An Investigation of the Impact of Fiscal Stimulus on National Economic Recovery in Nigeria

An Investigation of the Impact of Fiscal Stimulus on National Economic Recovery in Nigeria

Background of the Study
Fiscal stimulus involves the use of government spending and tax policies to boost economic activity, particularly during periods of economic downturn. In Nigeria, fiscal stimulus measures introduced between 2023 and 2025 have aimed at jumpstarting national economic recovery following external shocks and domestic slowdowns. By injecting funds into the economy, reducing tax burdens, and increasing public investment in critical sectors, the government seeks to stimulate demand, create jobs, and restore growth momentum (Ibrahim, 2023; Adebanjo, 2024).

These stimulus measures have been targeted at reviving key sectors such as manufacturing, agriculture, and services, which are vital for broad-based economic recovery. The government’s approach includes increased expenditure on infrastructure projects, incentives for small and medium enterprises, and temporary tax reliefs. The underlying theory is that such measures can generate multiplier effects, whereby an initial increase in spending leads to a larger overall boost in economic activity. Empirical studies suggest that well-calibrated fiscal stimulus can significantly enhance recovery rates by reducing unemployment and boosting consumer confidence. Nonetheless, the effectiveness of these measures depends on the timely implementation, proper targeting, and efficient use of funds. This study aims to investigate the impact of fiscal stimulus on Nigeria’s economic recovery, examining both the short-term effects on aggregate demand and the long-term benefits in terms of sustainable growth.

Statement of the Problem
Despite the deployment of fiscal stimulus measures in Nigeria, the anticipated rapid economic recovery has been uneven and, in some instances, slower than expected (Ibrahim, 2023). While stimulus packages have injected much-needed capital into the economy, issues such as delays in project implementation, misallocation of funds, and persistent structural challenges have undermined their effectiveness (Adebanjo, 2024). Additionally, concerns have been raised about the long-term fiscal sustainability of such measures, given the potential for increased public debt and inflationary pressures. The challenge for policymakers lies in ensuring that the stimulus is both effective in the short term and sustainable over the long run. This study seeks to disentangle the effects of fiscal stimulus on various dimensions of economic recovery, including employment, investment, and overall GDP growth, to determine whether the measures have met their intended objectives.

Objectives of the Study

• To assess the impact of fiscal stimulus on key economic recovery indicators in Nigeria.

• To identify the challenges and bottlenecks in the implementation of stimulus measures.

• To recommend strategies for enhancing the effectiveness and sustainability of fiscal stimulus.

Research Questions

• How has fiscal stimulus affected national economic recovery in Nigeria?

• What challenges have impeded the effectiveness of stimulus measures?

• What policy recommendations can improve the long-term impact of fiscal stimulus?

Research Hypotheses

• H1: Fiscal stimulus measures significantly accelerate economic recovery in Nigeria.

• H2: Implementation inefficiencies reduce the effectiveness of fiscal stimulus.

• H3: Sustainable fiscal management enhances the long-term benefits of stimulus measures.

Scope and Limitations of the Study
This study examines fiscal stimulus initiatives in Nigeria from 2023 to 2025, using macroeconomic data, government reports, and economic models. Limitations include data variability, external economic shocks, and the challenge of isolating stimulus effects from other fiscal policies.

Definitions of Terms

• Fiscal Stimulus: Government actions, including spending increases and tax cuts, intended to boost economic activity.

• Economic Recovery: The process by which an economy regains growth and stability following a downturn.

• Multiplier Effect: The proportional increase in economic activity resulting from an initial injection of spending.

• Fiscal Sustainability: The ability of a government to maintain fiscal policies over the long term without leading to excessive debt.

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