXP ESCAEXP TRCAEXP

Estimation Equation:

GDP = C(1) + C(2)ADCAEXP + C(3)SCSCAEXP + C(4)ESCAEXP + C(5)TRCAEXP

Substituted Coefficients:

GDP = -237.790920673 + 305.365640865ADCAEXP – 51.4999624979SCSCAEXP – 63.4705896542ESCAEXP + 162.327594479TRCAEXP
The analysis showed that the constant coefficients of B was -237.790920673.
In view of the model used for this study:
GDPt = b0+b1 ADCAEXP t+b2 SCSCAEXP t+b3 ESCAEXPt+b4 TRCAEXP + et ……
Logos: African Journal of Philosophy and Studies. Vol. 6, 2023
http://www.africanjournalofphilosophy.com
123
The summary of the linear regression result obtained from the study can be stated as:
GDP = -237.790920673 + 305.365640865ADCAEXP -51.4999624979SCSCAEXP
-63.4705896542ESCAEXP + 162.327594479TRCAEXP …………………
The above regression model on the effect of government capital expenditure on economic
growth of Nigeria showed that GDP averages -237.79 over time. Keeping all other variables
constant except administration capital expenditure, a unit change in administration capital
expenditure will result to a 305.37 increase in gross domestic product. Barring all other variables
constant except social & community services capital expenditure, a unit change in social &
community services capital expenditure will result to a 51.50 decrease in gross domestic product.
Keeping all other variables constant except economic services capital expenditure, a unit change
in economic services capital expenditure will result to a 63.47 decrease in gross domestic product.
Also, keeping all other variables constant except transfers’ capital expenditure, a unit change in
transfers’ capital expenditure will result to a 162.33 increase in gross domestic product.
The regression analysis showed the probability values of the independent variables of
administration capital expenditure (0.0114), social and community services capital expenditure
(0.8073), economic services capital expenditure (0.2325) and transfers capital expenditure
(0.0028). The R-squared value of 0.895724 which implies that 89.6% changes in the dependent
variable (gross domestic product) are explained or influenced by the independent variables
(administration capital expenditure, social and community services capital expenditure, economic
services capital expenditure and transfers capital expenditure). The probability (f=statistic) value
of 0.000000 showed that the independent variables are jointly significant to gross domestic
product. The F-statistic regression value is 77.30959. The Durbin Watson statistic value of
1.249442 is closer to 2 than 0 thereby signifying that there is no first order correlation among
successive residuals.
Test of Hypotheses
Decision rule: Accept the null hypothesis if the significance probability value is greater than the
level of significance (5%), otherwise reject.
Logos: African Journal of Philosophy and Studies. Vol. 6, 2023
http://www.africanjournalofphilosophy.com
124
Summary statistics for hypothesis testing:
Hypothesis Variable Coefficient Std. Error t-statistic Probability Decision
One ADCAEXP 305.3656 114.5290 2.666793 0.0114 Reject null
Two SCSCAEXP -51.49996 209.6165 -0.245687 0.8073 Accept null
Three ESCAEXP -63.47059 52.26137 -1.214484 0.2325 Accept null
Four TRCAEXP 162.3276 50.61368 3.207188 0.0028 Reject null
Hypothesis One: H0: Administration capital expenditure has no significant effect on gross
domestic product in Nigeria.
The outcome of the regression analysis showed a positive coefficient and t-statistic
probability of 0.0114 which is lower than the 0.05 level of significance, hence we reject the null
hypothesis and accept the alternate hypothesis. We therefore conclude that administration capital
expenditure has a positive and significant effect on gross domestic product in Nigeria for the period
reviewed.
Hypothesis Two: H0: Social and community services capital expenditure has no significant effect
on gross domestic product in Nigeria.
The outcome of the regression analysis showed a negative coefficient and t-statistic
probability of 0.8073 which is higher than the 0.05 level of significance, hence we accept the null
hypothesis. We therefore conclude that Social and community services capital expenditure has a
negative and non-significant effect on gross domestic product in Nigeria for the period reviewed.
Hypothesis Three: H0: Economic services capital expenditure has no significant effect on gross
domestic product in Nigeria.
The outcome of the regression analysis showed a negative coefficient and t-statistic
probability of 0.2325 which is higher than the 0.05 level of significance, hence we accept the null
Logos: African Journal of Philosophy and Studies. Vol. 6, 2023
http://www.africanjournalofphilosophy.com
125
hypothesis. We therefore conclude that economic services capital expenditure has a negative and
non-significant effect on gross domestic product in Nigeria for the period reviewed.
Hypothesis Four: H0: Transfers capital expenditure has no significant effect on gross domestic
product in Nigeria.
The outcome of the regression analysis showed a positive coefficient and t-statistic
probability of 0.0028 which is lower than the 0.05 level of significance, hence we reject the null
hypothesis and accept the alternate hypothesis. We therefore conclude that transfers capital
expenditure has a positive and significant effect on gross domestic product in Nigeria for the period
reviewed.
Discussion of findings
This study disaggregated the capital expenditure of the government and assessed their
individual relationship with gross domestic product. The finding showed that administration
capital expenditure had a positive and significant relationship with gross domestic product in
