Effect of Government Consumptions on Performance of Annual Capital Expenditure in Nigeria

Abstract

Consumptions, in decades; had taken the highest allocation compared to capital expenditure, as confirmed from the current 2023 appropriation bill that was laid before the national assembly. This study seeks to investigate the effect of government consumptions on performance of annual capital expenditure in Nigeria. Government consumptions was proxied by Administration, Economic services, Social and Community services, and Transfers’ consumptions while performance of annual capital expenditure was proxied by aggregate annual capital expenditure. The study employed ex- post facto research design, and used descriptive statistic and ordinary least square regression techniques to analyze the data. Secondary data used were sourced from the Federal Ministry of Finance and the Office of Accountant-General of the Federation, over a period of forty-one years (1981-2021). The data collected were analyzed using Johansen Co- integration test and vector error correction model (VECM). The findings revealed that besides administrative consumption, other explanatory variables economic service consumption, social and community services consumption, and transfers’ consumption had positive and significant effect on the performance of annual capital expenditure. The study concluded that changes in the performance of annual capital expenditure are explained by changes in government consumptions. The study suggested, amongst others; that Government should put in place mechanisms, such as adequate internal control system; to reduce wastages in administrative consumption.