Government Expenditure on Education and Poverty Reduction: Implications for Achieving the MDGS in Nigeria a Computable General Equilibrium Micro-Simulation Analysis

This study examines the likely impact of government expenditure policy on education and poverty reduction in Nigeria. The specific objective of the study is to explore or simulate how government expenditure on education would help to meet the Millennium Development Goals (MDG) of the United Nations in terms of improving education service and reduce poverty in Nigeria. An integrated sequential dynamic computable general equilibrium (CGE) model was used to simulate the potential impact of increase in government expenditure on education in Nigeria. The model is simulated with a 2004 social accounting matrix (SAM) data of the Nigerian economy. The result of experiment indicate that it will be extremely difficult for Nigeria to achieve the MDG target, in terms of education and poverty reduction by the year 2015, because this policy measure in the analysis was unable to meet this goal. The MDG target for Nigeria in terms of poverty reduction is to reduce the percentage of population living in relative poverty from 54.4% in 2004 to 21.4% by 2015. It was found that the re-allocation of government expenditure to education sector is important in determine economic growth and the reduction of poverty in Nigeria. It was recommends that in order to achieve the MDG in both education and poverty reduction poverty, investment in education service should receive the highest priority in the public investment portfolio. The study concludes that if government policy is going to substantially reduce poverty, then future economic growth has to be pro-poor. Investing in education is one of the pro-poor policies for improving human capital and reducing poverty.