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THE IMPACT
OF EDUCATIONAL EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA
ABSTRACT
There is
need for encouraging the educational sector in Nigeria and its expenditure by
the federal government. The objective of this research is to find out the
impact of educational expenditure to the Nigerian Economy, the null hypothesis
(H0) which states that educational expenditure has no significant effect to
Nigeria economy is tested against the alternative (H1) which states that
educational expenditure has a significant effect to the Nigeria economy. The
linear regression analysis is used adopting the “ordinary least squares”
techniques. Based on the available data, it found out that “Educational
Expenditure” has a positive relationship with “Economic Growth” i.e Gross
Domestic Product. From the finding it recommended that to harness a remarkable
increase in educational sector, federal government have to spend at least 40%
of its revenue in the educational sector in order to develop human capital
resources to obtain a remarkable increase in Gross Domestic Product.
CHAPTER ONE
INTRODUCTION
Background
of the Study
It is widely
acknowledged that, education is an important determinant factor of economic
growth. Prominent classical and neoclassical economist such as Adam Smith,
Romer, Lucas and Solow emphasized the contribution of education in developing
their economic growth theories and models. The main theoretical approaches of
modeling the linkages between education and economic performance are the
neoclassical growth models of Robert Solow (1957) and the model of Romer
(1990). Apart from the theoretical aspects, numerous empirical studies have
focused on the issue of education and economic development. According to Ismail
(1998), education is considered as a long term investment that leads to a high
production for a country in the future. In fact, economists argued that
advanced education sector will certainly lead successfulness of a country’s
economics and socials development. Therefore, most of the developed and
developing countries emphasize the enhancement of educational sector. Nigeria
has no exceptions in developing and enhancing its educational system in order
to be a world class country (Ibrahmim and Awang, 2008). Nigeria’s commitment in
developing its educational sectors has been tremendous. This can be seen from
Nigeria’s annual budget allocation. Nigeria has allocated significant amount of
budget for education sector and it keep increasing for each budget session.
What can be learnt is that, from 1989 there have been consistent increases for
Nigeria’s educational budget allocations. Despite the financial turmoil that
badly affected Nigerian economy in which had devaluated Nigeria currency,
government’s allocation for the educational sector has never been reduced. In
fact it has been increasing. Emphasizing on educational sector has been successful
as it plays important roles in achieving National development agenda and
contributed to a country’s economic growth. Sheehan (1971) has listed some
direct benefit that country’s gain from education. This includes increases in
productivity, labors’ income, country’s economic growth and literacy rate. In
addition, education could also improve efficiency of income allocation as well
as labor’s mobility and transfer in accordance to work demand of trained
workers.
Nigeria is a multi-ethnic group but
consisted of three major ethnic groups namely, Igbos that inhabited there
Eastern part of the country, Hausas
which inhabited the Northern part and Yorubas at the Western part.
Before the coming of the colonial
masters, Nigeria practiced a traditional educational system which comprises of
teachings based on religious background (Islam and Christianity). Essentially,
the major aim of traditional education was to foster good character in the
individual member of the society for them to be useful in the larger society.
For instances, local stories and folktales were frequently told and references
to ancestors who demonstrated the “act of legendary”. Notwithstanding that this
system was a hallmark for the preservation of socio-cultural values and norms
but the system fail to make room for critical thinking and research
development. Since much valuable time are wasted as a result of unnecessary
long period of training thereby impending the development of the child’s
potentialities.
After the demise of slave trade in 1806
as a result of missionaries resettlement and rehabilitation plans. These
Christian Missions included Church Missionary Society (CMS), Methodist
Missionary Society (MMS), the Roman Catholic Mission (RCM) and others. They
preached the mysteries of reading and writing with the “Holy Bible” and its
content as their principal reference materials and belief.
In Nigeria, Western education formally
took-off at Abeokuta in today’s Ogun State by the establishment of a formal
school in 1546 by the Church Missionary Society and ten years later, the
Baptist Mission led by Reo Bowen arrived to established their own school, the
Roman Catholics and others followed suit in establishment of schools in several
parts of Nigeria.
Up until 1884, when Nigeria was formally
made a colony of the British government, little attention was paid to the
educational needs of the people as the entire Western education system was
solely missionary affair. One of the immediate benefits of the early western
education was that the graduates from the Christian schools secure white-collar
jobs in the colonial establishments.
The national consciousness of the
significance of education in Nigeria formed the basis upon which education
expenditure became a matter of serious consideration. Since 1960 to date one of
the major problems facing educational sector is low investment in the
infrastructural, research grants and learning aid especially in the public
schools. For several years now, educational industry has suffered tremendous
neglects arising mainly from the ineptitude of education administrators at the
various levels of government in Nigeria. According to Prof. Ukeje B.O “the
problem of education is not only in terms of the economic factor of increasing
demands in the face of decreasing resources but also in terms of political
considerations.
On the foregoing promises, this paper
work stands to present a framework in which policy interventions can be hinged
in order to ameliorate the problem of poor financing and inconsistencies in the
federal government’s educational expenditure pattern in Nigeria.
Statement of
the Problem
The federal government allocation to
education sector has declined steadily since 1999 and is much lower than the
average in the last years of military rule.
Alternative source of financing
education explored by the federal government is the Education Tax Fund (ETF)
established in 1995. ETF ensures that companies with more than 100 employees
contribute 2% of their pre-tax earnings to the fund. Primary education receives
40% of this fund, secondary education receives 10% and higher education 50%.
Primary education has also in the past decades receives from the Petroleum
Trust Fund (PTF) for capital expenditure and provision of infrastructural
materials.
Despite all alternatives, the
infrastructure and facilities remains inadequate for coping with a system that
is growing at a very rapid pace. Due to poor financing, the quality of
education offered is affected by poor attendance and inadequate preparation by
teachers at all levels. Physical facilities such as libraries, laboratories, modern
communication and information technology equipment have to be provided.
Objectives
of the Study
The objectives of this work are:
Firstly, to find out the relationship
between federal government educational expenditure and economic growth in
Nigeria for the period of 1994-2011.
Secondly, to find the impact of federal
government educational expenditure on economic growth in Nigeria.
Hypothesis
of the Study
For the purpose of this study, the
following hypothesis will be tested.
H0: Federal government expenditure has no
significant impact on economic
growth in Nigeria.
H1: Federal government expenditure has
significant impact on economic growth
in Nigeria.
Significance
of the Study
The federal government annual
expenditure to the educational sector is of great concern to all citizenry.
This is because; educational expenditure has a significant impact on human
capital development.
The study will be of great importance to
policy-makers because it will make them to see the impact of education on
national development and will make them to make policy adjustments concerning
the education sector.
The study will also benefit the
education authorities and administrators, as this will propel reforms and
transformation where necessary.
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