Governance Sustainability: A Descriptive Analysis of Governance Financing and Government Effectiveness in Nigeria (1996-2024)

Abstract

Governance financing can be defined as the amount of revenue expended by the government on governance of a particular country, which basically relates to public administrative costs such as general administration, defence, internal security and national assembly. On the other hand, government effectiveness is a governance indicator that captures the perceptions of the quality of government policy formulation and implementation, as well as quality public services, civil service and independence from political pressures. It is expected that when governance is adequately financed, government effectiveness should also improve. This notwithstanding, empirical study on The link between the two, most especially in developing countries, is scarce. Therefore, this study examined the relationship between governance financing and government effectiveness using Nigeria’s datasets obtained from the World Bank’s Worldwide Governance Indicators and Central Bank of Nigeria’s Statistical Bulletin for the period 1996-2024. Using descriptive statistics, Pearson correlation and Johansen cointegration tests, the study found the existence of a weak but positive significant correlation between governance financing and government effectiveness in Nigeria. However, there was no long-run relationship between governance financing and government effectiveness in Nigeria. The study concludes that the association between governance financing and government effectiveness in Nigeria is short-termism and the rise in government administrative costs and expenditures is not matched with its governance sustainability in terms of government effectiveness. This implies that, while governance financing may contribute positively to government effectiveness in Nigeria, the impact appears limited and insufficient to Establish a stable long-term relationship. This therefore points to the need for Nigerian government to review its cost of governance in such a manner that it can be positively matched with its effectiveness indicator in the country.