Abstract
This study investigated Fiscal policy and economic growth in Nigeria for a period of forty five years 1970 to 2014. The objective is to determine the impact of Fiscal policy on economic growth in Nigeria. The study used Ex-post facto research design and time series data (1970-2014) sourced from National Bureau of Statistics (NBS) annual bulletin, Central Bank of Nigeria (CBN) annual bulletin, World Bank Country economic statistics and Central Intelligence of America Countries Economic statistics. Ordinary least squares of multiple regressions were used to test the formulated hypotheses and to ascertain the stationarity of the data used the Augmented Dickey Fuller test was conducted. The Engle-Granger co-integration and the Error correction models were used to test for the short and long run dynamic behavioral relationship of the variables. The study also showed that most of the explanatory variables were not significance in contrast with the a priori expectations. It was also found out that Nigerian aggregate public expenditure if not properly managed could cause real gross domestic product, the proxy for economic growth to reduce by 28.05%. It was also showed that Nigeria aggregate public expenditure has no significance on the growth of Nigeria economy. Also showed was that Nigerian public recurrent expenditure was negative, insignificant and had no impact on the economic growth of Nigeria. It was revealed that Nigerian public capital expenditure was significant, positive and could impact on the growth of Nigeria economy. The impact of Nigeria aggregate public expenditure on economic growth in Nigeria was found to be insignificant. In view of the findings and conclusion the Researcher recommends that the Nigerian economic fiscal policy makers should formulate policies that would encourage other sources of revenues and expenditures. The researcher recommended that government should embark upon an aggressive implementation of the Nigerian expenditures budget in order to drive to a greater height the Nigerian economy as to better the economic conditions of the people of Nigeria.
TABLE OF CONTENTS
Title
Declaration i
Certification ii
Dedication iv
Acknowledgements v
Table of contents vii
Lists of Tables xiv
List of figure
xvi
Abstract xvii
CHAPTER
1: INTRODUCTION
1.1 Background
to the Study 1
1.2 Statement
of the Problem 7
1.3 Objectives
of the Study 10
1.4 Research
Questions 11
1.5 Research
Hypotheses 12
1.6 Limitations
of the Study 12
1.7 Scope
of the Study
13
1.8 Significance
of the Study 14
1.9 Operational
Definition of Terms 14
CHAPTER
2: LITERATURE REVIEW
2.1 Conceptual
Framework
17
2.2 Concept
of Government Budgeting and Budget 20
2.2.1 Budgeting 21
2.2.2 Budget concept
23
2.2.1.1 Public Sector Budgeting
24
2.2.2.2 Revenues
25
2.2.2.3 Expenditure
25
2.2.2.4 Fiscal deficit
26
2.3
Politics of budgeting
27
2.4
The concept of budgetary control
29
2.4.1 The objectives of budgetary
control 30
2.4.2 The advantages of budgetary
control 31
2.5 Types of budgeting
32
2.5.1 Line item or Traditional
budgeting 33
2.5.2 Performance Based
Budgeting
35
2.5.2.1 Component of performance
based budgeting
38
2.5.2.2 Characteristics of
performance Based Budgeting 38
2.5.2, 3 Qualities of performance
Based Budgeting
39
2.5.3 Zero Based Budgeting
40
2.5.3.1 Features of zero based
budgeting 42
2.5.3.2 The merits of zero based
budgeting 44
2.5.3.3 The demerits of zero based budgeting 44
2.5.4 Planning programming budgeting system 45
2.5.4.1 Characteristics of planning
programming budgeting 48
2.5.4.2 Advantages of planning
programming budgeting
48
2.5.4.3 Disadvantages of planning
