Government Expenditure and Nigeria’s Economic Growth: An Assessment of Budget Execution in the Fourth Republic

Abstract

This study examined the effect of government expenditure on Nigeria’s economic growth during the Fourth Republic, with particular attention to the execution of functionally classified expenditure. Government expenditure was disaggregated into administration, social and community services, economic services, and transfer expenditure, while gross domestic product (GDP) proxied economic growth; inflation and the exchange rate served as control variables. Adopting an ex post facto research design, the study analysed annual time-series data covering 2000 to 2019, sourced from the Central Bank of Nigeria Statistical Bulletin and the World Bank. Data were analysed using simple and multiple linear regression after a log-linear transformation of the monetary variables, such that the estimated coefficients are interpreted as elasticities. The bivariate results showed that administration expenditure (β = 0.904), social and community services expenditure (β = 0.770), economic services expenditure (β = 0.922), and transfer expenditure (β = 0.769) each exerted a positive and statistically significant effect on GDP (p < 0.05). The joint model explained about 96.7% of the variation in GDP (adjusted R² = 0.967) and was statistically significant (F = 93.083; p < 0.001), confirming a significant composite effect of the four expenditure categories. The study concludes that government expenditure is an important catalyst for growth, but that converting growth into development requires a shift of emphasis from execution of funds to the efficiency of implementation. It recommends prioritising capital execution, strengthening implementation audits, and diversifying revenue to reduce deficit-financing pressures.