Recurrent Expenditure Research Articles

Impact of Public Sector Financial Management on the Economic Growth of Nigeria

The main thrust of this study is to investigate the seeming mismatch between resource generation, resource allocation and expenditure management in Nigeria. While an ex-post facto research design was adopted in the investigation; descriptive statistics as well as a least square regression analysis were carried out on a time-series data to ascertain relationships. Real Gross Domestic Product taken as a proxy for economic growth is the dependent variable while capital and recurrent expenditures are the independent variables. Outcome of the study indicates that, the nation’s financing option is skewed towards payment of salaries and personnel emoluments (Recurrent Expenditures) as against the provision of basic infrastructures (Capital Expenditures) that are growth oriented. The trend of disbursements is not appropriately harnessed to create a favorable and positive impact on economic growth. In the short run, the disaggregated components of capital expenditure (CAPEX) indicate that expenses incurred in administration sector and external debt service transfers attracted more than their fare share of public expenditure to the detriment of economic and social community welfare services. The disaggregated component of recurrent expenditures (RECEX) indicate that expense on economic service sector and the lagged value of RGDP taken as an explanatory variable were found to have a positive significant relationship with economic growth in the long run. It is therefore recommended that conscious efforts be made by government to scrutinize and monitor budget implementations. Macroeconomic projections should guide the overall level of expenditures. This should be more realistic, internally consistent and based on more accurate and timely information. Government must embark on a careful estimation and determination of priorities and to emphasize the need for control over revenue and expenditure so as to enhance critical areas of economic growth in Nigeria.

Driving Public Investments in Construction Sector for Economic Growth in Nigeria: A Synthesis of Wagnerian and Keynesian Hypotheses

This study investigated the relationship between public investments in construction sector and economic growth in Nigeria. The study deployed econometric statistics to examine the existence of Wagner's Law and Keynesian Theory in Nigeria using published economic and construction sector data. It found that federal government capital expenditure influences economic growth negatively (t=-2.837, p(0.0084)<0.05), while the recurrent expenditure on construction sector has a positive and significant long-run and short-run influence (t=10.315, p(0.0000)<0.05) on economic growth with a causal effect flowing from construction expenditure to GDP without feedback. The study further established that the aggregate construction investments have potential to grow the economy regardless of effects of capital expenditure ((F=8.19> I(0)=3.10 and I(1)=3.87); ECM(-1)=-0.196, p=0.000<0.05)); but for corruption, misapplication and diversion of capital project budgets. Although, this study partly confirmed the existence of Keynesian Theory, it cannot conclusively establish that construction investments stimulate economic growth in Nigeria. This signified that Nigerian economic models are defective and/or ineffective in transforming the huge capital spending on construction sector to economic growth, thereby making investment in construction sector an irrelevant strategy for economic policy formulation. It then placed the burden of economic rejuvenation through investments in construction sector on economic policy and decision makers in Nigeria. It recommended for diligence in budgeting and implementation of capital projects as the only way the capital expenditure can contribute to a meaningful economic growth.

Contentious issues on Value-Added Tax and Sales Tax in Nigeria: A review of conflicting court decisions

Taxation is a universal means of revenue generation by governments worldwide. It is the oldest form of revenue generation. Many countries rely on taxes as an avenue for revenue generation to foster development and improve the welfare of their citizens. There are different types of taxes computed in line with the tax policies of individual countries. Nigeria, like many other countries, relies on taxes alongside other sources of revenue for its recurrent and capital expenditure. The various taxes in Nigeria include value-added tax (VAT), sales tax, company income tax and personal income tax. This article looks at contentious issues arising from the implementation of VAT and sales tax in Nigeria. The article adopts doctrinal methodology by reviewing case law and tax legislation, and using a comparative analysis approach. The article considers the provisions of the law and their applicability in the Nigerian federal system of government. The article also considers the powers of the federal and the state governments in respect of VAT and sales tax. The article finds that a major challenge in the implementation of VAT and sales tax in Nigeria is the debate between the states and the federal government of Nigeria about which tier of government has power over VAT and sales tax. The article recommends that states should be allowed to have power over VAT and sales tax alongside the federal government, as occurs in other federal settings. In addition, the end users of most consumable items are domiciled in the various states of Nigeria.

The Impact of Export Promotion Schemes on Agricultural Growth in Nigeria

This paper examines the impact of government export promotion schemes on the growth of agriculture in Nigeria. Employing an ARDL cointegration technique, impulse-response functions and variance decompositions, the results indicate a significant positive impact of the government export promotion schemes on agricultural output growth in the short- and long-run. The findings highlight the need to be selective in the choice of export promotion strategies in Nigeria. Most notably, government must not only provide more credit facilities to the sector but also ensure increased recurrent and capital expenditure in the agricultural sub-sector.