programming budgeting 49
2.6 Process of budgeting
50
2.7 Budget preparation in
Nigeria 53
2.8 Budget cycle
55
2.8.1 The phase one (Budget
formulation) 55
2.8.2 The phase two (Authorization of
budget) 57
2.8.3 The phase three (Budget
execution) 57
2.8.4 The phase four (Budget
accountability)
58
2.9 Challenges of budget
preparation
58
2.9.1 Weaknesses in budget
preparation 58
2.9.2 Improper articulation of the
motive of consultation 59
2.9.3 Limited coverage of relevant
issues
59
2.9.4 Dwindling enthusiasm of
participants 59
2.9.5 Inauspicious timing 60
2.9.6 Absence of a legal prescription
of specific time schedule for budget preparation 60
2.9.7 Activities of dominant
individuals 60
2.10 Budget implementation and its
challenges 62
2.10.1 None implementation of
budgets 67
2.10.2 Delays in budget approval 71
2.10.3 Challenges in public
expenditure budgeting
72
2.10.4 Weak budget monitoring and
evaluation
73
2.10.5 Weak budget
implementation
74
2.10.6 Attitude of the public policy
implementation 77
2.10.7 Poor implementation, design,
conception and discipline 78
2. 10.8 Poor programme leadership and
management. 80
2. 10. 9 Inadequate resources
80
2. 10.10 Corruption in the
system
81
2.10. 11 Sectionalism and ethnic
biases 83
2. 10. 12 Multiplicity of public
policies 85
2. 10. 13 Misplaced priorities 86
2. 10.14 Exacerbation of service
delivery problems
87
2.10.15 Worsen of banking
operation 87
2.11 The concept of public
expenditure 90
2.11.1 Nigerian aggregate public
expenditure
93
2.11.2 Nigerian public capital
expenditure
95
2.11.3 Nigerian public recurrent
expenditure 97
2.11.4 Nigerian tax revenue
97
2.11.5 Nigerian inflationary
rate
101
2.11.6 Nigerian real exchange
rate
103
2.11.7 Nigerian savings
105
2.11.8 Nigerian domestic
investment
107
2.11.8.1 Domestic investment and
economic growth
109
2.12 Concept of economic growth
111
2.13 Theoretical Framework
113
2.13.1 Theories of budgeting 117
2, 13.1.1 Bottom up theory
117
2.13.1.2 Top down theory 118
2.13.1.3 Incrementalism theory
119
2.13.1.4 Principal – agent
theory 119
2.14 Economic growth theories
120
2.15 Review of empirical studies
128
2.16 Summary of the review of
literature
147
CHAPTER
3: METHODOLOGY
3.1 Research design
150
3.2 Nature and source of data
150
3.3 Area of the study
151
3.4 Methods of data analysis
151
3.5 Model specification
152
3.5.1 Models for hypotheses
testing
153
3.6 A priori expectation
162
3.7 Operational research
variables 162
3.7.1 The dependent variable
163
3.7.2 The independent variables 163
3.8 The diagnostic tests
172
3.8.1 The Unit root test
172
3.8.2 Augmented Engle- Granger
Co-integration test
172
3.9 Correlation analysis
173
3.10 Ordinary least squares model
174
3.10.1 Regression analyses
technique
174
3.10.2 Error correction mechanism
model
174
3.11 Test of significance and stability of
regression models 175
3.11.1 T – statistics
175
3.11.2 Adjusted coefficient of
multiple determination
177
3.11.3 Test for significance of the
overall regression
177
3.11.4 Durbin Watson statistic
(DW)
178
CHAPTER
4: DATA PRESENTATION AND ANALYSIS AND
DISCUSSION
4.1 Data presentation
180
4.2 Data analysis
197
4.2.1 Trends analysis
198
4.2.2Descriptive statistic
199
4.3 Augmented Dickey Fuller (ADF)
Unit root test 202
4.4 Presentation of estimation
results
204
4.4.1 Johansen co-integrations
204
4.4.2 Regression results
207
4.4.3Testfor multi-co-linearity
212
4.5 Test of hypotheses 214
4.6 Discussion of findings
224
CHAPTER
5: SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary of findings 234
5.2 Conclusion
235
5.3 Recommendations
237
5.4 Contribution to knowledge
