Government Expenditure On Security and Private Investment in Nigeria

• Author(s): Emerenini, Fabian. M; Ogu, Callistus; Nosike, Ebele Veronica
• Paper ID: 1719063
• Page: 3594-3607
• Published Date: 02-07-2026
• Published In: Iconic Research And Engineering Journals
• Publisher: IRE Journals
• e-ISSN: 2456-8880
• Volume/Issue: Volume 9 Issue 12 June-2026
• DOI: https://doi.org/10.64388/IREV9I12-1719063

Abstract

This study examines the relationship between government expenditure on security and private investment in Nigeria over the period 2000-2024, incorporating inflation and interest rates as additional explanatory variables. Grounded in public goods theory, the study hypothesizes that effective security provision creates an enabling environment for private investment by protecting property rights, reducing transaction costs, and lowering risk premiums demanded by investors. The Dynamic Ordinary Least Squares (DOLS) methodology was employed to estimate long-run cointegrating relationships among the variables, addressing potential endogeneity and serial correlation problems inherent in standard estimation techniques. The findings reveal a positive and statistically significant relationship between government expenditure on security and private investment, indicating that a 1% increase in security expenditure is associated with approximately 1.02% increase in private investment. Conversely, inflation exhibited a negative and statistically significant effect on private investment, confirming that macroeconomic instability deters capital formation by creating uncertainty about future returns. Interest rates similarly demonstrated a negative insignificant relationship with private investment, consistent with neoclassical investment theory predictions that elevated borrowing costs reduce investment viability. The study concludes that security provision and macroeconomic stability function as complements in promoting private investment, with neither alone sufficient for optimal outcomes. Policy recommendations include maintaining effective security expenditure, prioritizing inflation control through credible monetary policies, reducing interest rates via financial sector development, and adopting coordinated policy approaches that recognize the interdependence of security reforms and macroeconomic management in stimulating private sector capital formation.

Keywords

Government expenditure on security, private investment, public goods theory, inflation, interest rates, DOLS, Nigeria

Citations

IRE Journals:
Emerenini, Fabian. M, Ogu, Callistus, Nosike, Ebele Veronica "Government Expenditure On Security and Private Investment in Nigeria" Iconic Research And Engineering Journals Volume 9 Issue 12 2026 Page 3594-3607 https://doi.org/10.64388/IREV9I12-1719063

IEEE:
Emerenini, Fabian. M, Ogu, Callistus, Nosike, Ebele Veronica "Government Expenditure On Security and Private Investment in Nigeria" Iconic Research And Engineering Journals, vol. 9, no. 12, Jun. 2026, doi: https://doi.org/10.64388/IREV9I12-1719063

APA:
Emerenini, Fabian. M, Ogu, Callistus, Nosike, Ebele Veronica (2026). Government Expenditure On Security and Private Investment in Nigeria. Iconic Research And Engineering Journals, 9(12). doi: https://doi.org/10.64388/IREV9I12-1719063

MLA:
Emerenini, Fabian. M, Ogu, Callistus, Nosike, Ebele Veronica "Government Expenditure On Security and Private Investment in Nigeria" Iconic Research And Engineering Journals, vol. 9, no. 12, Jun. 2026. Crossref, https://doi.org/10.64388/IREV9I12-1719063

BibTeX

@article{1719063,
author = {Emerenini, Fabian. M, Ogu, Callistus, Nosike, Ebele Veronica},
title = {Government Expenditure On Security and Private Investment in Nigeria},
journal = {Iconic Research And Engineering Journals},
year = {2026},
volume = {9},
number = {12},
pages = {3594-3607},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1719063.pdf},
abstract = {This study examines the relationship between government expenditure on security and private investment in Nigeria over the period 2000-2024, incorporating inflation and interest rates as additional explanatory variables. Grounded in public goods theory, the study hypothesizes that effective security provision creates an enabling environment for private investment by protecting property rights, reducing transaction costs, and lowering risk premiums demanded by investors. The Dynamic Ordinary Least Squares (DOLS) methodology was employed to estimate long-run cointegrating relationships among the variables, addressing potential endogeneity and serial correlation problems inherent in standard estimation techniques. The findings reveal a positive and statistically significant relationship between government expenditure on security and private investment, indicating that a 1% increase in security expenditure is associated with approximately 1.02% increase in private investment. Conversely, inflation exhibited a negative and statistically significant effect on private investment, confirming that macroeconomic instability deters capital formation by creating uncertainty about future returns. Interest rates similarly demonstrated a negative insignificant relationship with private investment, consistent with neoclassical investment theory predictions that elevated borrowing costs reduce investment viability. The study concludes that security provision and macroeconomic stability function as complements in promoting private investment, with neither alone sufficient for optimal outcomes. Policy recommendations include maintaining effective security expenditure, prioritizing inflation control through credible monetary policies, reducing interest rates via financial sector development, and adopting coordinated policy approaches that recognize the interdependence of security reforms and macroeconomic management in stimulating private sector capital formation.},
keywords = {Government expenditure on security, private investment, public goods theory, inflation, interest rates, DOLS, Nigeria},
month = {June}
}