What has driven acute public hospital expenditure growth in South Australia? An analysis of the relative importance of major expenditure drivers between 2006&#x2013;07 and 2017&#x2013;18.

Objective The aim of this study was to investigate whether increasing costs of delivering care have driven real growth in acute public hospital expenditure in South Australia (SA) and what has contributed to these real cost increases. Methods Using published time-series data, we decomposed inflation-adjusted growth in per capita total acute public hospital recurrent expenditure into its major utilisation and cost components to evaluate their relative contribution over the 12 years to 2017-18. Results Real per capita total acute public hospital recurrent expenditure grew by AU$667 (45.2%) over the 12-year period; of this, 86.0% was from real growth in input costs per weighted activity unit, with real growth in the average salaries of hospital staff accounting for AU$247 or 37.0%. Hospital utilisation rates contributed a minor 14.0%. Conclusion Over the 12 years to 2017-18, real growth in average clinical salaries was a more important driver of real growth in per capita total acute public hospital expenditure than rates of hospital utilisation. This would be facilitated by improvements in the scope, accuracy, quality and consistency of published national hospital data. What is known about the topic? Public hospital expenditure is one of the largest and fastest growing areas of government expenditure in Australia. Policy narratives often centre around demand pressures from an increasingly older, overweight, and chronically ill population. Comparatively little attention has been paid to the influence of increases in real input costs within the Australian context. What does this paper add? Real salary growth has been a major driver of acute public hospital recurrent expenditure growth in SA, whereas hospital utilisation rates have played a minor role. What are the implications for practitioners? A clearer understanding of the main drivers of acute public hospital expenditure growth and the resulting benefits to population health is needed to guide the efficient and sustainable use of scarce healthcare resources.

Life Cycle Cost of Self-Supply Water in Metro City

Self-supply of drinking water is implemented in areas where the coverage of piped water services is inadequate, low incomes residents, and poor performance of piped water supply. The Life Cycle Cost (LCC) is a method of evaluating all costs incurred and is used to track the financing of the drinking water sector. This study analyses LCC of self-supply water in the Metro City, Indonesia. A field survey was conducted using a questionnaire in October 2020 for households in Metro City that captured information on costs incurred for household water use. It was observed that self-supply water uses in Metro City accounts for 92.86.30% of all water supplies. The average recurrent expenditure is Rp.224,344/ year with mean of capital cost is Rp.275,273. Most expensive cost for self-supply is borehole. High cost of borehole due deeper groundwater source, borehole use more pump electricity and higher drilling cost. This funding for selfsupply water is carried out independently by the households. These results highlighted the importance of self-financing for the water supply sector. Increased reliability and safety of self-supply require a better awareness of the costs and benefits of developing water sources. Furthermore, selfsupply water requires better governance to achieve safe water access.

NUC accreditation: A means of assessment and improvement of university libraries in Nigeria

In order to avoid total collapse of the entire university community, every University library needs total and adequate attention as it is regarded as the most essential part of any academic institution. The aim of the National Universities Commission (NUC) accreditation exercise in Nigerian universities is to achieve a uniform Maximum Academic Standard (MAS). To ensure that the process meets up with the set goals and objectives, this study examined NUC accreditation as a means of assessment and improvement of libraries in Nigeria. In this study, a descriptive survey design was adopted and the total enumeration technique was used to select 41 Heads of Department in federal university libraries in South-East Nigerian universities as the sample population. Questionnaire rated using the 4 point scale was used for data collection which was analyzed using mean scores. The outcome of the findings showed that accreditation exercise is very beneficial to the libraries in terms of increase in acquisition of library information resources, subscription to internet and online database, employment of adequate and qualified staff, procurement of library equipment. The result also indicated that when there is no accreditation, the libraries are not given adequate attention in terms of funds resulting to inadequate library services and resources, no acquisition of new library resources, no procurement of library furniture and poor maintenance of library equipment. The study therefore recommends that NUC accreditation exercise should be a continuous process in Nigerian universities and there should be a parameter of enforcing the release of 10% total budget for institutional recurrent expenditure as stipulated. The researchers concluded that regular accreditation is required for improvement of libraries.