240
References
241
Appendices
LIST OF TABLES
2.1 Trend of public expenditure
(1970-2014) 19
4.1 Dependent and Independent
Variables (1970-2014)
182
4.2 Percentage change in the
Dependent and Independent Variables 187
4.3 Trend of the Dependent and
Independent Variables (1970-2014) 190
4.4 Summary of Descriptive Statistics
of Dependent and Independent Variables 200
4.5 Summary of Augmented Dickey Fuller
Test Results 202
4.6 Johansen Co-integration Test
Results (RGDP, NAPE, NTGR, NPDS, NIF, NPGR, NSAV) 204
4.7 Regression Results (RGDP, NAPE,
NTGR, NPDS, NIF, NPGR and NSAV) 205
4.8 Johansen co-integration test
results (RGDP, NPCE, NPRE, NSAV, NOR, NPGR, NRER, and NTR) 206
4.9 Regression Results (RGDP, NPCE,
NPRE, NSAV, NOR, NPGR, NRER and NTR)
207
4.10 Johansen Co-integration Test Results
(RGDP, NDI, NAPE, NTR, NRER, NPGR and NSAV) 208
4.11 Regression Results (RGDP, NDI,
NAPE, NTR, NRER, NPGR and NSAV) 209
4.12 Variance Inflation Factor
212
4.13 Relationship between Real Gross
Domestic Product and the Independent Variables 215
4.14 Impact of Nigerian Aggregate
Public Expenditure on Economic Growth of Nigeria 217
4.15 Impact of Nigerian total
government revenue on Economic growth of Nigeria 218
4.16 Impact of Nigerian public
capital expenditure on economic growth of Nigeria 219
4.17 Impact of Nigerian public
recurrent expenditure on economic growth of Nigeria 219
4.18 Impact of Nigerian tax revenue
on economic growth of Nigeria 220
4.19 Impact of Nigerian Domestic
investment on the economic growth of Nigeria 221
4.20 Impact of Nigerian savings on
the economic growth of Nigeria 223
LIST OF FIGURES
4.1 Graphical trend of net public expenditure in
Nigeria (1970-2014) 198
4.2 Graphical trend of net government revenue in
Nigeria (1970-2014) 199
CHAPTER 1
INTRODUCTION
1.1
BACKGROUND TO THE STUDY
Fiscal policy is about planning
for revenues and expenditures of government or the public. Public expenditure theories evolved out of the perceived failure
of market economic to efficiently and equitably allocate economic resources for
social and economic infrastructure growth. This failure necessitated the
emergence of welfare economics that is, state intervention in economic
activities leading consequently to the rapid expansion of the government sector,
and by implication, growth in public expenditure (Aigheyisi, 2013).
As the public sector size
continued to grow relatively, the need for an appropriate mechanism that would
ensure efficiency in resource allocation arose. In order to fill this perceived
gap, the fiscal planning arose to take care of budgeting, which contained a
package of public revenue plan, public expenditure plan and tax legislation of
the government for the year readily come to be a veritable tool for
controlling, monitoring and relating government revenue and expenditure plans
to polices of finance and taxation (Aigheyisi, 2013).
In
England, the Magna Carta negotiation between King John and his people in 1215
heralded budget (Onoh, 2013). The word “budget” was
derived from French word “bourgettee” meaning a leather bag or wallet. The term
was used for the first time in 1733 by Mr. Walpole, the British Chancellor of Exchequer,
because he used to carry a leather bag containing papers on the financial plans
of the country to the House of Commons (Edame and Ejue, 2013). In
line with the Magna Carta agreement, it is now a routine for governments
at all levels all over the world to prepare and approve into law a summary plan
of their intended revenues and expenditures, which are made in advance of
government fiscal year in a document known as budget.
