Cost Implications of Peace Accounting on Economic Growth in Nigeria

Abstract

This study investigated the cost implications of peace accounting on economic growth in Nigeria. It assessed the effect of government security expenditures on Gross Domestic Product (GDP), analyzed opportunity costs related to high security spending, evaluated insecurity's effects on Foreign Direct Investment (FDI), and explored the influence of regional conflicts on national unity. Ex-post facto research design was utilized, secondary data from the Central Bank of Nigeria covering 2015 to 2023 were analyzed through descriptive statistics and Ordinary Least Squares (OLS) regression. Findings revealed that government defense expenditures significantly affect GDP, with a coefficient of 5.210431 (p-value = 0.0050), indicating a positive correlation between military spending and economic growth. However, high security spending incurred opportunity costs that limited investments in critical sectors, evidenced by a coefficient of 4.667122 (p-value = 0.0072). Insecurity negatively affected FDI, with a marginally significant coefficient of -0.960021 (p-value = 0.0544). Additionally, the study highlighted that regional conflicts and perceptions of neglect significantly influence national unity (coefficient = 0.908664, p-value = 0.0000). In conclusion, while security expenditures bolster GDP growth, they detract from other vital sectors. The study recommends strategic resource allocation to balance security needs with economic development, implement comprehensive security reforms to attract FDI, and prioritize initiatives fostering national unity. By aligning peace accounting with broader developmental goals, Nigeria can enhance economic growth and stability, paving the way for a more cohesive society.