Examining Budgeting and Fund Allocation in Higher Education

This study assesses the factors influencing the discontinuance of the norm-based and incremental budgeting approaches in higher education in Ghana. The National Council for Tertiary Education (NCTE – the coordinating body for tertiary education in Ghana) and the Ministry of Education of Ghana established norms in the early 1990s to assist higher education institutions in planning and ensuring efficiency of their operations and foster performance monitoring and evaluation. The norms also serve as standardized input factors for budgeting and allocating public funds for higher education. During the past years, budgetary allocation to higher education institutions for recurrent expenditure has fallen short of the norm-based costs. Indeed, the difference between the norm-based costs of university education and resources made available to the institutions by the Government was 28.9% in 2005/06 and 23.4% in 2009/10. It was also argued that the bases for funding tertiary education were not planned outputs of tertiary education. The fund allocation model was not programme-linked as initially thought. The consequence of the inability of the state to provide funds to meet the norm-based costs of higher education is the breakdown of norm-based budgeting, which was instituted in the early 1990s and a reversion to incremental and ad-hoc budgeting without due regard the volume of activities performed by the institutions. it is proposed that the Government of Ghana acting in concert with the National Council for Tertiary Education and tertiary institutions should regularly assess the developments in the tertiary education system and determine mission and purposes of tertiary education in Ghana as the basis for allocating public funds tertiary education institutions. The afore-made recommendations impose responsibilities on the Ministry of Education, the National Council for Tertiary Education and tertiary education institutions. This development has had grave consequences for higher education equity and efficiency in fund management.

EFFECTS OF GOVERNMENT HEALTH EXPENDITURES ON THE PERFORMANCE OF HEALTH SECTOR IN NIGERIA (1979-2017). AN EMPIRICAL ANALYSIS

Health is a very important aspect of an individual’s wellbeing, and since individuals make a nation, therefore, healthcare expenditure could be regarded as one of the necessary conditions to achieving a sustainable long-term economic development. This study examined the effects of government health expenditures on the performance of health Sector in Nigeria. The study employed expo facto research design. The annual time series data from 1979 to 2017 was used in this study from Statistical Bulletin of the Central Bank of Nigeria and World Development Indicators, 2018. The pre estimation test like the descriptive statistics, Augmented Dickey-Fuller (ADF) unit root test Johensen cointegration test and Error correction model test. The OLS estimation technique was used to determine the coefficient of the variables and test the four hypothesis. The results indicated that government total health expenditures, capital health expenditure and recurrent health expenditures are positively related to the performance of health sector proxy by life expectancy rate and statistically insignificant. However capital health expenditure was statistically significant to life expectancy. The study recommends that more emphasis should be placed on the capital expenditures on health as this will facilitate rapid development of the sector and adequate Machinery should be put in place by all sectors of government to arrest corruption and penalize those who divert and embezzle public health fund among other recommendations were made.

EXAMINING THE RELATIONSHIP BETWEEN PUBLIC SPENDING ON EDUCATION AND UNEMPLOYMENT PROBLEM IN NIGERIA

Much of the problems of unemployment in the past has been placed on the inadequacy of the country’s schooling system to be able to impact needed skills. Empirical and theoretical evidences are overwhelmingly in support of the significant role of public expenditure in education having multiplier effect on employment. Empirical evidence shows that this is not consistent in a macroeconomic framework. Government has been indicted of not doing enough to support education with its budgetary shortcomings to the sector. This study investigates the impact of government spending on unemployment in Nigeria. OLS estimates adopted for secondary data regressed over 27-year period for unemployment, federal government recurrent expenditure on education and economic growth indicated that while growth is significant and indeed influence unemployment negatively in line with our a-priori expectation, it is not the same for the impact of public expenditure on education. Our findings from this was that while Nigeria’s educational capacity has increased, its impact is shallow as the economy is unable to absorb the graduates. In order to address this anomaly, government will need to enhance its effectiveness through creating adequate channels for enterprise growth and sustainability which will increase the latter’s capacity to employ more labour.&#x0D; Nigeria, unemployment, public expenditure, education, human capitalJEL Classification: E62, H52, I22, I28&#x0D;

EXAMINING THE RELATIONSHIP BETWEEN PUBLIC SPENDING ON EDUCATION AND UNEMPLOYMENT PROBLEM IN NIGERIA

Much of the problems of unemployment in the past have been placed on the inadequacy of the country’s schooling system to be able to impact needed skills. Empirical and theoretical evidence is overwhelmingly in support of the significant role of public expenditure in education having a multiplier effect on employment. Empirical evidence shows that this is not consistent in a macroeconomic framework. Government has been indicted for not doing enough to support education with its budgetary shortcomings to the sector. This study investigates the impact of government spending on unemployment in Nigeria. OLS estimates adopted for secondary data regressed over the 27 years for unemployment, federal government recurrent expenditure on education and economic growth indicated that while growth is significant and indeed influence unemployment negatively in line with our a-priori expectation, it is not the same for the impact of public expenditure on education. Our findings from this were that while Nigeria’s educational capacity has increased, its impact is shallow as the economy is unable to absorb the graduates. To address this anomaly, the government will need to enhance its effectiveness through creating adequate channels for enterprise growth and sustainability which will increase the latter’s capacity to employ more labour.