Budget plays an indispensible role in the economy of any country such as
Nigeria. It is an economic instrument for realizing the economic visions of a
nation. Budget either as capital expenditure or recurrent expenditure is
expected to encourage economic growth in a country when it is judiciously
implemented or executed by the administrators. In Nigeria that does not appear
to be the case rather, poverty, decay of infrastructures and high inflation
rate are abundant in the country. High exchange rate, unemployment, lack of new
industries and the decay of the old industries are on the increase. Retardation
and abandonment of government projects have become the order of the day.
Stifling of the economy, loss of jobs, high cost of petroleum products and
others have been on the increase, giving rise to little or no increase in the
economy of Nigeria and invariably economic growth proxy by the Real Gross
Domestic Product (RGDP) (Osemenan, 1998; Ihuah
and Fortune, 2005; Aluko, 2008; Ayodele and Alabi, 2011; NHP, 2011; Richard et al., 2012; Uche, 2013; Ihuah and
Benebo, 2014).
Corruption in Nigeria is
another important menace and one reason why no visible progress has been made
on the economic growth of Nigeria. Monies budgeted and released for expenditure
on capital projects to drive the economy are not so utilized, leading to the
negligence of the capital projects which have the capacity to drive growth in
an economy (Omojola, 2007; Akpe, 2008; Ribadu,
2009; Oghodi and Iyagba, 2013).
Government or public sector budgeting is the only
avenue through which a government can allocate funds to public expenditures.
Public sector budget is a financial or quantitative statement prepared and
approved prior to a defined time period expressing the plans, policies and
programmes to be pursued by a government over the period for the purpose of
attaining some given set of objectives (Kalu, 2004).
In
Nigeria, budget preparation on annual basis has become a standard practice
backed by legal provisions such as
the Nigerian constitution and financial regulations (Aliu et al., 2012). In Nigerian’s
first Republic (1960 to 1965) the West Minister parliamentary model was operated
where the Minister of Finance presented budgets to the Federal House of
Parliament and the Regional Ministers to the Regional Houses of Assembly early
in April each year in line with those of the colonial masters (Kalu, 2004). The
basic and essential responsibilities of public financial management include the
planning, financing, safeguarding, utilizing, analyzing and reporting and at
the centre of the process is the public budgeting (Awe, 2001).
Public
budgeting, though, is characterized by confusion due to the inconsistent
definitions; it is the allocation of financial resources among the multifarious
alternative policies, programs and activities of government. Technically, it is
a process for systematically relating expenditure of funds to accomplishment of
planned objectives (Alabi, 1987 and Omopariola, 1997).
Studies
by some researchers such as Lucey (2002), Adams (2004), Lewis (2007) and
Babalola (2008) acknowledged the importance of budgeting both in public and
private sectors of the economy. Budgeting is important in public expenditure
because it is the process that brings about allocations of funds to specific
government programs and projects either of capital expenditure, recurrent
expenditure, social and community services expenditure, economic services
expenditure, and others. Therefore, budgeting is the process of allocating
money to all public expenditure heads and subheads.
In
Nigeria, the basic requirements for budgeting are; the1999 Constitution of the
Federal Republic of Nigeria, the Financial Regulations (at the Federal and
State levels) and the (Financial Memorandum at the Local Government level)
(Abdullahi, 2008). For over five decades, Nigeria has been involved in annual
budgeting as an independent state and her budgeting deals with financial
relations between different tiers of government within the policy (Oniore,
2014).
The annual budget spells out the
direction of the expected expenditure, as it contains details of the proposed
expenditure for each year, though the actual expenditures may differ from the
budget figures due, for example, to extra-budgetary expenditures or allocations
during the course of the fiscal year. Government expenditure is a major
component of national income as seen in the expenditure approach to measuring
national income: (Y = C+I+G +(X – M)) (Agbonkhese and Asekome, 2014).
