Title:
Private Sector Financing of Public Infrastructure and Social Welfare: A Comparative Analysis of Poverty and Unemployment in Nigeria and South Africa

Authors:
Tolulope Olayinka Lawal, Olajide Samuel Dada, Abolade Francis Akintola, Tolulope Ruth Omosebi, Nigeria

Abstract:

This study investigated the effect of private sector financing of public infrastructure on social welfare in Nigeria and South Africa. The main objective was to examine the impact of private infrastructure investments on poverty reduction and unemployment. Specifically, the study analyzed the trends of infrastructural financing; determined the effect of private investments in transportation, electricity, technology, and education on the poverty index; and assessed the impact of these sector-specific investments on the unemployment rate.

The study adopted an ex-post facto research design. Time-series data covering a twenty-year period from 2005 to 2024 were sourced from the African Infrastructure Development Index and the World Bank’s World Development Indicators. Data were analyzed using descriptive statistics, Augmented Dickey-Fuller unit root tests, Johansen Cointegration tests, and Multiple Ordinary Least Squares (OLS) regression. All hypotheses were tested at the 0.05 level of significance.

Results from the multiple regression analysis showed that in the Nigerian poverty model, private investment in transportation had a highly significant negative impact on the poverty index (β = -8.8018, p = 0.0021), while electricity financing remained statistically insignificant (β = -1.8301, p = 0.5198). The model yielded an R² = 0.6044. In the South African unemployment model, educational infrastructure financing had a significant positive impact on the unemployment rate (β = 0.3583, p = 0.0006), indicating a paradoxical short-term exacerbation of joblessness (R² = 0.8862). Furthermore, Johansen cointegration tests established significant long-run equilibrium relationships among the infrastructural variables and social welfare indicators across both nations.

The study concluded that private investment in transport and technology infrastructure serves as a potent tool for poverty alleviation in Nigeria, whereas capital-intensive infrastructural expansion in South Africa paradoxically exacerbates unemployment due to structural labor rigidities. Recommendations include mandating local content utilization within private concession agreements to absorb local labor, enforcing pro-poor tariff structuring to prevent service commodification, and aligning educational curricula to mitigate the skills mismatch induced by technological advancements.

DOI: https://doi.org/10.51505/IJEBMR.2026.10510