ABSTRACT
The study examined the impact of infrastructure financing on sustainable development in Nigeria for a period of thirty-nine (39) years, from 1981 to 2019. The Ex-post facto research design was adopted. Secondary data was collected from the National Bureau of Statistics (NBS) for various years. The study used Real Gross Domestic Product (RGDP) as a proxy for sustainable development. Error Correction Model multiple regression techniques and E-view statistical software 8 were used to analyze the data. The data were first subjected to pre estimation test such as unit root test and cointegration test. The unit root result showed that the variables were stationary at first difference while the Cointegration result showed that the variables have no long run relationship with RGDP. Because of the result of the Cointegration test, error correction model regression was used to test the hypotheses. The error correction model regression data results showed that telecommunication infrastructure and utility infrastructure (proxied by Infrastructure financing) have insignificant impact on sustainable development in Nigeria. Again, environmental infrastructure and transportation infrastructure (proxied by Infrastructure financing) has significant impact on sustainable development in Nigeria. Based on these findings, the study concluded that there is a positive relationship between the components of infrastructure financing and sustainable development in Nigeria. Hence, the study recommended that: Government should sustain the level of investment on transportation infrastructure, and environmental infrastructure because of their contribution to sustainable development in Nigeria. It further recommends that Government should review her investments on utility infrastructure and ensure they are well utilized for improved sustainable development in Nigeria.
TABLE
OF CONTENTS
Tittle
page i
Declaration ii
Dedication iii
Certification iv
Acknowledgements v
Table
of contents vi
List
of tables x
List of figures xi
Abstract xii
CHAPTER 1: INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 5
1.3 Objectives of
Study
7
1.4 Research Questions 7
1.5 Hypotheses 8
1.6 Significance of the Study 8
1.7 Scope
of the Study 9
1.8 Limitations of the Study 9
1.9 Operational Definition of Terms 10
CHAPTER
2: REVIEW
OF RELATED LITERATURE
2.1 Conceptual Framework 11
2.1.1 Concept
of infrastructure 11
2.1.2 Impact of
infrastructure on the economy 13
2.1.3
Infrastructure financing in nigeria. 14
2.1.4 Assessment
of infrastructure financing and growth in nigeria 14
2.1.5 Stylized facts on infrastructure financing
and growth in nigeria 16
2.1.6 Present state of infrastructure in nigeria 20
2.1.7 Service infrastructure 21
2.1.8 Categories of service infrastructure 22
2.1.9 Social infrastructure 25
2.1.10
Security infrastructure 25
2.1.11 Some
practices in financing infrastructure and services in nigeria. 27
2.1.12 Traditional infrastructure delivery process 28
2.1.13 The
sustainable development goals (SDG’s) global agenda 30
2.1.14Transforming our world:
the 2030 agenda for SDGs. 31
2.1.15 Targets of the sustainable development goals 31
2.1.16
Infrastructure financing and sustainable development 38
2.1.17 Means of implementation: 40
2.1.18 Measurements of sustainable
development goals 41
2.2 Theoretical Framework 47
2.2.1 Infrastructure
growth theory 47
2.2.2 The
Classical theory of economic development 49
2.2.3 The
dependency theory 50
2.3 Empirical Review 51
2.4 Summary and Gap in Literature. 65
CHAPTER 3: METHODOLOGY
3.1 Research Design 66
3.2 Area of the Study 66
3.3 Sources and Method of Data Collection 67
3.4 Model Specification 67
3.5 Description
of Model Variables 68
3.5.1 Dependent variable 68
3.5.2 The independent variables 68
3.6 Method
of Data Analysis 69
3.7 Decision Rule 71
CHAPTER 4: DATA
PRESENTATION, ANALYSIS, AND DISCUSSION OF FINDINGS
4.1 Data
Presentation 72
4.1.1 Trend analysis of
environmental financing in nigeria 76
