Impact of Road and Construction Financing on Economic Growth in Nigeria: An Autoregressive Distributed Lag (Ardl) Approach

Abstract

This study examines the impact of road construction financing and transport and communication financing on economic growth in Nigeria using an Autoregressive Distributed Lag (ARDL) approach. Annual time-series data covering the period 2002–2023 were employed, with real gross domestic product serving as the proxy for economic growth. The ARDL technique was adopted due to its suitability for variables with mixed orders of integration and its ability to capture both short-run dynamics and long-run relationships. The bounds testing procedure was used to examine the existence of long-run relationships among the variables. The empirical results reveal that road construction financing and transport and communication financing exert positive effects on economic growth; however, these effects are statistically insignificant within the study period. This suggests that although infrastructure financing is theoretically growth-enhancing, its practical impact in Nigeria has been weakened by inefficiencies in fund utilization, weak institutional frameworks, and implementation challenges. The findings further indicate that economic growth in Nigeria is more responsive to current policy effectiveness and structural conditions than to past growth performance. The study concludes that infrastructure financing alone is insufficient to drive sustainable economic growth without improved governance and execution. It therefore recommends strengthening efficiency, transparency, and accountability in infrastructure spending, as well as enhancing institutional coordination and project management capacity to ensure that infrastructure investments translate into meaningful economic growth.