GOVERNMENT SPENDING EFFICIENCY IN NIGERIA: A COMPARISON OF ECONOMIC SECTORS FROM 2010 - 2022

Abstract

This paper assessed the efficiency of government expenditure of five economic sectors in Nigeria from 2010–2022, both in relation to each other and compared across time using Data Envelopment Analysis. The aim is geared toward examining the efficiency of government spending on the health, education, administration, transport and communication and agricultural sectors in Nigeria. The study employs the output-oriented Variable Return to Scale (VRS) approach using government expenditure as a percentage of GDP as input while the contribution of each sector to GDP (expressed as a percentage of GDP) was used as output. The result of the inter-sector analysis showed that on average the economic sectors are inefficient with an average output efficiency score of 0.45 while theinput efficiency score is 0.49. Among the five sectors, public administration, health and education were found to be inefficient. However, when each sector was taken individually and efficiency scores analysed across time, the result revealed an average high efficiency score of 0.90 for public administration, 0.88 for health, 0.94 for education, 0.91 for agriculture and 0.93 for transport andcommunication. The study recommends improving working incentives, curtailing bureaucratic processes and corruption and improving labour productivity as measures of improving efficiency in the public sectors.