THEORETICAL CONSIDERATIONS ON ANALYSIS OF GOVERNMENT EXPENDITURE ON EDUCATION AND ITS IMPLICATION ON NIGERIA’S ECONOMIC GROWTH



In any country, there can be no meaningful economic growth without adequate human and natural resources. Human capital is so important that in the Khartoum Declaration of 1988, it was asserted that:
“…the human dimension is the sine qua non of economic recovery …no SAP or economic recovery programme should be formulated or can be implemented without having at its heart detailed social and human priorities. There can be no real structural adjustment or economic recovery in the absence of the human imperative” (Adedeji et.al. 1990: 390).
The concept of human capital refers to the abilities and skills of human resources of a country, while human capital formation refers to the process of acquiring and increasing the number of persons who have the skills, education and
experience that are critical for economic growth and development of a country (Okojie 1995:44). Human resources are all embracing, that is, it is inclusive of persons who works now, or are likely to be productively employed sooner or later. It is a continuum, a continuing process from childhood to old age, and a must for any society or enterprise that wishes to survive under the complex challenges of a dynamic world.

Yesufu (2000: 321), in agreement with this view, opines that “the essence of human resources development becomes one of ensuring factors that the workforce is continuously adapted for, and upgraded to meet, the new challenges of its total environment”. This implies that those already on the job require retraining, reorientation or adaptation to meet the new challenges. This special human capacity can be acquired and developed through education, training, health promotion, as well as investment in all social services that influence man’s productive capacities (Adamu, 2003)
In human capital development, education is essential. Education is concerned with the cultivation of “the whole person” including intellectual, character and psychomotor development. It is the human resources of any nation, rather than its physical capital and material resources, which ultimately determine the character and pace of its economic and social development. Thus, human resources:
  “constitute the ultimate basis for the wealth of nations. Capital and natural resources are passive factors of production; human beings are the active agents who accumulate capital, exploit natural resources, build social, economic and political organization, and carry forward national development. Clearly, a country which is unable to develop the skills and knowledge of its people and utilize them effectively in the national economy will be unable to develop anything else” (Harbison, 1973, p.3).
Education occupies an important place in most plans for economic and social development. Whichever way one looks at it, the education sector is important in human development as a supplier of the trained manpower and it is a prerequisite for the accomplishment of other development goals. Also, it is the main sector through whose national identity goals and aspirations are given meaning and reality among the people.

Despite the importance of educational institutions, Nigeria spends an almost insignificant proportion of her financial resources on education. In Nigeria, education expenditure as a proportion of gross domestic product (GDP) averaged 5.64 per cent between 1986 and 1990, compared to 5.84 per cent between 1999 and 2003. This performance fell below those of other developing countries, which in 1960 and 1977 were spending an average of 11.7 and 16.3 per cent of their total expenditure on education respectively. The United Nations recommends that 26 per cent of the total expenditure be devoted to education. Seychelles had committed 10.2 per cent of its gross national product (GNP) to total education in 1985-87 and 8 per cent in 1995-97. Ghana allocates an average of 20 percent of its total expenditure to education yearly. Between 1986 and 1992, Botswana spent 21 per cent of her expenditure on education; Malaysia, 19 per cent; Kenya, 20 per cent; Uganda, 15 per cent; and Nigeria, 5.23 per cent (Olaniyi and Adam, 2003).

Not only that education expenditure, as a percent of total expenditure, falls in many developing countries, including Nigeria, the budgetary allocations to the formal education system also have the shape of an inverted pyramid in which secondary and tertiary education receive more than four times as much public resources as primary education. In many cases primary schools are starved of financing while universities receive heavy subsidies. The majority of the population, particularly the poor, may lack adequate educational facilities, or may find that the opportunity cost of attending school exceeds short run private benefits, while the children from middle and upper class backgrounds benefit from comparatively generously financed university education.

Not only is this inversion of the financial pyramid not equitable, it is also not efficient. Particularly in the poorest developing countries, where primary education has been most neglected, the social rate of return on investing in basic education is high4. In addition to high returns, investing in primary education has the advantage of bringing government closer to the people it serves while simultaneously giving people greater control over their own lives and a basic institution of the communities in which they live. Primary schools are easier for local communities (villages, small towns, urban neighborhoods) to control than secondary schools, colleges and universities. There is more opportunity for participatory development, for the active involvement of people in education and hence from the community.

Despite this importance, it is discovered that educational sector in Nigeria is poorly funded. One may ask: why this poor funding in education? The explanation to this can be attributed, among others, to excessive defence spending. There has not been a clear link between public education expenditure and defence spending. While, Benoit (1973) postulates that technical training is a vital element of military service which augments the skill content of the existing labour force. Ball (1983) questions the value of military induced training and education in a country where unemployment is so high that the soldier will not be able to find gainful employment at the termination of his military service. Whynes (1979) has suggested that the military has an important role to play in dismantling social rigidities by virtue of the fact that it is a progressive institution.
Moreover, military regimes are sometimes perceived to promote the modernization of society which, in turn, dispenses with its feudal and social obligatory system (Pye, 1972) and moves towards a market-oriented, capitalist system which places a much greater premium on enhancing the quantity and quality of human capital in society (Roux, 1994).

Diamond (1990) also argues that defence expenditure, by ensuring the maintenance of security and public order, may be an essential precondition for healthy investment environment. However, Arora and Bayoumi (1994) argue that reduction in world military spending would offer significant long-term benefits for private investment and private consumption, especially for developing countries. Depending on the structure of country’s economy and the composition of her military expenditure, a reduction in military spending may have positive welfare effects on the populace through the primary impact of the reductions on national security (Olaniyi and Adam, 2003). In general, therefore, the defence sector may enhance the supply of skilled labour, thereby alleviating an important growth constraint. Conversely, however, it may compete for scarce human resources with the more productive civilian economy, thereby compromising the overall productivity and efficiency of the economy (Roux, 1994).
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