This implies that government
expenditure is a key determinant of the size of the economy and of economic
growth. However, it could act as a two-edged sword: It could significantly
boost aggregate output, especially in developing countries such as Nigeria where
there are massive market failures and poverty traps, and it could also have
adverse consequences such as unintended inflation and boom-bust cycles (Wang
and Wen 2013).
The effectiveness of government expenditure in expanding the economy and
fostering rapid economic growth depends on whether it is productive or
unproductive. All things being equal, productive government expenditure would
have positive effect on the economy, while unproductive expenditure would have
the reverse effect (Agbonkhese and Asekome, 2014).
No public expenditure is undertaken if it was
not provided for through the budget process and passed as a law or act of
parliament. Through budgeting, national resources are mobilized, allocated and
managed for facilitating and realizing objectives in a given fiscal year. In
view of this, budgeting has to be well-designed, effectively and efficiently
implemented, adequately monitored and its performance well evaluated to achieve
the purpose for which it is meant (Olomola, 2009).
Consequently,
in every financial year the Federal, States, and Local government areas raise
the hope of the Nigerian citizenry through the presentation of budgets with nomenclatures/slogans
such as; ‘budget of hope’, ‘budget of empowerment and consolidation; ‘a budget
of impartation’, ‘budget of sustainable growth’, ‘budget of transformation’, ‘budget
of restoration’, ‘budget of actualization’, ‘budget of integrated development’,
‘budget of sustained prosperity’, ‘budget of redemption’, ‘budget of
consolidation’, ‘budget of commitment’, and so on (Nwachukwu E. C, Ekeke M. I.
and Eme O. I. , 2014).
The
major reason for budgeting, is to be able to take stock of what has been done
in the past, what is to be done and how can they be done to achieve greater
success in terms of the expected growth economically. Furthermore, it is worthy of note that though
it may not be completely accurate as expected, financial estimates of a good
budget should not be wide off the mark (Bhatia, 2010). This means that a budget
after its implementation should be able to attain a reasonable percentage of
success to make a given impact on the growth of the economy.
The
extent to which budgets are being implemented for the overall economic growth
of the country has become a source of serious worry in the system. This may
have stemmed from the fact that the huge sums of Naira always quoted in the
budget at the end of the financial year appear not able to actualize their
purpose in terms of feasible economic growth (Nwachukwu E. C, Okeke M. I. and
Eme O. I., 2014).
In
both developing and emerging economies, policy makers see Gross Domestic
Product (GDP) growth parameter as the leading performance indicator in reducing
unemployment, inequality and poverty (Ali and Ahmad, 2014). Evidence showed
that the total government or public budgeted expenditure in terms of capital
and recurrent expenditures have continued to rise in the last four decades (Oni
et al., 2014). Despite the rise in
government expenditure in Nigeria over these years, there are still public
outcries over decaying infrastructural facilities (Chude and Chude, 2013).
Poverty
in Nigeria is still assuming wider dimensions despite the huge public
expenditures. Included were household income poverty, food poverty, insecurity,
poor access to public services and infrastructures, unsanitary environment,
illiteracy, ignorance, and poor governance (Manyong et al., 2005). The huge
annual budgets on public expenditures have been unable to make impact on
Nigerian economic growth and therefore have failed in bringing about the
required growth in the economy. All the infrastructural needs of Nigerians such
as electricity, good road network, good railway system, potable water, good health,
qualitative education and others are begging to be fixed but it appeared it
would be difficult the huge amount of money committed to public expenditures
notwithstanding.
For Nigeria to be ready in its quest
to become one of the largest economies in the world by the year 2020,
determining the impact of Nigerian public expenditures on economic growth is a
strategy to fast-track growth in all sectors of the economy. Also merely few
empirical studies on Nigeria have taken a holistic examination of the effect of
implementation of public budgeting and expenditures on economic growth of
Nigeria regardless of its importance for policy decisions (Chude and Chude,
2013).
