AN ASSESSMENT OF THE RELATIONSHIP BETWEEN EDUCATIONAL FUNDING AND ECONOMIC GROWTH IN NIGERIA

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Introduction

1.1 Background to the Study

The researcher considers the relation that is established between education and economic growth in Nigeria. Education, as a key component of human capital formation is recognized as being vital in increasing the productive capacity of people. Education, especially at the higher level, contributes directly to economic growth by making individual workers more productive and leading to the creation of knowledge, ideas, and technological innovation (Odeleye, 2012).

The effect of education on technological innovation is direct following the Romer/Solow growth theory framework. An investment in education is beneficial to the society, both at micro and macro levels and affects the system both directly and indirectly. Education is basic to development and is also regarded as an instrument through which the society can be transformed. As a salient factor in transition programme, education equips human resources with the needed knowledge, skills and competencies, which would make them functional, and contribute to the all-round development of the nation. It does not only help to supply the essential human capital which is a necessary condition for sustainable economic growth but it is also a key to poverty reduction and a major vehicle for promoting equity, fairness and social justice (Todaro, 2007).

Education is seen here as representing one of the primary components of human capital formation, which is an important factor in modelling the endogenous growth. Human capital is essentially important in achieving a sustainable economic growth; however, the greatest contribution is accomplished through investment in the quality and quantity of education.

Economists, since the time of Adam Smith and David Ricardo have been interested in the issue of economic growth and its causes. It was not until the 1950s and 1960s, however, that the first set of theories of economic growth were formalised. These early theories, known as the neoclassical approach to growth theory, had a number of weaknesses. One of the key ones was that they assumed that technological change (and hence productivity growth) was driven entirely by factors beyond our control. Clearly, these models did not provide a good representation of the real world. Beginning in the 1980s, a series of more sophisticated models appeared based on so called New Growth theories. These models are not uniform. One strand emphasis the stock of human capital as an important determinant of economic growth. A second strand places more emphasis on the incentives that firms have to generate new ideas. Without going into technical detail, Kerr (2001) identified a couple of points worth noting up front:

Firstly, specifically recognized that the growth rate of the economy is not driven solely by outside factors; and second, shown that government policies have an important role to play in determining the long- run growth rate of a country’s economy.

These models are clearly more realistic in their portrayal of the economy with consumers, firms and governments all having an impact. They also provide a much more useful benchmark for thinking about the role of education in economic growth and the design of education policies. In these recent models, unlike the earlier ones, education is seen as contributing to economic growth in two ways:

It directly affects economic growth by making individual workers more productive; and indirectly affects economic growth by leading to the creation of knowledge, ideas and technological innovation − either through the process of acquiring education itself or because education is a key input into the development of a research sector that produces new knowledge and ideas.

Education is important not only because educated people engage in university research. Education is also important because it generates new ideas in the private sector. Knowledge creation is not a monopoly of either the public or private sectors. A number of studies have confirmed the importance of education in explaining growth. The consensus view on the direct effects of education is that the private rate of return to an individual from an additional year of schooling is anywhere from 5 to 15 percent. This must, to some extent, reflect the fact that employers see educated workers as more productive.

Similarly, Odeleye, (2012) find that increases in educational attainment account for around 20 percent of growth in output per worker. Education also has indirect effects and studies have shown that higher levels of human capital are associated with significantly larger physical investments, higher rates of technology transfer and longer life expectancy. However, remains to be done in measuring the exact impact of education on economic growth.

Education is the most important instrument to enhance human capabilities and to achieve the desired objectives of socio and economic development. Education enables individuals to make informed choices, broaden their horizons and opportunities and to have a voice in public decision making. At the macro level, education means strong and sustainable economic growth due to productive and skilled labour force. At the micro level however, education is strongly correlated to higher income generating opportunities and a more informed and aware existence. Emerging globalisation offers immense opportunities and challenges in a competitive environment, and only those nations can benefit from it, which has acquired the required knowledge base and skills. (Akram,2007). It is typically on this basis that governments expend substantial amount of money in the financing of education with or without considering the economic returns to such investment.

