Shadow Economy and Economic Growth in Nigeria

The study seeks to examine the effect of shadow economy on economic growth in Nigeria. Both the exploratory and ex-post facto designs were adopted in this study. The study population consist of 14 years (2011 – 2024) period given the number of years the data was collected. Using a consensus sampling method, the 14 years are used as sample size. The study used the ordinary least square regression technique, specifically the Vector Autoregressive model for testing the hypotheses stated. The first findings revealed that, illicit financial flow from corruption has a positive insignificant effect on change gross domestic product of Nigeria. While, the second hypotheses tested revealed that, illicit financial flow from illegal-commercial activities has a negative insignificant effect on change gross domestic product of Nigeria. As a result, it is recommended that, Nigerian government should put forward policies that discourage corruption. This can be done through ensuring financial transparency in the public sector via Treasury Single Account and Integrated Personnel Payroll Information System implementation. The government through the recent financial intelligence Act should ensure that funds from illegal business activities are curbed by enacting and implementing laws against shadow economic activities and the proceeds collected from such acts be invested back into the Nigerian economy to burst production and GDP.