Adult Literacy and Capital Inflows in Nigeria: Investigating Institutional Quality Interaction Effect

Nigeria has not been able to move to high human development category with its HDI between 2020 and 2023 still remaining at 0.539. This has put Nigeria in the low human development index category as the 158 out of 189 countries ranked for 2020 and the 163 out of 193 countries ranked for 2023. The study examined adult literacy and capital inflows: investigating institutional quality interaction effect with specific objectives that examined the impact of capital inflows on adult literacy in Nigeria and analysed the impact of the interaction of institutional quality and capital inflows on adult literacy in Nigeria using data set that covered the period 1990 – 2023. To achieve this auto regressive distributed lag (ARDL) method was employed. The study found that the selected capital flows have significant impact on adult literacy rate in Nigeria during the period under study and that an interaction effect exists between institutional quality and external debts, remittances, and not with foreign aids on adult literacy (human development) in Nigeria. It therefore concludes that though institutional frameworks are present and complements the effect of capital inflows in human development in Nigeria, institutional frameworks has not been effective enough in averting the possible negative influence of capital inflows on human development in Nigeria, focusing specifically on adult literacy. The study recommends strategic and intentional investment of capital inflows in order to improve adult literacy rate (human development) by the government among others.