4.1.2 Trend analysis
of telecommunication financing in nigeria 77
4.1.3 Trend analysis of
transportation financing in nigeria 77
4.1.4 Trend analysis of
utility financing in nigeria 78
4.1.5 Trend analysis of
real gross domestic product (RGDP) of nigeria 78
4.2 Pre-Estimation Tests 82
4.2.1 Stationarity/ unit root tests 82
4.2.2 Cointegration test results 83
4.3 Test Of Hypotheses 86
4.3.1 Decision rule for hypotheses’ tests 87
4.4
Discussion of Findings 92
4.4.1
Impact of transportation infrastructure financing on sustainable development 92
4.4.2 Effect of environmental infrastructure financing on
sustainable development 93
4.4.3
Impact of utility infrastructure financing on sustainable development 93
4.4.4
Effect of telecommunication infrastructure financing on sustainable development 94
CHAPTER 5: SUMMARY, CONCLUSION, AND RECOMMENDATIONS
5.1 Summary of Findings 95
5.2
Conclusion 96
5.3 Recommendations 96
5.4 Contribution to Knowledge 97
5.5 Suggestion for Further Studies 98
References
Appendices
LIST
OF TABLES
2.1 Types and components of Infrastructure 12
2.2: Growth of Recurrent &
Capital Budget Estimate on Infrastructures in Nigeria 17
2.3:
Contributions of Selected Infrastructures to Growth in Nigeria, 1970-2019 18
2.
4: Electricity Generation and Consumption in Nigeria, 1970-2019 19
2.5:
Health Expenditure in Nigeria: 1995-2019 20
2.6: Summary of Investments Outlay in
Infrastructure from 1980 to 2016 26
2.7:
Sources of Infrastructure Funding in Nigeria 28
2.8: Reviewed Empirical Literature. 60
4.1: Sectoral Infrastructure Financing from
1981 to 2019 73
4.2: Descriptive Statistics 79
4.3: Augmented Dickey
Fuller (ADF) Test 83
4.4:
Cointegration Test 84
4.5:
The Error Correction Model 85
4.6:
Error Correction Model Regression 86
4.7: Ranking Of the Infrastructure. 91
LIST
OF FIGURES
2.1: Conceptual Framework 47
4.1 Trends of
Infrastructure Financing Data Used for the Study 74
CHAPTER
1
INTRODUCTION
1.1 BACKGROUND TO THE
STUDY
Infrastructure is perhaps the most important factor for
the attainment of sustainable development of emerging nations including
Nigeria. As such, many developing countries keep seeking the most effective
methods of financing infrastructure. Furthermore, public funding challenges are
compelling both public and private clients to rethink the orthodox methods of
funding infrastructure development. Consequently, it is critical to seek and
tap into alternative methods of funding crucially needed infrastructure in our
country. In recent years, the need for the development of infrastructure and
public facilities, as a very significant factor of economic growth, has
increased in developing and developed economies. Unfortunately, governments'
budgetary allocations are perhaps not sufficient to allow keeping pace with
these needs (Rabiu, 2017).
Budget estimates to sustain the available
infrastructures have been on the increase between 1977-1986 and 1997-2006.
Transportation and Communication infrastructure grew from a negative 1.84% to
79.6% and declined sharply to 7.03% during 2007-2014. During the same period,
education, health, construction and water infrastructure grew from 8.78%,
11.1%, 18.8% and 38% to 33.1%, 44.1%, 57.1% and 73.2% respectively. Between
2007-2014, the growth of education, health, construction, and water
infrastructure stood at 13.3%, 13.3%, 4.96%, and 4.96% respectively, (NBS,
2019). The increase between 2015 -2019 stood at 15.9%, 15.6%, 17.2%, and 17.8
for education, health, construction, and water infrastructure respectively
(NBS, 2019). The National Integrated Infrastructure Master
Plan (NIIMP) stipulates that Nigeria will need an average of about US$25billion
per annum i.e. (5% of GDP) investment for 5 years from implementation to meet
the infrastructure need (Rabiu, 2017). With this reality, it is, therefore,
necessary to find alternative modes to raise finance to close the gap of
budgetary provisions with actual performance (Rabiu, 2017).