Human capital is a broad and multifaceted concept encompassing many different types of investment in people. Health and nutrition are certainly an important aspect of such investment, particularly in developing countries where deficiencies in these respects may severely limit the population’s ability to engage in productive activities. In advanced countries, however, the key aspect of human capital has to do with the cognitive and non-cognitive abilities that are acquired at home, in the work place and in formal and informal training and are useful in the production of goods, services and further knowledge (Fuente, 2006). Human resource development relates to the education, training and utilisation of human potentials for social and economic progress. Hallak, 1990 identified five energy boost of human resource development: education; health and nutrition; the environment; employment; and political and economic freedom. These energisers are interlinked and interdependent, but education is the basis of all the others, an essential factor in the improvement of health and nutrition, for maintaining a high- quality environment, for expanding and improving labour pools, and for sustaining political and economic responsibility.

For the attainment of economic growth and development in an economy, there is a serious need to develop human resources in that economy. Schultz (1961) as quoted in Adamu (2003) identified five ways of developing human resources, out of these, education of different form accounted for the highest number of ways of developing human resources.

Investment in health facilities and services, broadly conceived to include all expenditures that affect the life expectancy, strength and stamina, and the vigour and vitality of the people. On-the-job training, old-type apprenticeships organized by firms. Formally organised education at the elementary, secondary and higher levels. Study programme for adults that are not organized by firms, including extension programmes notably in agriculture, Migration of individuals and families to adjust to changing job opportunities. Human capital is a broad and multifaceted concept encompassing many different types of investment in people. Health and nutrition are certainly an important aspect of such investment, particularly in developing countries where deficiencies in these respects may severely limit the population’s ability to engage in productive activities.

There are good reasons to expect that human capital should be an important determinant of productivity, both at the individual and at the aggregate level, and that its role should be particularly crucial in today’s globalized knowledge economy. Workers with greater problem-solving and communications abilities should perform better than their less skilled counterparts at any task that requires more than the routine application of physical labour and will also learn faster and adapt better to changing circumstances. Hence, skilled workers can be expected to be more productive than unskilled ones for any given production process, and should be able to operate more sophisticated technologies that place greater demands on their capacities. If skill does carry with it a greater ability to learn, produce new knowledge and adapt to change, moreover, a more educated labour force will also be able to achieve faster productivity growth, both through gradual improvements in existing production processes and through the adoption and development of more advanced technologies, and should be in a better position to respond flexibly to rising worldwide competition. These considerations suggest that the importance of human capital as an input has grown over time as production processes have become increasingly knowledge intensive and footloose.

Today, relatively few occupations involve only mechanical physical tasks, and a large and growing fraction of jobs either reduce to the processing of information or require the application of specialized knowledge and skills to the production of increasingly sophisticated goods and services. Education remains the most effective instrument through which the society can be transformed. The extent to which a country invests in education, among other sectors, will determine the level and rate of its transformation. Education does not only make use of physical materials but also human resources to make up for the resources needed for transformation. As a stringent and unique factor in transition programmes, education equips human resources with the needed knowledge, skills and competencies which would make them functional, and contribute to the all round development of the nation.

The structure of the formal education consists of six years primary education, three years of junior secondary, three years of senior secondary education and four years at the tertiary school (the 6-3-3-4 system). This replaced the old system of 6-5-2-4 system inherited from the colonial masters in 1984. The attendance of primary and junior secondary schools, which is also called basic education, is compulsory and free. However, in practice, basic education is not truly free because all schools collect obligatory contributions from students to supplement the government subsidies. The collection of fees is mainly feasible in secondary and post secondary levels. At the secondary level, it came as a disguise of Parents Teachers Association (PTA) fees, Development fees, Computer fees to mention but a few. At the post secondary levels however, it is broadly called school fees. Although both the local and state governments mainly finance basic education, there are also a significant number of private schools, especially at the primary and JSS levels. However, higher education is composed of three levels namely collegiate from colleges of educations, diplomas from Polytechnics and degrees from Universities in various disciplines. In addition, the University degrees are in three phases, they are bachelors, masters and doctorate degrees in various areas.

The National Policy on Education assured nine years of free and compulsory basic education for all Nigerian children. The scheme failed for inadequate planning and lack of resources, but resulted in doubling primary education enrolment in a decade. The new democratic Government responded to the crisis in the education sector with the launch of Universal Basic Education (UBE) in 1999, but it was not passed into law until 2003. Not unlike the defunct UPE, emerging statistics show evidence of an increase in enrolment.

