Impact of Education on economic growth of Nigeria

Impact of education on economic growth of Nigeria. Education impacts the economy in several ways including improvement in human capabilities, skills, competence, among others.



1.1.      Background to the study

Education is an age long phenomenon in all societies although it may take various forms from one society to another. In Nigeria two forms of education were in existence before the advent of colonialism. They were indigenous education and Islamic education. Traditional education as was practiced in the southern and some parts of the middle belt Nigeria, consisted essentially of general but informal training in character, norms, agriculture, fishing intellectual and other ways of life as approved by society. Islamic education on the other hand was practiced mainly in Northern part of Nigeria. It is based on the Quran. Both forms of education preceded the Western education which was introduced to Nigeria in the 19th century by the European Christian missionaries. The advent of colonialism brought about formal education in Nigeria. The colonialists had to organise the training of the indigenous people to understand the Queen’s language. The Christian missionaries organised schools and trained Nigerians the art of reading and writing. The initial persons that were trained in the communities became the first indigenous persons to be employed by the colonial government as interpreters, clerks and teachers (Adegbite, 2015).

It did not take long before the benefits of formal western education became manifest in Nigeria. The regional governments of independent Nigeria expanded educational opportunities, building more schools and providing grant-in-aid to missionary schools in their respective regions especially in the southern regions. Expanded educational facilities were seen as the panacea to the manpower needs and overall development in post-colonial Nigeria. The role of human capital formation in economic development has long been recognised in the literature. According to Harbison (1973 cited in Noko, 2016), “human beings are the active agents who accumulate capital, exploit natural resources, build social, economic and political organisations and carry forward national development. Clearly, a country which is unable to develop the skills and knowledge of its people and utilise them effectively in the national economy will be unable to develop anything else”. Several other theoretical and empirical studies have found a positive correlation between human capital development and economic growth (Lucas, 1958 cited in Peckb, 2007).

Education – formal and informal, contributes to skill acquisition. Informal education begins at the household level where children are taught how to sweep, clean their environment, fish or farm. By participating in these activities they learn how to do things by themselves and contribute to family income growth. Although such incomes are not recorded in national income accounting, they nevertheless amount to substantial family income. Human capital development through schooling is often associated with access to big jobs and higher incomes. This helps to explain the phenomenon of the Kuznets inverse “U” curve hypothesis (Gylfason & Zoega, 2003). The higher the incomes of the educated class and the more educated persons we have, the higher would be tax revenues which could be used for pro-poor growth projects and programmes. Due to the education – high income link, there is a common belief in Nigeria that education is the sure way to escape from abject poverty and from the drudgery of rural farm life. Parents see the education of their children as the best insurance not only for their future but also as a vessel of sustenance in their old age (Noko, 2016).

It is not surprising therefore that there was a rapid expansion in the education sector in Nigeria beginning from 1960 when political independence was attained. Between 1960 and 1974, educational facilities were expanded culminating in the take over of privately owned primary / secondary schools by government. In 1975 the central government also took over the universities and other tertiary institutions (Aigbokhan et al, 2003) and created new ones. It is rather surprising when the federal ministry of education in 2003 reported that all is not well in the education sector since 1978. Financial inadequacies among other factors were responsible.

The provision of education is a key element of a policy to promote broad-based economic growth. Education plays a great and significant role in the economy of a nation, thus educational expenditures are found to constitute a form of investment. This augments individual’s human capital and leads to greater output for society and enhanced earnings for the individual worker. An insignificant proportion of Nigeria’s financial resources is spent on education. Education budget as percentage of total national budgets were 8.43% in 2012 and 8.67% in 2013. development. There is the first phase of rapid expansion in the growth of the sector. This phase may be broadly located within the period 1950 – 1980. There is the second phase of rapid decline in the sector in terms of growth. This phase falls within the period 1981 – 2009 (Chude & Chude, 2013).

In the early 1950s when representative governance took its roots in Nigeria, the three regional governments had control of the educational development in their respective regions. This first phase in educational development in Nigeria effectively marked the beginning of rapid expansion in terms of access. For example the number of pupils in primary schools was 626,000 in 1954, the figure rose to 2,912,619 in 1960. Similarly the number of post primary school rose from 161 in 1955 to 912 in 1960. The student population in post primary schools rose from 9,908 in 1947 to 140,401 in 1960 (Aigbokhan, 2005). The surge in access to schools was due largely to the policies and programmes of governments that built primary and post primary schools and also provided grant – in- aid to missionary schools. We must note here that the missionary churches dominated the provision of schools before the government take over of primary and post primary schools in the early 1970s.