This study tends to fill this gap and
would cover the entire nation and a period of forty five (45) years (1970 – 2014)
to improve on the studies of Oniore (2014), Chude and Chude (2013) and Ali and
Almad (2014) who had carried out similar studies with some modification in
terms of scope of the study, geographical spread and the variables used.
1.2 STATEMENT OF THE PROBLEM
Nigeria had her independence in 1960, from then onwards, the country
has been involved in annual budgeting as an independent state. A look at the
performance of Nigerian previous budgetary estimates suggests that they may
have not helped the country to achieve enhanced economic growth. The country’s
successive budgets had, in most cases, recorded deficits, although, it should
be noted that at times deficit financing is deliberately undertaken by
governments to stimulate economic activities in the country which will be
controlled by establishing more industries to absorb those who were unemployed,
provide more social amenities to the people and improve the general well being
of the populace. But in Nigeria, instead of the afore-stated being the case,
the reverse appears to be occurring consistently and unabated (Oniore, 2014).
The International Federation of Accountants (IFAC) crystallized the
place of budget in Public Sector as a means to evaluate whether resources were
obtained and utilized in accordance with legal requirements and provide
adequate information for evaluating the government’s or unit’s performance in
terms of costs, efficiency and accomplishments. These aims are highly attained by
many governments world over. However, the present levels of infrastructures and
economic conditions in Nigeria do not seem to be in consonance with the
acclaimed level of budget performance at all tiers of government.
The much spent monies in Nigeria appear not to be reflecting on
projects, also, the huge amounts of money budgeted every year by the leadership
of Nigeria do not appear to be translating to the growth of the country’s
economy but, instead, the rate of poverty in the country appears not to be
reducing, but is rather on the increase (Ejiogu et al., 2013).
This is an indication that budget implementation in Nigeria may not
be meeting up with the desired expectations of the people of Nigeria in terms
of economic development (Ejiogu at el,
2013). Rather than promote
social, cultural, economic and infrastructural development, the nation’s
economy appears rather to be deteriorating but, there seems to be gross
inequality, uneven allocation of resources, unemployment, ravaging poverty and
social incontinence despite the huge budget (Edame and Ejue, 2013).
There have been several empirical studies on the relationship
between government expenditure and economic growth at global levels and they had
arrived at different and even conflicting results (Abdullahi, 2011). Some
studies according to (Barro and Martin, 1992), suggested that increases in
public expenditure on socio-economic and physical infrastructures impacted on
long run economic growth rate. Similarly, expenditure on infrastructure such as
road, power and others reduced production costs, increased private sector
investments and profitability of firms, thus ensuring economic growth (Barro,
1990; Barro and Martin, 1992; Roux, 1994; Okojie, 1995; Abdullahi, 2000; Bleany
et al., 2001; Liu et al., 2008; Alexion, 2009).
On the other hand, observations that growth in government spending,
mainly based on non-productive spending was accompanied by a reduction in
income and has led to the hypothesis that the greater the size of government
intervention the more negative is its impact on economic growth (Glomm and
Ravikumar, 1997; Mitchell, 2005; Olopade and Olapade, 2010; Abu and Abdullah,
2010).
Government budgeted expenditures in Nigeria over these years have
been on the increase, but there are still doubts on its effect on the country’s
economic growth, therefore, for Nigeria to become one of the largest economies
in the world by the year 2020, determining the impact of Nigerian public
expenditure on economic growth should be considered a cogent priority. The
important question that requires an urgent answer is – has the Nigerian public
or government aggregated, disaggregated how public expenditures over these
years have impacted on the growth of the Nigerian economy? Many empirical studies in other
countries of the world conducted by some researchers such as (Barro,1990;
Mitchell, 2005; Vu Le and Suruga, 2005; Niloy et al., 2006; Bose et al., 2007; Jiranyakul and Brahmasrene, 2007;
Komain and Brahmasrene, 2007; Alexiou, 2009; Bleany et al., 2009; Taban, 2010;
Ali and Shah, 2012), showed that public expenditures can have positive impact
on economic growth when it is applied productively, while others said it had
negative effect on economic growth and others would say it has positive effect
no matter where it is applied.
