An Evaluation of the Role of Fiscal Policies in Shaping Nigeria’s Economic Growth
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Background of the Study
Fiscal policies play an instrumental role in shaping the trajectory of economic growth in developing nations, and Nigeria is no exception. In recent years, policymakers in Nigeria have implemented various fiscal measures—ranging from tax adjustments to changes in public expenditure—to stimulate economic growth and reduce dependency on volatile commodity revenues. The multifaceted nature of these policies has made them central to discussions on sustainable development and economic resilience. Emerging research from 2023 to 2025 highlights that fiscal policies are not only pivotal in driving economic expansion but also in stabilizing economic cycles and reducing structural imbalances (Akinola, 2023).
Nigeria’s economy, characterized by rapid population growth, vast natural resources, and fluctuating global oil prices, demands innovative fiscal strategies that can leverage domestic resources while mitigating external shocks. Recent fiscal policies have sought to broaden the tax base, enhance revenue mobilization, and ensure a more efficient allocation of public funds. These strategies are intended to generate employment, foster industrial growth, and promote social welfare. However, the extent to which these policies translate into tangible economic growth remains subject to debate. While some studies suggest a direct positive correlation between proactive fiscal measures and economic performance, others indicate that the benefits are often diluted by corruption, inefficiencies, and inadequate policy implementation (Balogun, 2024).
Furthermore, fiscal policies interact with other macroeconomic variables such as inflation, interest rates, and exchange rates. As such, their impact on growth is complex and multidimensional. There is a need to critically evaluate whether current fiscal measures have achieved their intended outcomes or if they inadvertently contribute to economic instability. In recent years, several fiscal policy shifts have been introduced in response to global economic uncertainties, with policymakers striving to balance growth objectives with fiscal discipline (Ibrahim, 2025). This study will utilize both qualitative assessments and quantitative models to examine the multifaceted relationship between fiscal policies and economic growth in Nigeria, thereby filling an important gap in existing research and offering policy insights for sustainable development.
Statement of the Problem
Notwithstanding the critical role of fiscal policies in Nigeria’s economic landscape, there is persistent ambiguity regarding their effectiveness in driving sustained economic growth. Although several fiscal reforms have been implemented over the past few years, empirical evidence remains mixed. On one hand, initiatives aimed at expanding the tax base and increasing public expenditure on infrastructure have shown promise in stimulating economic activities and attracting investment (Akinola, 2023). On the other hand, issues related to policy implementation, inefficiencies in revenue collection, and corruption have raised concerns about the real impact of these reforms (Balogun, 2024).
The conflicting outcomes suggest that while fiscal policies are designed to foster growth, their execution often falls short of expectations due to structural challenges within the Nigerian economy. For instance, the benefits of increased government spending are frequently offset by fiscal deficits and inflationary pressures, leading to an environment where growth is sporadic and uneven. Moreover, the interplay between fiscal policies and external economic factors—such as fluctuating oil prices and global market uncertainties—further complicates the assessment of these policies’ effectiveness. Policymakers and stakeholders face the challenge of discerning whether the slow pace of economic growth is a result of inherent flaws in fiscal strategy or an outcome of extraneous economic shocks. Additionally, the lack of comprehensive data and robust evaluation frameworks hampers the ability to conduct a thorough impact assessment (Ibrahim, 2025).
Thus, this study is designed to systematically evaluate the role of fiscal policies in shaping Nigeria’s economic growth. It aims to identify the key obstacles that undermine policy effectiveness and propose strategies to enhance the positive impacts of fiscal interventions. By doing so, the research seeks to contribute to a more nuanced understanding of the fiscal dynamics in Nigeria and provide actionable recommendations for policymakers.
Objectives of the Study
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To assess the effectiveness of recent fiscal policies in promoting economic growth in Nigeria.
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To identify the primary channels through which fiscal policies influence growth indicators.
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To propose policy recommendations that address implementation challenges and optimize fiscal outcomes.
Research Questions
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What has been the overall impact of recent fiscal policies on Nigeria’s economic growth?
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Through which mechanisms do fiscal policies affect growth and development?
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What adjustments can be made to current fiscal strategies to better promote sustainable growth?
Research Hypotheses
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H1: Recent fiscal policies have a significant positive effect on Nigeria’s economic growth.
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H2: Enhanced revenue mobilization directly correlates with improved growth indicators.
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H3: Structural inefficiencies in policy implementation weaken the overall impact of fiscal measures on growth.
Scope and Limitations of the Study
This study focuses on fiscal policy interventions between 2023 and 2025 and their effects on economic growth in Nigeria. It draws on data from governmental agencies, economic surveys, and academic literature. Limitations include the variability of external economic shocks, data reliability issues, and the challenge of isolating fiscal impacts from other growth determinants.
Definitions of Terms
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Fiscal Policies: Government strategies involving taxation, public spending, and borrowing aimed at influencing economic activity.
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Economic Growth: An increase in the production of goods and services, measured by GDP and other indicators.
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Tax Base Expansion: Strategies aimed at broadening the range of taxable activities to increase revenue.
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Sustainable Development: Economic development that meets present needs without compromising future generations.
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