Relative Impact of Domestic and Foreign Public Debt on Economic Growth in South Africa

This paper investigates the debt-growth nexus by testing both the impact of aggregate public debt on economic growth and the relative impact of domestic and foreign public debt on economic growth using South Africa as the case study—from 1970 to 2017. Based on the autoregressive distributed lag (ARDL) technique, the findings reveal that the impact of aggregated public debt on economic growth in South Africa is statistically significant and negative, both in the short run and in the long run. The results further reveal that domestic public debt and economic growth have a statistically significant and positive relationship in the short run only. Furthermore, foreign public debt has a statistically significant and negative relationship with economic growth but only in the long run. Therefore, the study recommends the government to manage effectively its debt and to finance long-term high-returning productive investments that should translate into economic growth. Finally, the study cautions the country against growing public debt, predominantly foreign debt, to finance its increasing recurrent expenditure needs.

An investigation into the effect of budget deficit on the economic performance of Zimbabwe

ABSTRACT The study investigated the impact of budget deficit on the economic performance of Zimbabwe for the period 2000–16. Using secondary data sourced from the International Monetary Fund (IMF), Zimbabwe National Statistics Agents (ZIMSTATS), World Bank and the Reserve Bank of Zimbabwe (RBZ) websites, the study estimated the relationship between budget deficit and economic performance using ordinary least squares (OLS) methods. The estimated results revealed a negative and significant relationship between budget deficit and economic performance in Zimbabwe. The study inferred that Zimbabwe’s huge budget deficit could be driven by recurrent expenditure such as salaries. We recommend the need for the government to have fiscal discipline and to channel resources towards the productive sectors of the economy such as capital projects for long term development.

Fiscal deficit and growth in Nigeria economy

This study examines the impact of fiscal deficit on economic growth in Nigeria for period of 1980 to 2018. Sequel to the mixed level of stationarity of the variables as evidence in the result of the unit root test, this study adopts auto-regressive distributed lag (ARDL) technique and the result of the study shows that fiscal deficit is detrimental to economic growth in Nigeria. This study is in tandem with neoclassical paradigm. The study argues that one of the main reason why fiscal deficit is adversely affecting the economic growth in Nigeria is because of the pattern of her public spending which is heavily skewed in favour of recurrent expenditure which may not stimulate growth. Thus, the study recommends that government should review her pattern of spending to favor productive sector by so doing the economy will strive to greatness. Also, government should minimize her borrowing and look inward for ways to generate revenue. Lastly, if government wants to operate fiscal deficit, it should be only during recession and high unemployment.

Government Expenditure and Regional Economic Growth: The Direction of Causality

This study examines the link between government expenditure and regional economic growth, over the period 2013 to 2017. Gross County Product per capita growth is used as indicator of regional economic growth. This study used Error Correction Model and Engle and Granger framework two step procedure to investigate the long-run and short-run equilibrium relationship between expenditure and regional growth. The analysis reveals that expenditure and regional growth are co-integrated and, hence a long-run equilibrium relationship exist between them. Non-devolved expenditure is found to be significant in determining regional growth and growth significantly affect non-devolved in short-run. Further, short-run uni-directional causality was detected between capital, recurrent expenditures and growth. This study argues that expansionary government expenditure accelerates regional economic growth in long-run. The absence of a long-run causality moving from growth to components of expenditure implies that economic growth macroeconomic policies can be implemented without adversely affecting the size of government expenditure.

Government expenditure and standard of living in an emerging market in Africa–Nigeria

The effect of government expenditure on the standard of living has different impact for various level of economies. In this study, we determined the effect of government recurrent and capital expenditure on the standard of living in Nigeria using a test of causation. The long and short run estimates were done by utilizing an Autoregressive Distributive Lag (ARDL) model using data that spanned from 1981 to 2018. Findings/Originality: Precipitously, we asserted that government recurrent and capital expenditure have a significant effect on the standard of living in Nigeria. Nevertheless, that is not the true reflection of the living standard in the country. There is an enormous need for the government to increase its expenditure on the health sector. Investment in healthcare is positively related to economic growth and has the potential of reducing poverty, hence a better standard of living. The Federal Government of Nigeria ought to, as a matter of direness, prioritize capital expenditure over recurrent expenditure.