Likewise in Nigeria researchers such as; Akpan (2005), Abu and
Abdullahi (2010), Nurudeen and Usman (2010), Taiwo and Abayomi (2011)
Ezeabasili et al. (2012), Usman et al.
(2012), Chude and Chude, (2013), Edame and Ejue (2013) and Ejiogu et al. (2013), who have conducted
studies on similar topics also had conflicting results. While some were of the
opinion that public or government expenditures impacted positively on economic
growth, others believed that it had no effect on economic growth while some
others were still of the opinion that it could have effect on economic growth
only when applied productively.
Again,
most of the scholars used the ordinary least squares alone in their analysis
and could not cover the period between 1970 and 2014. The present study is
aimed at providing answers to these questions by conducting, “an empirical
examination of the impact of government budgeting and public expenditure on
economic growth of Nigeria”, using time series data for forty five (45) years,
from 1970 to 2014 and ordinary least squares of multiple regression. By the
time the study is completed, it will be in a position to confirm or rebut
results of the past studies.
1.3 OBJECTIVES OF THE STUDY
The major objective of
this study is to examine the impact of government budgeting and public
expenditure on economic growth in Nigeria. The specific objectives are to:
i. Ascertain
how economic growth in Nigeria has impacted by the country’s aggregate public
expenditure.
ii. Find
out how Nigeria’s total government revenue has been able to impact on its
economic growth of the country.
iii. Determine
the impact of Nigerian public capital and recurrent expenditures on its
economic growth.
iv. Determine
how Nigeria’s tax revenue has impacted on its economic growth.
v. Ascertain
how Nigerian economic growth has been affected by its total domestic
investments.
vi. Examine
the impact of Nigerian savings on Nigerian economic growth.
1.4 RESEARCH
QUESTIONS
The following research questions
helped in resolving the problems identified in this study.
i. How
has the Nigeria’s economic growth been impacted by the Nigerian aggregate
public expenditures?
ii. What
is the impact of Nigerian total government revenue on the economic growth of
Nigeria?
iii. To
what extent has Nigerian capital and recurrent expenditures impacted on the
economic growth of the country?
iv. In
what way has the Nigerian economic growth being affected by total tax revenue?
v. How
has Nigerian economic growth being affected by her total domestic investments?
vi. What
impact has Nigerian savings been able to make on the growth of its economy?
1.5 RESEARCH HYPOTHESES
Based
on the objectives and research questions of the study the following hypotheses were
formulated to empirically verify the claims of the study.
i.
H01: The Nigerian aggregate public
expenditure has no significant impact on its economic growth.
ii.
H02: There is
no significant impact existing between economic growth in Nigeria and the total
government revenue.
iii.
H03: The
Nigerian public capital and recurrent expenditures have no significant impact
on economic growth of Nigeria.
iv.
H04: The
Nigerian total tax revenue has no significant impact on economic growth of
Nigeria.
v.
H05: The
Nigerian economic growth is not affected significantly by Nigerian domestic
investments.
vi.
H06: Nigerian
government savings has not made any significant impact on Nigerian economic
growth.
1.6 LIMITATIONS OF THE STUDY
It is important to note that a study of this magnitude
would likely be faced with some constraints, ranging from dearth of data,
financial inabilities to insufficiency of time. The research has a time frame
within which to complete the work. In view of this, he had to make maximum use
of the available time to reach out for information through visits to
institutions and use of the internet.
To raise the funds
required for a research of this nature, one has to reach out to friends,
relatives and organizations for financial supports. To source the related data
for the study, the Central Bank of Nigeria (CBN) and Federal office of statistics
were of great help. Internet sources were also of very helpful.
