Foreign aid and human capital development in Nigeria

This study examines the impact of foreign aid on human capital development in Nigeria

between the periods of 1981-2016. Secondary data were collected from CBN statistical bulletin and

World Bank indicators. The variables used were Official development assistance, gross capital

formation, foreign Direct Investment and labour force with human development index as the

dependent variable. The overall or general objective of this research work is to investigate the impact of foreign

aid on human capital development in Nigeria. Unit root test was carried out to check if the

variables were stationary and co-integration analysis was done to ascertain the existence of long

run relationship between foreign aid and human capital development.

From the finding, foreign aid has a significant impact on human capital. Also variables such

as labour force and foreign direct investment also significantly impact on human capital

development. It is only gross capital formation; a proxy for domestic investment was insignificant in

the model.

Based on these findings, the study recommends amongst others that government should

provide appropriate policies that will increase and sustain manpower development and enough

funds should be allocated to education for proper utilization of potential productive and social

benefits. Government should channel more funds to the health sector in order to improve health

standard and hence life expectancy of the citizen since a healthy population and work force is a

major ingredient for rapid and sustainable productivity and growth through its aids it receives from

abroad.