Conceptually, it has been argued that
infrastructure may affect aggregate output in two main ways: (i) Directly,
considering the sector contribution to GDP formation and as an additional input
in the production process of other sectors; and (ii) Indirectly, raising total
factor productivity by reducing transaction and other costs thus allowing more
efficient use of conventional productive inputs (Sawada, 2015). Infrastructure
can be considered as a complementary factor for economic growth. How big is the contribution of infrastructure
to aggregate economic performance? The answer is critical for many policy
decisions. For example, to gauge the growth effects of fiscal interventions in
the form of public investment changes, or to assess if public infrastructure
investments can be self-financing (Agenor and Moreno-Dodson, 2016).
It has long been recognized that an adequate
supply of infrastructure services is an essential ingredient for productivity
and growth in any economy. In recent years, the role of infrastructure services
has received increased attention (Agenor and Moreno-Dodson, 2016). Much of the
current international debate on ways to spur growth, reduce poverty, and
improve the quality of human life in low-income countries has been centered on
the need to promote a large increase in public investments in infrastructure. A
report by the United Nations Millennium Project (2015), the Blair Commission
(2015), and the World Bank (2015) have dwelt on the importance of a “Big Push”
in public investments in core infrastructure, financed by generous debt relief
and substantial increases in foreign aids (Agenor and Moreno-Dodson, 2016).
A common argument for a large increase in
public spending on infrastructure is that infrastructure services may have a
strong growth-promoting effect through their impact on the productivity of
private inputs and the rate of return on capital. According to Agenor and
Moreno-Dodson (2016), in Sub-Saharan Africa for instance, only 16 percent of
roads are paved, less than one in five Africans has access to electricity, and
transport costs are the highest of any region. Infrastructural development has
been on the top of the priority list for governments all over the world. Policymakers
believe that appropriate infrastructural investment holds the key to
sustainable development. Improving infrastructure in the world is key to
reducing poverty, increasing growth, and achieving the Sustainable Development,
(World Bank, 2017).
The financing of infrastructure has important
implications for macroeconomic stability. As a countercyclical tool,
infrastructure investment can generate employment and consumer demand in the
short term as well as in the longer term. Infrastructure has become a
ubiquitous theme in a variety of areas of the policy debate. For instance,
there is persuasive evidence that adequate financing of infrastructural
facilities is a key element in the agenda required for sustainable
development. However, some studies (Agenor
and Moreno-Dodson, 2016; World Bank, 2013; Adesoye, Maku and Atanda, 2010) have
argued that infrastructural financing plays a key role in helping reduce income
inequality and sustained development.
According to Adesoye, Maku and Atanda (2010),
there is a general view that public infrastructure expenditure, either
recurrent or capital expenditure, notably on social and economic infrastructure
like transportation and communication can be growth-enhancing. The need for
infrastructure financing is indeed crucial for developing countries, especially
Nigeria. Perhaps, lack of modern infrastructure financing has been regarded as
an impediment and a major constraint not only on poverty reduction but also on
the attainment of the Sustainable Development in Sub-Saharan Africa (SSA)
countries (Habitat, 2011). Also, Ondiege (2013) attributed the rise in the
transaction costs of business in most African countries to inadequate
infrastructure development.
In September 2015, 193 UN Member States gathered at the institution’s
headquarters in New York and agreed to take transformative steps to shift the
world on to a sustainable path. They adopted a new global agenda committed to
people, to the planet, to promoting peace, prosperity, and partnerships: the
2030 Agenda for Sustainable Development. The 2030 Agenda includes 17
Sustainable Development Goals. The SDGs, which in turn target and are aimed at
a universal, integrated and transformative vision for a better world. The SDGs
were built on a participatory basis, building on the successful experience of
the Millennium Development Goals (MDGs), responsible for major advances in
promoting human development between 2000 and 2015 (UNDP, 2018).