Some tiers of government capitalize on the aspect of the UBE law that gives a grace period of five years before the full implementation of the bill, to charge fees. Also interestingly, since Nigeria operates a federal system of government, the state government owned the UBE and Child Rights Act, passed in the federal legislative house, do not bind schools. As a signatory to the 2000 World Education Conference, and the 6 Dakar Goals towards achieving Education for All (EFA), Government has also established a National EFA Coordination unit under the Federal Ministry of Education mandated to prepare a National Action Plan for the delivery of EFA in Nigeria. Perhaps the greatest challenge facing government is the inadequate spending on education. The Federal Government also established the Education Trust Fund (ETF) with the aim of assisting the education sector. However, as at April 2009 about ₦22.6 billion Education Trust Fund money lies unutilized in the Central Bank of Nigeria1. The scenario is dismay in the face of glaring financial inadequacies due to serious under funding, poor or/and dilapidated facilities and other degrading features in education, sector. Nonetheless, the ETF still assist largely in rebuilding the already dilapidated education sector.

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1.2 Statement of the Problem

Of all the problems plaguing schools in Nigeria today, the financial state of the schools is the key focal point of interest to the nation and administration in process of attaining the goals of education.

The main problem faced by governments is allocating scarce resources across competing activities and sectors. The choice between alternative investments such as investment in education versus investment in physical infrastructure depends on society’s objectives, which are represented by governmental decisions, and on the analysis between costs of the investment versus the future benefit to be derived from that investment. Since economists see education as an investment, therefore, it is important to estimate its contribution to economic growth and/or its rate of return.

Education represents both consumption and investment items in an economy. Education is valued for its immediate as well as its future benefits. This means that the distribution of educational investment affects future income distribution, thus, equity plays an important role in educational investment decisions. Different societies give different weight between the objectives of efficiency and equity in defining an educational investment. In general, centrally planned economies placed a higher weight on equity grounds in defining their educational policy investment than capitalist economies (Manuel Madrid-Aris, 2000).

Inadequate funding of schools has had a lot of effects on the schools and education as a whole which include fall in the standard of education, indiscipline, examination malpractice, secret cults, and teachers’ commitment to their job, bribery and corruption in the school to mention few. All these shall be looked at as the research work continues. In view of this study aims at finding out how educational funding can promote economic growth in Nigeria.

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1.3 Purpose of the Study

The main purpose of this study is to carry out an assessment of the relationship between educational funding and economic growth in Nigeria.

Other purpose of study include the following:

1. To determine the relationship between educations and economic growth in Nigeria
2. To examine how inadequacy of funding affects secondary school effectiveness.
3. To find out government’s provision of instructional materials for teachers.
4. To investigate the effects of inadequate funding on teachers commitment to their duties.
5. To examine the extent to which lack of funding has affect the standard of education.

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1.4 Significance of the Study

The study would help to update information about the effect of funding in the secondary schools, adequacy and their relationship to education growth.

The information thus discovered would be an eye-opener to the parents and guardian on the effects of funding on secondary school effectiveness.

It would help to improve the quality of education in the state and it is hoped that the funding would further reveal more areas for possible research studies.

It is hoped that the result of this study will undoubtedly fully be valuable for teachers, administrators and the government because it would expose and also provide them with useful information on the area in which effect of funds on secondary school effectiveness.

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1.5 Research Question

The study intends to provide answers to the following questions:

1. Is there any relationship between educations and economic growth in Nigeria?
2. To what extent does inadequacy of funding on education lead to secondary school effectiveness?
3. Does the government provide enough instructional materials for the teachers?
4. Is inadequate funding of education by government responsible for teachers less commitment to their duties?
5. To what extent does lack of funding affect standard of education?

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1.6 Scope and Limitation of the Study

This study is limited to Lagos State. It does not intend to go beyond this zone because of financial and time constraint.

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1.7 Definition of Terms

Effective:

Producing the result that was wanted or intended, impressive or interesting enough to notice.

Fund:

Amount of money that has been made available for a particular purpose.

Secondary School:

It is the post-primary institutions where students are prepared for the West African School Certificate (WASC) Examination for a minimum period of six years.

Teaching:

It is the act of engaging in interactive behaviour with one or more students for the purpose of affecting a change in the students attitudinal, cognitive or psychomotor thereby promoting the psycho-social development and growth of the students.

Learning:

Is a relatively permanent change in an individual’s behaviour as a result of experience of training.

Academic Performance:

This is how well or how bad an educational work or activity is done.