Nigeria for the period reviewed. This finding is in line with the apriori expectation of the study.
This also agrees with the finding by John (2017) and Odubuasi (2020).
The finding on social & community services capital expenditure showed that it had a
negative and non-significant relationship with gross domestic product. This is in agreement with
the finding of Odubuasi et al (2020) and Yerima et al (2022). It however differ from that of John
(2017) who found a positive and significant relationship. The finding as regards hypothesis two
differs from the apriori expectation of this work. Government hence need to re-appraise her social
& community services capital expenditure pattern and processes so as to reverse the current trend.
The finding on economic services capital expenditure showed a negative and nonsignificant relationship with gross domestic product. This disagrees with John (2017) who found
a negative and significant relationship as well as with Odubuasi et al (2020) who found a positive
and significant relationship. The finding as regards hypothesis three disagrees with the apriori
expectation of this study. It therefore calls for attention on what is causing this negative and nonsignificant effect of economic services capital expenditure on gross domestic product in Nigeria.
Logos: African Journal of Philosophy and Studies. Vol. 6, 2023
http://www.africanjournalofphilosophy.com
126
The finding that transfers capital expenditure had a positive and significant relationship
with gross domestic product agrees with the finding by John (2017). The finding of this study
agrees with the apriori expectation hence the current trend should be sustained.
Conclusion
This study examined the growth nexus of disaggregated government capital expenditure
and economic growth in Nigeria for the period 1981 to 2021. The study showed that these
components of capital expenditure are good indices for measuring economic growth of the
Nigerian economy. Therefore, there is the need to encourage and ensure proper use of capital
expenditures so as to help achieve the desired positive and significant effect on gross domestic
product in Nigeria.
Recommendations
1) The Nigerian government should ensure that the administration capital expenditure is properly
used to continue its positive and significant effect on the economy.
2) The Nigerian government should ensure proper channeling of her social & community services
capital expenditures to the relevant sub-sectors so as to trigger production of goods and services
hence stimulating economic growth.
3) The Nigerian government should ensure that her capital expenditure on economic services
should be properly channeled and monitored to help achieve economic growth in Nigeria.
4) The Nigerian government should ensure that the transfers capital expenditure is properly used
to continue its positive and significant effect on the economy.
5) Capital expenditures therefore need to be properly monitored, evaluated before approval to
avoid wastages.
Logos: African Journal of Philosophy and Studies. Vol. 6, 2023
http://www.africanjournalofphilosophy.com
127
REFERENCES
Akpokerere, O. E., & Ighoroje, E. J. (2013). The effect of government expenditure on economic
growth in Nigeria: A disaggregated analysis from 1977 to 2009. International Journal of
Economic Development Research and Investment, 4(1), 60-70. Retrieved from
www.researchgate.net
Aluthge, C., Jibir, A., & Abdu, M. (2021). Impact of government expenditure on economic
growth in Nigeria: 1970-2019. CBN Journal of Applied Statistic, 12(1), 139-174. doi:
10.33429/Cjas.12121.6/6
Bennee, E., Okoye., P. V. C., & Amahalu, N. N. (2021). Effect of public expenditure on
economic growth of Nigeria. Research Journal of Management Practice, 1(12).
Retrieved from https://www.ijaar.org
Ebong, F., Ogwumike, F., Udongwo, U., & Ayodele, O. (2016). Impact of government
expenditure on economic growth in Nigeria: A disaggregated analysis. Asian Journal
of Economics and Empirical Research, 3(1), 113-121. Retrieved from
http://asianonlinejournals.com/index.php/AJEER
John, M. S. (2017). Effect of federal government capital expenditure on the Nigerian economic
growth. (Masters thesis, Delta State University, Abraka)
Odubuasi, A. C., Ifurueze, M. S., & Ezeabasili, V. A. (2020). Effect of government expenditure
on economic growth in Nigeria. Journal of Accounting, Business and Social
Sciences, 3(1), ISSN 2672-4235 (JABSS). Retrieved from
https://www.researchgate.net/publication/351941460
Ogar, A., Eyo, I. E., & Arikpo, O. F. (2019). Public expenditure and economic growth in
Nigeria: VAR Approach. European Journal of Economics and Financial Research,
3(3). doi: 10.5281.zenodo.2580458
Onifade, S. T., Cevik, S., Erdogen, S., Asongu, S., & Bekun, F. V. (2020). An empirical
retrospect of the impacts of government expenditure on economic growth: New evidence
from the Nigerian economy. Economic Structures, 9(6). doi: 10.1186/540008-020-0186-7
Oyediran, L. S., Sanni, I., Adedoyin, L., & Oyewole, O. M. (2016). Government expenditure and
economic growth nexus: Evidence from Nigeria. Journal of Business and Management
Research, 5(4). doi: 10.5430/bmr.v5n4p56
Yerima, U., Nymphas, V. A., Sani, Y. U., Auta, D. K., Amos, N. U., & Abwage, J. S. (2022).
Impact of government expenditure on economic growth in Nigeria. Sapientia Foundation
Journal of Education, Sciences and Gender Studies (SFJESGS), 4(3), 151-163. Retrieved
from www.researchgate.net
Logos: African Journal of Philosophy and Studies. Vol. 6, 2023
http://www.africanjournalofphilosophy.com
128

Leave a Reply

Your email address will not be published. Required fields are marked *