DEFENSE SPENDING AND POVERTY DYNAMICS IN NIGERIA (1995-2024)
Tope Isaiah Omotosho and Adamu Jibrilla
Volume 13 Issue 2
Abstract
This study investigates the effect of defence expenditure on poverty dynamics in Nigeria, covering the period 1995 to 2024. Using time series data, the study examines recurrent defence expenditure (RDE), capital defence expenditure (CDE), and total defence expenditure (TDE) as the main independent variables, while human development index (HDI), household consumption expenditure (HCE), poverty rate (POR), and gross domestic product per capita (GDPPC) serve as proxies for poverty dynamics. Control variables include inflation rate (INF), exchange rate (EXR), and interest rate (INT). The study employs descriptive statistics, Pearson correlation analysis, Augmented Dickey-Fuller (ADF) unit root tests, and Ordinary Least Squares (OLS) regression models to assess the relationships among variables and ensure the robustness of findings. The results reveal that recurrent defence expenditure has a positive but statistically insignificant effect on all poverty indicators, with coefficients of 0.223454 (HDI, p = 0.8183>0.05), 0.321964 (HCE, p = 0.9459>0.05), 0.243344 (POR, p = 0.1091>0.05), and 0.163597 (GDPPC, p = 0.2851>0.05), indicating limited direct impact on welfare. Capital defence expenditure positively influences poverty dynamics, with coefficients of 0.123486 (HDI), 0.212187 (HCE, p = 0.0290<0.05), 0.222008 (POR, p = 0.0386<0.05), and 0.170559 (GDPPC), showing significant effects on HCE and POR. Total defence expenditure has positive effects with coefficients of 0.212085 (HDI), 0.145572 (HCE), 0.186692 (POR), and 0.323491 (GDPPC, p = 0.0359<0.05), with significance only for GDPPC. Macroeconomic variables, particularly inflation, exchange rate, and interest rate, also significantly affect poverty dynamics. The study concludes that defence expenditure exerts a statistically positive impact on poverty dynamics in NigeriaThe study recommends prioritizing development-oriented defence spending, integrating defence expenditure with social policies, enhancing efficiency, and maintaining macroeconomic stability. Keywords: Defence expenditure, Poverty dynamics, Human Development Index, Household Consumption Expenditure, GDP per capita.
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