Defence spending, unemployment and poverty in Nigeria: an econometric analysis

This paper empirically looks at the effect of government defense spending on unemployment and poverty in Nigeria between 1980 and 2017. The data utilized were sourced from the secondary sources like Central Bank of Nigeria publications, National Bureau of Statistics, World Bank World Development Indicators (WDI). The defense expenditures (independent variables) were disaggregated into capital and recurrent components while unemployment rate and poverty rate served as the dependent variables. The outcome of the unit root tests showed that Capital defense expenditure (CDEX), Unemployment rate (UNEMPR) and Poverty rate (POVT) were stationary after first difference while recurrent defense expenditure (RDEX) was stationary at level thereby informed the use of the Auto Distributed Lag (ARDL) Bound Testing approach. The results of the analyses revealed that inconsistency in the federal government defense expenditures (capital and recurrent components) have led to a rise in both the unemployment rate and poverty rate in Nigeria. The policy implications of these findings are that government spending on defense has not seemingly played the role of providing the desired level of security of lives and property. This perhaps had impacted on job creation and attracted rising unemployment and poverty rates so far experienced. The paper therefore recommends that the federal government should urgently adopt fiscal discipline options that will guarantee job creation and reduce poverty levels. This can be achieved through the enforcement of Nigeria’s local content policies options especially as relate to local production of military and other civilian items