The Impact of Foreign Aid on Socio–Economic Development in Nigeria

¹Sennuga Mabayoje Albert, ²Adedayo Temitayo Gbeminiyi and *³Sennuga Samson Olayemi

¹Economics Department, School of Arts and Social Sciences, Tai Solarin College of Education, Omu-Ijebu, PMB 2128, Ijebu-Ode, Ogun State, Nigeria.

²Establishments Department, Tai Solarin College of Education, Omu-Ijebu, PMB 2128, Ijebu-Ode, Ogun State, Nigeria.

³School of Agriculture, Food and Environment, Royal Agricultural University, Stroud Road, Cirencester, Gloucester, GL7 6JS, United Kingdom.

*Corresponding Author’s Contact Detail: E-mail Address ✉: dr.yemisennuga@yahoo.co.uk

Accepted March 02, 2021

The purpose of foreign aid is to stimulate socio-economic growth in aid-recipient countries; yet, literature review reveals mixed results: inconclusive or often controversial findings. Using linear regression with the application of Ordinary Least Squares (OLS) technique and time series annual data from 1988 to 2018, this study aims to examine the relationship between foreign aid and economic growth in Nigeria. The study adopted gross domestic product growth rate as dependent variable while poverty rate, unemployment rate and foreign aids constituted the explanatory variable to determine their impacts on socio-economic development in Nigeria. The result indicated that while foreign aids is positively related to the dependent variable (GDP growth rate), poverty and unemployment rates were found to be inversely related to the GDP growth rate, which might be attributed to institutional failure, corruption and inefficient allocation of scare resources which no doubt manifest in terms of high rate of unemployment, insecurity and abject poverty in Nigeria. Consequently, Nigerian government should, therefore, put in place appropriate policy measures that would monitor the maximum and effective utilization of foreign aid.

Key words: Development, Foreign Aid, Gross Domestic Product, Socio-economic Unemployment.

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