DISAGGREGATED HOUSEHOLD CONSUMPTION EXPENDITURE AND ECONOMIC GROWTH IN NIGERIA

Abstract

The study empirically analyzed the disaggregated household consumption expenditure on
economic growth in Nigeria for the period of 1981-2023. The dependent variable is gross
domestic product growth rate (GDPGR) while the explanatory variables are Final Consumption
Expenditure of Household (FCEH) and Final Consumption Expenditure of Non-Profit
Institution Serving Household (FCEN). The data were all sourced from Central Bank of Nigeria
Statistical Bulletin 2023. The preliminary analysis was carried out using Augmented Dickey
Fuller Unit Root test and Johansen Cointegration while the main estimation technique is Vector
Error Correction Method and Granger Causality/Block Exogeneity Wald Tests. This study
revealed that the Final Consumption Expenditure of Households (FCEH) significantly drives
Nigeria's GDP growth, with a short-term impact of 9.35 percentage points and a stronger longterm effect of 17.80 percentage points. The Final Consumption Expenditure of Non-Profits
Serving Households (FCEN) shows short-term benefits with a 1.91 percentage point rise but a
long-term decline of 2.78 percentage points. The Granger Causality Test indicates that FCEH
and FCEN Granger-cause GDP growth. This study concluded with emphasize on the
importance of promoting household consumption while optimizing public expenditure to
support long-term economic growth. To foster economic growth, Nigeria should implement
policies to increase household disposable income and boost consumer spending, while also
expanding social welfare programs to reduce regional disparities.