Transport infrastructure and economic growth in Nigeria

Abstract

The paper considered transport infrastructure and economic growth in Nigeria. Findings from the study show that in the three national development plans in Nigeria, road transportation system has been given more priority followed by water and air. It was found that the local government authority controls about 67% of the total road network in Nigeria. The contribution of transport to total gross domestic product has been on the downward trend in spite of the fact that 20% of annual budget is put on roads projects at both state and the federal level. The estimated loss to the Nigerian economy as a result of poor state of the roads is about N450 billion yearly. The empirical part of the study shows that no causality was found between road development and economic growth in Nigeria. However, the long run part of the VECM estimation shows that the lag value of road development variable is very significant in the determination of economic growth in Nigeria. The short run dynamics of growth rate of the economy revealed that the error correction terms of road development variables as well as its lag values are not significant in the determination of economic growth in Nigeria. It is therefore recommended that rather than construct new roads, policy makers should adequately maintain the existing roads as this will further reduce cost of transportation of goods and services, thereby reducing poverty and boosting economic growth in Nigeria.

Keywords: Road, Granger causality, VECM and Economic growth.