Recurrent expenditure versus capital investment: implications for service sector growth in Nigeria

Purpose: This study analyzed the implication of recurrent expenditure and capital investment on growth of Nigeria's service sector with the annual time series data from 2010 to 2024. Methodology: Secondary data were obtained from Central Bank of Nigeria (CBN) Statistical Bulletin. The Ordinary Least Squares (OLS) estimation was used to analyse the relationship among the variables. Results and conclusion: The results of the study showed that government recurrent expenditure has positive and significant influence on the growth of services in Nigeria. This means that recurrent expenditures really do make a difference in sustaining the size of the service sector. The study also discovered that the effect of government capital investment on the growth of the service sector is positive but is not significant, which means that capital investment by the government during the study period has not contributed significantly in the performance of the service sector. Furthermore, inflation rate had a positive but insignificant impacts on the growth of the service sector in Nigeria. The study is concluded that capital investment does not have as much impact on the growth of the service sector in Nigeria as recurrent expenditure. The study accordingly suggests that government should enhance capital project implementation and monitoring, sustain effective recurrent expenditure and boost fiscal management policies in order to facilitate sustainable expansion of service sector in Nigeria. Implication of findings: Government Spending, Capital Expenditure, Recurrent Expenditure, Service Sector GDP, Inflation Rate, Nigeria, OLS.