A Dynamic Analysis of the Link between Public Expenditure and Public Revenue in Nigeria and Ghana

This paper investigated the nature of the relationship between government expenditure and government revenue for Nigeria and Ghana within a dynamic framework. The major empirical and methodological contribution of this study is the use of Dynamic Ordinary Least Squares (DOLS) proposed by Stock and Watson (1993). Dynamic OLS becomes better than OLS by coping with small sample and energetic sources of bias. An Engle-Granger two-step methodology for error correction was employed. The models for revenue and expenditure for the two countries reveal causation running in both directions to and from revenue and expenditure. However, the conclusion drawn from the study supports the fiscal synchronisation hypothesis which is in dissension with views held by earlier researchers. Further, results indicate that lagging, leading and coincident effects of revenue on expenditure and vice versa are present for the two countries. On the other hand, changes in expenditure have a negative impact on revenue for the Nigerian economy and a positive impact for the Ghanaian economy. Moreover, changes in past values of expenditure impact positively on changes in revenue. This finding is peculiar to the Nigerian economy. Keywords: Dynamic ordinary least squares, fiscal synchronisation, hypothesis, error correction

Trade Openness-Government Size Nexus: Compensation Hypothesis Considered for Nigeria

Over the years, substantial theoretical and empirical studies have been carried out on the trade openness-government size nexus. While a strand of the literature reported positive linkage, the other suggests otherwise. This study contributes to the debate by examining this relationship for Nigeria using the bounds testing approach to cointegration within an ARDL framework proposed by Pesaran et al. (2001). Empirical evidence reveals that government size measured by percentage share of total government expenditure in GDP and share (percent) of recurrent expenditure in GDP significantly affects trade openness in the long run but percentage share of capital expenditure in GDP as a measure of government size does not impact on trade openness in the long run. The results of the standard causality test corroborate these findings. However, the three measures of government size considered significantly affect trade openness in the short run. The major implication for our study therefore is that compensation hypothesis holds for Nigeria. Thus, the government need to continue to expand its expenditure in order to cushion the effect of increase in risk caused by rising trade openness

The effects of working capital management on the profitability of Nigerian manufacturing firms

The efficiency of working capital management (WCM) has implications for firms’profitability. This paper empirically investigates the effects of WCM on the profitability of a sample of 48 large manufacturing firms quoted on the Nigerian Stock Exchange (NSE) for the period 1993 to 2005. It is aimed at filling the gaps in a previous study and contribute to expanding and enriching the literature particularly on Nigeria and at large. The analysis examined the responses of the firms’ profitability to WCM and a number of augmenting factors. Profitability was alternatively measured by gross operating profit (GOI), net operating income (NOI) and return on assets (ROA). Likewise, WCM was measured by the average collection period (ACP), average pay period (APP), inventory turnover days (ITID) and comprehensively by the cash conversion cycle (CCC). The results indicate that the firms’ have been inefficient with WCM and caused significant reductions in profitability. The paper concludes that improving the efficiency of WCM is essential and recommends that manufacturing firms in Nigeria should shorten the ACP, APP, ITID and reduce their CCCs

An applicability test of the use of deposit-refund system for managing water-sachet litter in Ilorin, Nigeria

This study used both quasi-experiment and contingent valuation survey to explore the applicability of deposit-refund system (DRS) to water-sachet litter management in Nigeria. In the experiment, a DRS was established to incentivize the participants to return emptied sachets of water. A contingent valuation survey of 454 sachet-water consumers selected using quasi-systematic sampling technique was conducted. Experimental results showed that the number of sachets returned by the experimental group – those subjected to DRS – was significantly greater than that of the comparison group – those not subjected to DRS. Logit regression results showed that refund size increased the odds of returning sachets by 42.0%. Increasing the redemption time decreased the odds of turning in sachets by about 16.0%. A one-minute increase in the time spent on redemption would result in about 2.4% decrease in the probability that participants would comply. Income decreased the odds of compliance by about 31.0%, while age reduced the odds of compliance by about 2.2%. These results imply that the DRS reduced water-sachet littering in the study area, and that income, refund amount, redemption time, age and perceived effectiveness of DRS influenced consumers’ compliance with DRS. Hence, an appropriate motivating DRS would reduce litter and its attendant problems, such as hygiene, plastic pollution, flooding, aesthetic loss, non-naturally degradable toxic compounds, degradation of natural habitat ant its endangered species. The government should, therefore, implement a DRS and set up recycling plants, or encourage private recycling firms, in order to accommodate used sachets that would end up piling up

