An Evaluation of the Role of Public Financial Management Reforms in Enhancing Economic Growth in Nigeria
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Background of the Study
Public financial management (PFM) reforms are critical in ensuring that government resources are used efficiently to stimulate economic growth. In Nigeria, the period from 2023 to 2025 has seen significant efforts to overhaul fiscal management systems. Reforms have included the implementation of performance-based budgeting, enhanced audit mechanisms, and the adoption of digital financial reporting systems. The theoretical framework suggests that improved PFM creates fiscal discipline, reduces wastage, and ultimately enhances investor confidence—key drivers of economic growth (Ogunleye, 2023). Empirical studies indicate that robust PFM reforms correlate with increased public revenue mobilization and more efficient allocation of resources, which in turn support infrastructure development, social programs, and overall economic expansion (Adebayo, 2024).
These reforms aim to tackle longstanding issues such as revenue leakage, budgetary inefficiencies, and corruption. By streamlining fiscal procedures and promoting transparency, the Nigerian government intends to create a more predictable and stable economic environment. However, the impact of these reforms on economic growth remains subject to debate. Critics argue that without addressing underlying political and administrative challenges, the benefits of PFM reforms may be limited. This study, therefore, assesses the extent to which PFM reforms have contributed to economic growth in Nigeria, exploring the relationship between fiscal discipline and macroeconomic performance.
Statement of the Problem
Despite the introduction of extensive PFM reforms, Nigeria’s economic growth has not met expectations. Persistent issues such as revenue leakage, inefficient allocation of resources, and corruption continue to hinder fiscal performance (Ibrahim, 2024). Inadequate implementation of reforms—exacerbated by political interference and limited technical capacity—has reduced the potential benefits of improved financial management. As a result, economic growth remains constrained by a lack of fiscal stability and investor confidence. This study aims to critically evaluate the effectiveness of PFM reforms in fostering economic growth and to identify the key challenges that limit their impact on fiscal discipline and resource allocation.
Objectives of the Study
- To assess the impact of PFM reforms on economic growth in Nigeria.
- To identify challenges in implementing effective public financial management.
- To propose policy measures to enhance fiscal discipline and growth outcomes.
Research Questions
- How have PFM reforms influenced economic growth in Nigeria?
- What are the main obstacles to effective public financial management?
- Which policy interventions can strengthen fiscal discipline and boost economic performance?
Research Hypotheses
- H1: Effective PFM reforms are positively correlated with higher economic growth.
- H2: Inadequate implementation and corruption diminish the impact of PFM reforms.
- H3: Strengthened audit and transparency mechanisms improve fiscal outcomes.
Scope and Limitations of the Study
This study examines PFM reforms implemented between 2023 and 2025 in Nigeria, using government fiscal reports, audit data, and economic performance indicators. Limitations include external economic shocks and difficulties in isolating the impact of PFM reforms from other macroeconomic factors.
Definitions of Terms
– Public Financial Management (PFM): Systems and processes used to plan, manage, and monitor government finances.
– Economic Growth: An increase in the production of goods and services in an economy, usually measured by GDP.
– Fiscal Discipline: The adherence to responsible budgeting and spending practices.
– Digital Financial Reporting: The use of technology to enhance the accuracy and transparency of financial data.
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