Impact of Public Education Finance on Private Sector Investment in Nigeria

Abstract

The study empirically examined the impact of public education finance on private investment in Nigeria from 1986 to 2016. The study used time series data from the Central Bank of Nigeria Statistical Bulletin of December, 2016 and Annual Statistics Report of the National Bureau of Statistics in Nigeria of (2017). The study used multiple regression analysis with Johansen Co-integration and Error Correction Model (ECM) for the estimation of the variables. The co-integration result shows that the variables are co-integrated and there is a long run relationship among the economic variables. While Error Correction Model (ECM) results revealed that there is a significant and positive relationship between public education finance and private investment in Nigeria and the result shows that public education finance has positive impact on private investment in Nigeria. The government recurrent education expenditure (GCEX), government capital education expenditure (GREXH) and total number of schools in Nigeria (TNOSN) were statistically significant in explaining the variations in the private investment in Nigeria (PIVN). On the other hand, the level of total number of students’ enrolment in Nigeria (TNSRN) was negatively related to private investment in Nigeria and it was statistically insignificant in explaining the variation in private investment in Nigeria. Therefore, the study recommends that, government should focus on educational reforms and policies that will help to increase the education expenditures especially the capital expenditure through the annual budgets to enable the sector provide the needed physical facilities, human resources and effective educational services for sustainable private investment in Nigeria.