The Sustainable Development Goals and their
targets challenge all countries to be ambitious and innovative to establish
inclusive, efficient, and transparent means of implementation to bring to
reality this complex development agenda, from the global to the subnational
level. These means of implementation, as recommended by the document
“Transforming Our World: the 2030 Agenda for Sustainable Development” include,
among others, the mobilization of financial resources, capacity-building,
international public funding, and the availability of high-quality, up-to-date,
reliable, and disaggregated data. That is multidimensional solutions to multidimensional
challenges. Thus, for the 2030 Agenda to be effectively implemented,
governments have the primary responsibility to follow up and review, at the
national, regional, and global levels, the progress made in implementing the
Goals and targets by 2030. (www.sustainabledevelopment.un.org).
Rabiu (2017), opined that African countries (which
Nigeria is among) exhibit the lowest levels of productivity of all low-income
countries and are among the least competitive economies in the world. This according to him is the result of poor
infrastructure financing. It is on this ground that this study intends to
examine the effect of infrastructure financing on sustainable development in
Nigeria.
1.2
STATEMENT OF THE PROBLEM
Infrastructure is a heterogeneous term,
including physical structures of various types used by many industries as
inputs to the production of goods and services (Chan, Chen, and Dasu, 2009).
This description encompasses “social infrastructure” (such as schools and
hospitals) and “economic infrastructure” (such as network utilities). The
latter includes energy, water, transport, and digital communications. They are
the essential ingredients for the success of a modern economy and the focus of
this thesis.
Infrastructural financing is very important
to the development of every economy, either underdeveloped, developing, or
developed country. Nigeria spends a huge amount every year on infrastructure
financing to enhance sustainable development in the country. Unfortunately, the
money spent on these infrastructures does not translate to sustainable economic
development. Nigeria is experiencing stunted growth perhaps due to sluggish
infrastructure development. Resources directed to the provision of infrastructural
services are either inadequate, embezzled, or out rightly diverted to less
productive needs which are susceptible to corruption Rabiu, (2017). The average
growth rate of federal allocation to infrastructure in Nigeria increased from
26% to 34% between 1970 and 1999, (NBS, 2017). The increase was sustained by a high
revenue inflow from the oil sector. However, the rise in the growth rate did
not reflect on decreasing Nigeria's infrastructure development needs.
Similarly, the GDP growth rate declined substantially from 24.2% to 8.48%
during the period 2012 and 2017 respectively, (NBS, 2017). The downward trend
in the growth rate could be attributed to the declining revenue available to
give out. Every economy has two major development questions to answer. The
first question is, how would the economy make available the basic core needs of
the people? The second question is; how would the economy achieve higher growth
rates and sustainable development? There are only a few studies found to have investigated
infrastructure financing using varieties of infrastructure outcomes to gauge
growth temperature and sustainable development.
Agenor &
Moreno-Dodson, (2016), carried out a study on the relationship
between infrastructure investment and economic growth.
The empirical results confirm that both public and private infrastructure investments have
positive but insignificant effects on economic growth.
This is contrary to the findings of Imobighe and Awogbemi (2016), who analyzed the effects
of infrastructural financing on economic growth in Nigeria between 1970 and
2015. Their result revealed that government community service infrastructure
spending, private infrastructure investment, broad money supply, and total
population, exert a positive influence on economic growth. Owolabi (2015), investigated the
infrastructural development and economic growth nexus in Nigeria from 1983 to
2013. His empirical results reveal that infrastructure (measured by Gross Fixed
Capital Formation) has a positive and statistically significant impact on
Nigeria's economic growth. Sawada (2015), analyzed the effect of public and
private investment on infrastructures and its impact on economic growth in
Nigeria during the period 1970 to 2014. The empirical
results confirm that public and private investment in infrastructures have a positive impact
on economic growth. More so, Abu and
Abdullah (2010), analyzed the relationship between government expenditure and
economic growth in Nigeria from the period ranging from 1970 to 2008. The
empirical result revealed that government total capital expenditure, total
recurrent expenditure, and education hurt economic growth.
Thus, though empirical studies on the impact
of infrastructure financing on sustainable development in Nigeria abound, the
results are mixed hence creating a gap that this study purpose to fill.
