Macroeconomic Shocks, Human Capital Vulnerability, and Non-Oil GDP Growth in Nigeria: An Empirical Modeling of SME Resilience and Operational Drag (1990–2025)

This study investigates the dynamic long-run and short-run impacts of structural macroeconomic shocks, human capital health vulnerabilities, and informal liquidity buffers on non-oil Gross Domestic Product (GDP) growth in Nigeria over a 36-year period (1990–2025). Driven primarily by Small and Medium Enterprises (SMEs), the non-oil sector serves as the true shock absorber of the Nigerian economy but faces persistent operational drag. Utilizing continuous time-series data from official sources (CBN, NBS, IHME GBD, and World Bank), the study employs an Autoregressive Distributed Lag (ARDL) Bounds Testing Approach to model long-run equilibrium and short-run Error Correction Model (ECM) dynamics.
The empirical findings confirm the existence of a robust co-integrating relationship among the variables (F = 5.842, exceeding the 1% upper bound critical threshold). Long-run results demonstrate that human capital degradation—proxied by depressive and anxiety Disability-Adjusted Life Years (DALYs) lost—exerts a statistically significant negative impact on non-oil growth (β = −12.4150, p < 0.01), validating Endogenous Growth Theory regarding the erosion of total factor productivity under chronic mental health strain. Macroeconomic shocks, including exchange rate devaluations (β = −1.1530), commercial prime lending rates (β = −0.2145), and headline inflation (β = −0.0842), also exert statistically significant contractionary effects on non-oil output. Conversely, informal money liquidity (COB/M2 cash ratio) exhibits a statistically significant positive long-run coefficient (β = 0.2814, p < 0.05), proving that informal financial networks act as a vital defensive buffer during formal credit crunches. The short-run ECM term (ECMt−1 = −0.5482, p < 0.001) indicates a moderate speed of adjustment, with approximately 54.82% of annual disequilibrium corrected back toward long-run equilibrium per year. Comprehensive post-estimation diagnostics (Breusch-Godfrey LM, Ramsey RESET, CUSUM/CUSUM Squares) confirm residual homoskedasticity, absence of serial correlation, and structural parameter stability across policy regimes.
Based on these findings, the study recommends integrating workplace mental health programs into national economic frameworks, de-risking SME credit via targeted CBN interest rate subsidies, prioritizing official FX liquidity for productive non-oil inputs, and non-punitive digital integration of informal liquidity networks.

Non-Oil GDP Growth, SME Resilience, ARDL Bounds Test, Human Capital Vulnerability

1. Abari-Ogunsona, T. A., Danmola, R. A., & Aruleba, M. S. (2025). Oil revenue fluctuation, fiscal policy response and economic growth in Nigeria. International Journal of Research Innovation and Social Science, 9(1), 102–118. [Google Scholar] [Crossref]

2. Adeleke, A. O., & Oloyede, D. B. (2021). Macroeconomic volatility, monetary shocks, and non-oil output in Nigeria: An ARDL bounds testing approach. African Development Review, 33(2), 245–258. https://doi.org/10.1111/1467-8268.12510 [Google Scholar] [Crossref]

3. Central Bank of Nigeria. (2025). Central Bank of Nigeria statistical bulletin: Financial and macroeconomic statistics (1990–2025). Central Bank of Nigeria Publications. https://www.cbn.gov.ng [Google Scholar] [Crossref]

4. Dixit, A. K., & Pindyck, R. S. (1994). Investment under uncertainty. Princeton University Press. [Google Scholar] [Crossref]

5. Echebiri, C. N., Okonkwo, I. J., & Danjuma, M. (2023). Non-communicable diseases, mental distress, and aggregate labor productivity in Sub-Saharan Africa: A system GMM approach. Journal of Health Economics and Development, 15(1), 88–104. [Google Scholar] [Crossref]

6. Institute for Health Metrics and Evaluation. (2024). Global burden of disease study (GBD 2021/2024) results: Depressive disorders and anxiety DALYs for Nigeria (1990–2025). Global Health Data Exchange, University of Washington. https://vizhub.healthdata.org/gbd-results/ [Google Scholar] [Crossref]

7. Lucas, R. E., Jr. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3–42. https://doi.org/10.1016/0304-3932(88)90168-7 [Google Scholar] [Crossref]

8. National Bureau of Statistics. (2025). National accounts statistics: Real non-oil Gross Domestic Product (GDP) growth and headline Consumer Price Index (CPI) inflation reports (1990–2025). National Bureau of Statistics, Federal Republic of Nigeria. https://nigerianstat.gov.ng [Google Scholar] [Crossref]

9. Ogunleye, E. O., Adeleke, A., & Nwokoma, N. (2020). Regulatory compliance drag, administrative friction, and micro-enterprise growth in West Africa: Evidence from World Bank Enterprise Surveys. Journal of African Business, 21(3), 312–330. https://doi.org/10.1080/15228916.2019.1695201 [Google Scholar] [Crossref]

10. Ozoh, F. C., Okafor, E. N., & Adeleke, M. O. (2024). Structural shocks and non-oil economic resilience in West Africa: A empirical assessment. Journal of Emerging Market Economies, 16(2), 145–168. [Google Scholar] [Crossref]

11. Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616 [Google Scholar] [Crossref]

12. Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002–1037. https://doi.org/10.1086/261420 [Google Scholar] [Crossref]

13. World Bank. (2021). World Bank enterprise surveys: Nigeria country profile and panel datasets (2007, 2009, 2014, 2020). World Bank Group. https://www.enterprisesurveys.org [Google Scholar] [Crossref]

• Entrepreneurship and Start-Up Ecosystem Vis-À-Vis Government Start-Up Scheme in Manipur: A Critical Review and a Way Forward
• Building Resilience: How Malaysian Women Entrepreneurs Use Strengths and Resources to Navigate Challenges
• Branding in Digital Entrepreneurship: Evaluating Branding Criteria in IT Entrepreneurship
• Bridging the Intention–Action Gap through Entrepreneurial Optimism: A Conceptual Exploration
• Entrepreneurial Orientation of Undergraduate Students in University Malaysia Perlis: A Conceptual Paper