Perspective Chapter: Sustaining University Education for and National Development in Nigeria

This chapter presents a retrospective and prospective reflections on university education in Nigeria in relation to national development. Retrospectively, the Nigerian university system was among the best in Africa and beyond, especially in the 1970s. The universities were top notch and attracted other Africans who flooded into Nigeria to study. Then the Nigerian university system possessed the four crucial elements of a universal and functional university system-quality teachers, quality students, an enabling environment for learning and international competitiveness. However, over the past three decades, the Nigerian university system has suffered benign neglect and lost its hallmark of quality, and thereby raising concerns about its role and relevance in contemporary national development. Nevertheless, this chapter expresses strong believe and conviction that the university system is still relevant for the socio-economic and political development of the country but there is the need to take necessary actions/steps to strengthen the system towards making it have the desired and comparative international quality and functionality required to meet the requirements of contemporary challenges and the future. Suggestions were offered accordingly

Long-term Determinants of Government Expenditure: A Disaggregated Analysis for Nigeria

This study examines the long-term determinants of marked expansion of government expenditure in Nigeria. Using annual time series data for a period of 51 years (1960-2010) and a single equation estimation approach, we overcome an omitted variable bias by testing a wide range of leading hypothesis (on the determinants of government expenditure) in a comprehensive specification. The result yields a variety of interesting and qualified evidence. Among other results, we found that inflow of foreign aid contributes to expansion of government recurrent expenditure at the expense of capital spending; debt servicing reduces all components of government expenditure;  revenue is a major factor that accounts for long-term government growth; openness has a significant negative association over government expenditure; higher population (mostly in urban areas) leads to higher government spending; military regime is favorable to capital expenditure expansion in Nigeria than the civilian administration; election period is associated with higher government expenditure than would otherwise be the case. To ensure fiscal sustainability and the overall growth of the Nigerian economy, some useful policy options have been suggested. These include cautious trade liberalization policy, diversification of the Nigerian economy and internally revenue generation improvement initiative, fiscal restraint on further foreign debt, population reduction programme or legislation, reduction in the cost of election, etc

Government Spending and Inclusive-Growth Relationship in Nigeria: An Empirical Investigation

This study has investigated the relationship between government spending and inclusive growth in Nigeria over the period 1995 to 2014. Specifically, it examined how, and to what extent, government spending on education, government spending on health, economic freedom, public resource use, and real GDP growth rate have impacted on inclusive growth in the country. It used the Dickey-Fuller GLS unit root test to ascertain the order of integration of the series. Consequently, through the Auto-Regressive Distributed Lag (ARDL) bound testing technique, the study found that in the long-run government spending on health, economic freedom, public resource use and real GDP growth rate had significantly positive influence on inclusive growth. In the short-run, however, only real GDP impacted significantly on inclusive growth while other variables were not significant in causing inclusive growth. Thus, in conclusion, government spending in the form of redistributive spending on health propelled inclusive growth in Nigeria

Public expenditure and economic growth in Africa

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Public Investment and Output Performance: Evidence from Nigeria

This study examined the direct/indirect long-run relationships and dynamic interactions between public investment (PI) and output performance in Nigeria using annual data spanning 1970-2010. A macro-econometric model derived from Keynes’ income-expenditure framework was employed. The model was disaggregated into demand and supply sides to trace the direct and indirect effects of PI on aggregate output. The direct supply side effect was assessed using the magnitude of PI multiplier coefficient, while the indirect effect of PI on the demand side was evaluated with marginal propensity to consume, accelerator coefficient and import multiplier. The results showed relatively less strong direct effect of PI on aggregate output, while the indirect effects were stronger with the import multiplier being the most pronounced. This is attributed to declining capital expenditure, poor implementation and low quality of PI projects due to widespread corruption. By and large, we concluded that PI exerted considerable influence on aggregate output