It must be noted also that at this initial phase of educational development no effort was made to select school curricula that would meet the long-run developmental needs of the Nigeria society. Rather emphasis was placed on numeracy and general intellectual capacity while technical and practical skills were neglected. The university college Ibadan which was the only university in Nigeria before 1960 had no facilities of engineering, law and technology. Access to tertiary education was more than doubled with the establishment of the University of Nigeria, Nsukka (1960), university of Lagos (1962), University of Ife, Ile – Ife (1961), Ahmadu Bello university, Zaria (1962), University of Benin, Benin City (1970).

This study examines the extent at which government expenditure as an input to health and education sectors produced optimal outcomes using a data on growth technique borrowed from the Romer endogenous growth theory of firm.

1.2 Statement of the Problem

In Nigeria the high level of unemployed graduate & mass underemployment, 38% in 2016 (World Bank, 2016; NBS, 2016), which is manifested in low per capita income of Nigeria could be attributed to the neglect of the human capital development of the nation. Another issues of concern is, why should Nigeria be tagged a developing country in the face of such high number of universities, polytechnics, universities of science and technology and college of education that abound in the country?

An insignificant proportion of Nigeria’s financial resources is spent on education. Education budget as percentage of total national budgets were 8.43% in 2012 and 8.67% in 2013. These fell below those of other developing countries. Ghana, South Africa, Cote d’Ivoire, Kenya and Morocco had 31%, 25.8%, 30%, 23% and 17.7% respectively for their annual budget for education (Abayomi, 2012). The proposed budget on Nigeria education for 2016 is about 18% of the total national budget (President Buhari, 2015). The United Nations recommends that 26% of the total expenditure should be devoted to education. Due to the perceived poor funding of education sector which reflects in the area of poor salaries to teachers, poor state of the infrastructural facilities, irregularities of teachers remuneration, inadequate staffing, etc. This has resulted to incessant strikes embarked upon by the Academic Staff Union of Universities (ASUU), Colleges of Education Academic Staff Union (COEASU), Academic Staff Union of Polytechnics (ASUP), National Union of Teachers (NUT), Academic Staff Union of Secondary Schools (ASUSS), Non-Academic Staff Union, etc. have really affected the education sector.

Owing to this, the academic calendars have been disrupted; pupils and students have stayed more than required in their studies. To the employed staff in the academic institutions, their agitations bow down to the inability of the government to meet up the new salary scale and other allowances. More so, it is attributed to the poor state of the learning institutions which the attention of the government is drawn to. There exist no strong evidence of growth-promoting externalities of education in Nigeria, but rather education expansion further deepens social inequality and inculcate negative social changes such as cultism, sexual harassment, result racketeering, brain drain among other social vices in the Nigerian school system (Noko, 2016).

In many Less Developed Countries like Nigeria, the role of government as a provider of funds to the education sector at Primary, Secondary and Tertiary levels is widely recognised. Nigeria’s successive governments have increasingly augmented their allocations for education so as to achieve the desired educational goals in the country. On the other hand, school enrolment at Primary, Secondary and Tertiary levels have also been increasing since 1970 due to population growth rate in Nigeria. It is expected that adequate funding of education is a driver of human capital development which will translate into economic growth.

1.3 Research Questions

  1. To what extent does government expenditure on education impact on the economic growth of Nigeria?
  2. Is there any relationship between government expenditure on education and unemployment in Nigeria?
    • Objectives of Study

The objective of this study is to evaluate; the significant relationship between government expenditure on education and economic growth. Specifically, the objectives of this study include.

  1. To empirically investigate the relationship between government expenditure on education and economic growth in Nigeria
  2. To examine the longrun relationship between government expenditure on education and economic growth in Nigeria.

1.5       Statement of Hypothesis

H0: Education has no significant relationship with economic growth in Nigeria.

H1: Education has significant relationship with economic growth in Nigeria.

H0: Government expenditure on education has no long-run relationship with economic growth in Nigeria.

H1: Government expenditure on education has long-run relationship with economic growth in Nigeria.

1.6     Significance of Study

The impact of human government expenditure on education on the sustainable growth of any nation cannot be over-emphasized; since human capital is all about human resources of any country. This work will be of great importance to the general public, government and its agencies. The work will explore the returns on education and health as a motivation for investing in human capital of Nigeria.

Also, it will be of great importance to the ministry of education as well as school administrators. Above all, it will be a foundation for economist, students and researchers who have interest on human capital.

1.7   Scope and Limitation of Study

This research will analyze the impact of government expenditure on education in Nigeria economy, taking a good analysis on various ways and means put by the government of Nigeria to develop human capital since 1981-2016. The work will analyze government expenditure on health & education as well as its effort in establishing skills acquisition Centre’s.

The researcher encountered a number of constraints in the course of this work to include; data sourcing or data inconsistence due to poor nature of information management in Nigeria. Other constraints are; time factor, financial constraints and host of other constraints that prevent the researcher to present a better work than this.

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