Foreign Aid and Economic Wellbeing in Nigeria: A Disaggregated Approach

Happiness OWABIE; Victor AKIDI; Dennis Brown EWUBARE

doi:10.56201/ijefm.v11.no9.2026.pg33.50

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Foreign Aid and Economic Wellbeing in Nigeria: A Disaggregated Approach

Happiness OWABIE, Victor AKIDI, Dennis Brown EWUBARE

Abstract

Characterized by inadequate domestic savings and foreign exchange earnings, Nigeria is continuously challenged with weak economic wellbeing. This reality necessitates foreign aid as a measure for supporting investments in critical sectors of the economy. This study therefore examined the effects of foreign aid on economic wellbeing in Nigeria, considering the period, 1990 to 2024. Foreign aid is disaggregated into health, humanitarian, agriculture and rural development, education, and infrastructure and economic development aid while economic wellbeing is proxied by Human Development Index. Annual data were mostly sourced from the International Monetary Fund Financial Statistics, the World Bank’s World Development Indicators , the United Nations Development Programme reports, and the National Bureau of Statistics publications. The Autoregressive Distributed Lag test processes were employed for short-run and long-run impact analyses of the model. The empirical findings revealed that health, agriculture and rural development, education, and infrastructure and economic development aid exerted positive and statistically significant effects on Human Development Index, whereas humanitarian aid exhibited positive but insignificant effect. The study concluded that foreign aid contributes meaningfully to enhancing economic wellbeing in Nigeria. Therefore, among other measures, emphasizing attraction and effective channeling of more aid; particularly, towards improving healthcare and education infrastructures, providing modern medical and schooling equipment, expanding rural healthcare and education services, supporting immunization and skills development programmes, and ensuring affordable healthcare and education services delivery, are vital for improving life expectancy and man’s productive skills which will in the long-run strengthen Human Development Index in Nigeria.

Keywords

Foreign aidEconomic wellbeingHuman development indexAutoregressive Distributed LagNigeria. JEL Classifications: F35I31O15

References

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Foreign Aid and Economic Wellbeing in Nigeria: A Disaggregated Approach

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