LITERATURE REVIEW ON THE ANALYSIS OF GOVERNMENT EXPENDITURE ON EDUCATION AND ITS IMPLICATION ON NIGERIA’S ECONOMIC GROWTH

THEORETICAL LITERATURE

Several of the issues in the financing of education in Nigeria are embedded in the virtually endemic problems of fiscal federalism— in particular, the so-called vertical and horizontal fiscal imbalances. The first of these deals with the balance between financial responsibilities and financial resources at each level of government: federal (or central), state and local. The second deals with equity across the sub units of each specific level of government such as state or local governments.

In Nigeria, since Independence, the search for appropriate mechanisms and formulae for minimizing each set of imbalances has been particularly problematic. For instance, between 1960 and 1991, sixteen changes were made to the Constitution in attempts to resolve these issues. First, primary school enrolments are

part of the allocation formula for distributing centrally collected revenues across states. Second, the education sector typically consumes a significant share of state and local government re sources. And third, the financial responsibility for primary education across levels of government has never been fully resolved. Over the past fourteen years in particular, the sources and modalities for funding this level of education have undergone significant changes. Following a recent Supreme Court ruling, yet another set of arrangements is required.

While much attention in the past forty years in Nigeria has been given to the issues of horizontal imbalances (particularly between states), less has focused on whether the revenue allocation arrangements are sufficient to minimize vertical imbalances and to allow each level of government to perform the responsibilities allocated to it. In the education sector where, in spite of some overlaps, the major financial responsibility for each separate level lies with a different tiers of government, it is relevant to ask whether the vertical allocation criteria allow for the provision of ‘appropriate’ funding for the education system as a whole and for each individual level of the system. The current debate on this issue, such as it is, is based on very little information. There is, for instance, no credible estimate of the total amount of public expenditure which is spent by the Federal, state and local governments on education and hence of the sources, levels, trends and distributions across the various educational levels.

This lack of information on education expenditure nationally and for individual states has several other implications. For instance, there is little basis on which to assess issues such as:

·        Whether the financial effort in this sector has been increasing or decreasing in terms of real expenditures or as a share of public expenditures or of national income;

·        The distribution of expenditures across the various educational levels either nationwide or in individual states;

·        The relative importance of each level of government in funding education;

·        The nature, level and importance of vertical and horizontal imbalances as they affect the education sector, and the levels of efficiency and equity of public expenditures in the sector which would provide a quantitative basis for arguments in favor of expanding or re-allocating expenditures;

·        The future public expenditure requirements, nationally or by state, as the existing enrolment pressures in the system evolve naturally or are encouraged;

·        Unit costs of each level across states or of different levels within states;

·        The expenditures which households make in both government and private educational institutions, and the reliance on these at different levels and in different states.

Finally, it is not possible to compare the levels and patterns of education expenditures in Nigeria with those in other countries. In UNESCO and World Bank publications, for example, educational expenditure data for Nigeria are either totally omitted or are recorded for the Federal Government alone (UNESCO, 2000; World Bank, 2001).