1.3 OBJECTIVES OF THE STUDY
The broad objective of the study is to
investigate the impact of infrastructure financing on sustainable development
in Nigeria. The specific objectives are to:
(i)
Evaluate the impact of transportation
infrastructure financing on sustainable development in Nigeria.
(ii)
Determine the impact of environmental
infrastructure financing on sustainable development in Nigeria.
(iii)
Ascertain the impact of utility infrastructure
financing on sustainable development in Nigeria.
(iv)
Estimate the impact of telecommunication
infrastructure financing on sustainable development in Nigeria.
1.4 RESEARCH QUESTIONS
The following research questions guided the
study.
(i)
In what ways does infrastructure financing
impact sustainable development in Nigeria?
(ii)
How does environmental infrastructure financing
affect sustainable development in Nigeria?
(iii)
What is the impact of utility infrastructure
financing on sustainable development in Nigeria?
(iv)
How does telecommunication infrastructure
financing affect sustainable development in Nigeria?
1.5 HYPOTHESES
The following hypotheses were tested.
H01: Transportation infrastructure financing has no significant impact on
sustainable development in Nigeria
H02: Environmental infrastructure financing has no significant effect on
sustainable development in Nigeria
H03: Utility infrastructure financing has no significant impact on
sustainable development in Nigeria
H04: Telecommunication infrastructure financing has no significant effect on
sustainable development in Nigeria.
1.6 SIGNIFICANCE OF
THE STUDY
The
study will be useful to the following in the ways specified.
i.
Government: The findings of this study will enable the government
to know the impact of infrastructural financing (such as telecommunication,
environmental, transportation, and utilities) on sustainability in Nigeria. In
other words, it will guide them on the direction or area(s) of infrastructure
that needs adequate financing for them to increase its expenditure on those
sector(s) to achieve sustainable development of the economy.
ii.
Policymakers: The
study will serve as a guide to policymakers in decision-making. This is because
policymakers need to know the level of efficiency at which infrastructural
financing can achieve sustainable development and how best to sustain it. Having
access to this work will help them to achieve that goal.
iii.
Academician: This work will contribute to the existing
literature on the impact of infrastructure financing on sustainable development
in Nigeria. It will serve as a basis upon which further research can be built
on.
1.7 SCOPE OF THE STUDY
The study focuses on the impact of infrastructure financing on
sustainable development in Nigeria for the period ranging from 1981 to 2019.
The choice of the base year 1981 is based on the fluctuation in infrastructure
financing on sustainable development in Nigeria since 1981. Also, the data
published in the National Bureau of Statistics (NBS) bulletin where the data
were generated from, started from 1981 and ends in 2019 as at the time of this
research.
1.8 LIMITATIONS OF THE STUDY
This study was not without limitations, as there were constraints in the
course of the investigation. One of the challenges was the difficulty in
accessing data for the analysis. Also, the unavailability of the fund at the
time it was needed and other engagement that demanded time, were part of the
constraints in this study.
The above problems were overcome through the help of vast online sources
and my supervisor who guided and assisted me to gain access to critical data
sources for the study.
1.9 OPERATIONAL DEFINITION OF TERMS
Economic
Development: This is the process by which the economic well-being
and quality of life of a nation, region, local community, or individual are
improved according to targeted goals and objectives.
Economic Growth:
This is an increase in the production of economic goods and services,
compared from one period of time to another.
Sustainable
Development: This is the organizing
principle for meeting human development goals while simultaneously sustaining
the ability of the natural system to provide the natural resources and
ecosystem services on which the economy and society depend.
Sustainability: This simply means focusing on meeting the needs of the
present without compromising the ability of future generations to meet their
needs.
RGDP: Real Gross
Domestic Product (RGDP) is a macroeconomic measure
of the values of economic output adjusted for price changes (Inflation or
Deflation).
Click “DOWNLOAD NOW” below to get the complete Projects
FOR QUICK HELP CHAT WITH US NOW!
+(234) 0814 780 1594
Login To Comment