Does Fiscal Policy Tools have the Potential to Stimulate Performance of Manufacturing Sector in Nigeria?

Purpose: There is no denying the fact that the Nigerian manufacturing sector is not performing up to the expectation. The poor performance of the manufacturing sector is attributed largely to the poor state of basic infrastructures, especially power supply, and good road networks. To this end, this study examined the potential of fiscal policy to stimulate manufacturing sector performance in Nigeria.&#x0D; Methods: The model estimation employed the Ordinary Least Square (OLS) estimation technique, while the effect of estimation was carried out using the Granger causality test based on the data from the Central Bank of Nigeria (CBN) and Federal Inland Revenue Service (FIRS) for the period of 1986 to 2019.&#x0D; Results: The result of the analysis revealed that recurrent expenditure has no significant effect on manufacturing sector performance. However, capital expenditure, fiscal deficit, and the company’s income tax significantly affect manufacturing sector performance. &#x0D; Implications: The Federal, State, and Local governments should stop wasteful expenditure on unnecessary entertainment on meetings, seminars, workshops, foreign trips, etc. to increase spending on basic industrial infrastructures, most importantly on the power supply and road network to stimulate the manufacturing sector performance.

Impacts of productive and recurrent public expenditure on economic growth in South Africa: An analysis using the autoregressive distributed lag – error correction model

Orientation: The weak economic growth experienced by South Africa in the face of increased government spending is a concern. Research purpose: Investigating different components of government spending helps to observe their relationships with economic growth and conclude whether or not government spending contributes to the lower economic growth. Motivation for the study: Earlier studies in South Africa considered the effects of total government spending on economic growth; however, estimating this effect does not depict reality. Research approach/design and method: This study used annual data from 1976 to 2017 to observe this relationship. The autoregressive distributed lag bounds-test approach to cointegration and the ARDL-based error correction method were adopted. Main findings: The results showed that the two components of government spending positively affect economic growth in the short and long run. Government investment spending has a greater effect on economic growth in the long run than in the short run. The results showed that government consumption expenditure outweighs government investment expenditure, with the latter having lesser effect on economic growth. Practical/managerial implications: This shows that increased government spending is not to be blamed for the slow growth in South Africa, supporting theory. Contribution/value-add: Some studies did not disaggregate government spending into government investment and consumption spending in South Africa; and observed how each component affects economic growth; and other studies used econometric techniques that are different from the one used in the current study. This study therefore contributes to the ongoing discussion of the effect of government spending on economic growth.

Does government spending reduce poverty in Nigeria? Evidence from Auto-Regressive Distributed Lag Specification.

This paper analyses the impact of government spending on poverty reducing in Nigeria for the period 1981 to 2017 making use of annual time series data. The study employs the Auto-Regressive Distributed Lag (ARDL) approach. The result of the study revealed that economic service recurrent expenditure (ESRX), social and community recurrent expenditure (SCSRX), Transfer recurrent expenditure (TRX) reduces poverty while transfer capital expenditure (TCX) and administrative recurrent expenditure (ADRX) escalate poverty. Consequently, the study recommends that Government should embark on provision of food subsidies, subsidies farm input for farmers, subsidies transportation cost. Furthermore, government should endeavor to pay pensioners all their entitlements including gratuities as at when due without any delay, government should also be giving stipend to the unemployed and disabled, more poverty alleviating programs should be organize Also, the huge cost of maintaining the government should be reduced by reducing the numbers of political appointees to a reasonable size.

Human Capital Investment and Economic Growth in Nigeria: An Econometrics Analysis, 1981-2019

This study investigated the effect of human capital investment on economic growth in Nigeria within the periods 1981-2019. Time series data covering these periods of study were obtained and analyzed using Ordinary Least Square method. The data were further subjected to unit root test using the Augmented Dickey-Fuller (ADF) test, and a test of co-integration was performed using Johansen rank based test. The result of the ADF test showed that the variables were all integrated at order one, and the Johansen co-integration test confirmed the existence of at least a co-integrating equation. The researchers went further in estimation an Error Correction Model (ECM) aimed at reconciling the short run deviations from the long run equilibrium. The test results showed that capital and recurrent expenditures on education and health have not impacted significantly on the growth of the Nigerian economy both in the short run as well as the long run periods. Recommendations proffered include; government should intensify investments in education and health sectors in Nigeria to improve quality of services; government should embark on a general upgrade of the health sector in Nigeria as well as provision of adequate educational facilities in public schools. DOI: 10.7176/JESD/11-18-05 Publication date: September 30 th 2020