The Role of Education Financing in Enhancing Economic Growth & Alleviating Poverty in Nigeria

Abstract

The research sought to delve into the intricate dynamics between education financing, economic growth and poverty alleviation in Nigeria, using data spanning over four decades, from 1980 to 2022. Employing a methodological combination of trend analysis and Auto Regressive Distributive Lag (ARDL), the study aimed to unravel the trends, relationships, and consequential impacts of education financing on both economic growth and poverty reduction. The results from the education financing-growth model, dedicated to scrutinizing the nexus between education financing and economic growth, brought forth noteworthy insights. The findings pointed towards a positive and statistically significant influence of education financing on economic growth, discernible in both the short and long run, as evidenced by empirical data from Nigeria. Conversely, the second model, which delved into the association between education financing and poverty alleviation, revealed a statistically insignificant positive impact. This lack of significance was attributed to the glaringly low level of education financing, evident in the stylized facts concerning Total Government Expenditure on Education (TGEE%GDP).The study posited that the insufficient allocation of funds to essential aspects of education acted as a bottleneck to the development of contemporary skills necessary for optimal functioning in a world characterized by limited opportunities. Consequently, a stark scenario of persistent poverty, particularly driven by elevated unemployment rates among graduates, unfolded over the study period. The stylized facts for unemployment exhibited an upward trajectory, underscoring a direct correlation with the inadequacy of education financing relative to the country's burgeoning demand for education as a potent tool for poverty alleviation. In light of these findings, the researcher advocated for strategic interventions, chief among them being a substantial increase in Total Government Expenditure on Education (TGEE) to reach 10% of the Gross Domestic Product (GDP). This proposed augmentation in education financing was positioned as a pivotal solution to address existing challenges and contribute significantly to the overarching socioeconomic development of Nigeria.