Political Economy of Education Financing in Nigeria: Revenue Allocation, State Capacity, and Learning Outcomes

This study provides a comprehensive political economy analysis of education financing in Nigeria, examining how revenue allocation mechanisms, state fiscal capacity, and political governance structures jointly determine education funding adequacy and, ultimately, learning outcomes across the 36 states. Education financing in Nigeria involves complex interactions between federal revenue allocation, state internally generated revenue, UBEC matching grants, and local government education fund transfers, all embedded in a political economy characterised by revenue volatility, fiscal indiscipline, and clientelistic resource allocation. This study uses a longitudinal state-level panel dataset for the period 2010 to 2023, combining education expenditure data from the Budget Office of the Federation, state Ministry of Finance publications, and UBEC annual reports with learning outcome data from early grade reading assessments, NABTEB, and WAEC results. Political economy variables include gubernatorial election cycles, opposition party control, oil revenue dependency, and state fiscal rules compliance. Instrumental variable panel regression, synthetic control methods, and event study analysis around election cycles are applied. Results reveal significant electoral cycle distortions in education capital expenditure, with states cutting education budgets pre-election and increasing visible infrastructure spending post-election without improving learning outcomes. States with higher IGR autonomy and stronger fiscal rules compliance show more stable education funding and better learning trajectories. The study contributes an original Nigerian Education Political Economy Model and recommends constitutional education expenditure floors indexed to state revenue and independent education fund oversight boards to insulate education financing from electoral politics.

Keywords: education financing, political economy, revenue allocation, state capacity, Nigeria.