1.7 SCOPE OF THE STUDY
The Nigeria public sector
is large, covering the activities of the Federal, the thirty six states and the
seven hundred and seventy four Local Government Areas, their Parastatals and
Agencies. To achieve the objective of the study, a period of forty five (45)
years, from 1970 to 2014 was considered. The choice of the study period was
informed by the fact that the country had passed through many leaderships. For
instance, from 1970 to part of 1979 the country witnessed military regime; part
of 1979 to part of 1983, it witnessed civilian regime under President Shehu Shagari;
from part of 1983 to May, 1999, Nigeria witnessed military regime under various
military Heads of State, and from May, 1999 to 2014 it witnessed civilian
regime under various Presidents, the last being President Goodluck Ebele
Jonathan the first Nigerian President from the South South geo-political zone
of Nigeria..
The study period will therefore
permit a balanced view of budget processes in Nigeria, in both military and
civilian regimes. The study will also seek to determine how budget allocations
to various key areas of the economy have impacted on the country’s economic development
within the period under review.
1.8 SIGNIFICANCE OF THE STUDY
The result of this study will help policy makers and
the Nigerian budget planners to know where to channel funds for effective
contribution to the growth of the economy. It will create a good base for
Nigerian budget planners in their future budget designs and implementation
processes, monitoring, evaluation, and feedback. It will create an attitudinal
change amongst the implementers of the National budget.
It will also help the Nigeria government to properly
describe her budgetary intensions and policies as to achieve the aim for which
they were made and by doing so bring about the expected economic growth in the
country.
The result of the study will also assist other
developing countries in the design, implementation, monitoring and evaluation
of their budgets in the future.
Scholars of finance,
accounting and economics in Nigeria and other countries of the world will find
the study helpful for future financial and economic planning. The result of the
study will create Good Avenue for future research on budget and budget
implementation in Nigeria and other countries of the world.
1.9 OPERATIONAL
DEFINITION OF TERMS
1. Public or government budget: Budget
as it concerns the public sector or government, is a detailed statement by any
government in power in financial terms indicating and identifying projects and
programs of the government which would be executed by the government within a
given time frame, which in many cases is twelve calendar month or one year.‘Budget’
in this work refers to the entire budget of Federal Republic of Nigeria which
includes those of the Federation, thirty six states of the Federation, the
capital tertiary Abuja and the seven hundred and seventy four local government council
Areas in Nigeria.
2. Budgeting:
It is a process of taking deliberate measures aimed at moving the relevant economic
system from its current state toward a specific desired state. In this case,
the revenue and expenditure programs as well as the fiscal, monetary, trade and
other development policies enunciated in a budget are normally designed to move
the socio-economic system from its present state towards a desired state.
3.
Parastatals: These are government offices
established for special purposes by the Constitution or Act of the National
Assembly. The status of such office should not be equated to that of ministry.
4.
Economic services: This implies all
productive ventures such as, agriculture, oil and gas, industries, construction
and others.
5.
Social and community services: This implies
infrastructures such as education, health and others provided by government for
the social benefits of the society.
6. Economic growth:
This is a measure of an
increase in Real Gross Domestic Product (RGDP) of any country including
Nigeria.
7. Nigeria savings: Monies set aside on regular basis by
government to help her in her time of desperate need. It includes reserves by government, savings by
companies and individuals in Nigeria.
8. Public debt: Money borrowed by government
nationally or internationally to finance government projects, programs and
events.
9. Public debt servicing: Repayment of the interest part of public
borrowing either from domestic or international creditors
10. Nigeria direct investment: Investment of Nigeria government and
private business individual into economic activities in Nigeria for the purpose
of growing the economy.
11. Nigeria foreign investment: is a direct investment into production or business in a country
by an individual or company of another country, either by buying a company in
the target country or by expanding operations of an existing business in that
country.
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