This study examines the impact of foreign aid on human capital development in Nigeria
between the periods of 1981-2016. Secondary data were collected from CBN statistical bulletin and
World Bank indicators. The variables used were Official development assistance, gross capital
formation, foreign Direct Investment and labour force with human development index as the
dependent variable. The overall or general objective of this research work is to investigate the impact of foreign
aid on human capital development in Nigeria. Unit root test was carried out to check if the
variables were stationary and co-integration analysis was done to ascertain the existence of long
run relationship between foreign aid and human capital development.
From the finding, foreign aid has a significant impact on human capital. Also variables such
as labour force and foreign direct investment also significantly impact on human capital
development. It is only gross capital formation; a proxy for domestic investment was insignificant in
the model.
Based on these findings, the study recommends amongst others that government should
provide appropriate policies that will increase and sustain manpower development and enough
funds should be allocated to education for proper utilization of potential productive and social
benefits. Government should channel more funds to the health sector in order to improve health
standard and hence life expectancy of the citizen since a healthy population and work force is a
major ingredient for rapid and sustainable productivity and growth through its aids it receives from
abroad.
