Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Capital Formation and Growth of the Nigerian Economy

Ajueyitse Martins Otuedon, Ph.D and Prof. Andabai, Priye Werigbelegha, Ph.D

Abstract

This study examined the effect of capital formation on the growth of the Nigerian economy over the period 1998 to 2025. The specific objectives were to determine the effect of Gross Fixed Capital Formation, Total Savings, and Human Capital Formation on Real Gross Domestic Product in Nigeria. The study employed an ex post facto research design using annual time series data obtained from the Central Bank of Nigeria and World Bank database, with a sample size of thirty-one observations. Data were analyzed using time series econometrics techniques. The results showed that Gross Fixed Capital Formation and Total Savings have negative and statistically significant effects on Real Gross Domestic Product, while Human Capital Formation has a positive and statistically significant effect on economic growth. The study also found that no long run relationship exists among the variables, indicating that short run dynamics dominate their interactions. The study concludes that capital formation has no significant effect on the Nigerian economy. Thus, the study recommends that financial institutions and policymakers should enhance the mobilization and effective channeling of savings into productive investments by deepening the financial system and promoting investment friendly policies in the economy.

Keywords

Capital FormationGrowthNigerian economy

References

Abdulkarim, A. (2023). Investment indicators and economic growth in Nigeria: A systematic review. Humanities and Social Sciences Communications, 10(1), 1–12. Abolarin, T. O., Oladipo, S. O., Yusuf, H. A., & Oyegoke, A. J. (2025). Capital market dynamics and economic growth in Nigeria. International Journal of Economics, Finance and Management, 4(2), 45–60. Acemoglu, D. (2022). Why nations fail: The origins of power, prosperity, and poverty. Crown Publishing. Adeniyi, O., & Olaniyi, T. (2022). Macroeconomic indicators and economic performance in Nigeria. Journal of Economic Studies, 15(2), 45–62. African Development Bank. (2023). African economic outlook 2023. https://www.afdb.org Akinlosotu, N. T. (2020). Human capital development and economic growth in Nigeria: An autoregressive distributed lag approach. International Journal of Education and Research, 8(6), 135–148. Akinwale, A. A., & Musa, S. I. (2026). Domestic savings, capital formation, and economic growth in Nigeria. Journal of African Economic Studies, 12(1), 22–40. Ary, D., Jacobs, L. C., Sorensen, C., & Walker, D. A. (2018). Introduction to research in education (10th ed.). Cengage Learning. Bakare, A. S. (2021). A theoretical analysis of capital formation and growth in Nigeria. Far East Journal of Psychology and Business, 3(2), 11–24. Balogun, E. D., Okafor, V. O., & Ihayere, R. E. (2019). Capital flows and economic growth in Nigeria. International Journal of Research in Social Sciences, 9(3), 210–225. Bello, M. A., & Abdullahi, U. (2026). Savings, investment, and economic growth nexus in Nigeria. Nigerian Journal of Economic Development, 15(1), 55–73. Central Bank of Nigeria. (2024). Statistical bulletin. https://www.cbn.gov.ng Creswell, J. W. (2014). Research design: Qualitative, quantitative, and mixed methods approaches (4th ed.). SAGE Publications. Engle, R. F., & Granger, C. W. J. (1987). Co-integration and error correction: Representation, estimation, and testing. Econometrica, 55(2), 251–276. Esomnofu, C. A., & Onyejegbu, C. N. (2023). Capital formation and economic growth in Nigeria. Journal of International Economics and Management, 5(1), 88–104. Esomnofu, C. A., & Onyejegbu, C. N. (2025). Capital formation and macroeconomic performance in Nigeria. Journal of International Economics and Management, 7(2), 101- 120. International Monetary Fund. (2024). World economic outlook. https://www.imf.org Landowska, A., Kłopotek, M., Filip, P., & Raczkowski, K. (2025). Gross fixed capital formation and economic growth: A machine learning perspective. arXiv. Mejebi, O. O., Ugbogbo, S. N., & Iyoha, F. O. (2023). Determinants of capital formation in Nigeria. International Journal of Research and Innovation in Social Science, 7(6), 120– 135. Okafor, G. N., & Nwankwo, C. U. (2025). Capital formation and economic growth in Nigeria: Evidence from ARDL model. Journal of Economic Policy and Development, 10(2), 77– 95. Olawale, S. A., & Ibrahim, M. T. (2026). Human capital formation and economic growth in Nigeria. African Development Review, 18(1), 33–52. JAFM JAFM Onwiodiokit, E. A., & Otolorin, A. O. (2021). Capital formation and economic growth in Nigeria: A dynamic analysis. CBN Bullion, 45(2), 23–39. Opadeji, A. O., Oladimeji, O. A., Adekanmbi, F. P., & Olubitan, O. A. (2023). Capital formation, infrastructure, and economic development in Nigeria. Journal of Economics and Business, 6(1), 55–72. Ubi, P. S., Abai, E. A., & Anokwuru, G. (2018). Human capital development and economic growth in Nigeria. Journal of Finance and Economics, 6(3), 80–89. Uzoma, C. C., Ajie, H. A., Okorontah, C. F., & Okechukwu, J. (2025). Capital market and macroeconomic variables in Nigeria: A quantile regression approach. International Journal of Research and Scientific Innovation, 12(4), 90–108. Verhulst, B. (2025). Capital investment, education, and economic growth: A dynamic modelling approach. arXiv. https://doi.org/10.48550/arXiv.2512.08594 JAFM JAFM

More Articles from JOURNAL OF ACCOUNTING AND FINANCIAL MANAGEMENT