EXPENDITURE-UNEMPLOYMENT RELATION IN SUB- SAHARAN AFRICA: MACROFINAMETRIC EVIDENCE FROM NIGERIA

Chinedu B. Ezirim
Daniel Eniekezimene
University of Port Harcourt, Port Harcourt, Nigeria

Azuka E. Amuzie
Ministry of Finance, Imo State, Nigeria

Nneka Charles-Anyaogu
Imo State Polytechnics, Umuagwo, Owerri, Nigeria

ABSTRACT

Against the background of perennial double-digit unemployment and ever increasing
public spending in the Sub-Saharan African Region, this study set out to investigate the empirical
nexus between unemployment and government expenditure using Nigeria as a test case. Results
indicated that an inverse but significant relationship existed between capital expenditure of
government and unemployment both in the long-run and short-run. Invariably, capital expenditure
actually boosts employment in the country. Recurrent expenditure, being just overhead, was found
to relate negatively with unemployment both in the long-run and short-run, but not significantly.
Thus, recurrent expenditure does not cause unemployment, but would not considerably drive
employment. However, increasing capital expenditure relative to recurrent expenditure has the
potential to cause significant reversal to the problem of unemployment in Nigeria, and by
extension, the entire Sub-Saharan region of Africa.

Keywords: Unemployment, expenditure, microfinance, Macrofinametric, Nigeria