1 | Page Project Finance, Infrastructural Development, and Economic Growth in Nigeria (1986 - 2017) Adebayo Tunbosun Ogundipe Job Market Paper October 2020 ABSTRACT Achieving sustainable economic growth has been a global issue, as it is the focus of world leaders, governments, and interested individuals. It is a macroeconomic objective of all sovereign states, including Nigeria. Infrastructural development plays a key role in its achievement. This requires raising and utilization of appropriate project finance in the most economical and suitable manner. Research attention on this subject, in Nigeria, yet to explore the interrelationship between these three variables. This study, therefore, examined the effects of project finance and infrastructural development on economic growth in Nigeria within the time dimension 1986-2017. The study specified three inter- twined models based on endogenous growth theory. Economic growth was a function of infrastructural development and project finance. Infrastructural development (INFD) was proxied by INFD Index, and economic growth was proxied by Gross Domestic Product (GDP). Project finance was split into public- private partnership (PPP), public project finance (PBF), private project finance (PRF), official development assistance (ODA), and capital market-based project finance (CMF). Infrastructural development was split into economic, social and financial infrastructure. Transport development index (TDI), power production index (PPI) and road development investment (RDI) represented economic infrastructure. Health infrastructure (HI) and education infrastructure (EI) represented social infrastructure. Ratios of broad money to GDP and market capitalization to GDP represented financial infrastructure. Secondary data were sourced from various editions of Central Bank of Nigeria (CBN) Statistical Bulletin, Africa Infrastructural Development Group Report, and World Development Indicators. Autoregressive distributed lag, vector auto-regression and error correction mechanism were employed as estimation techniques. The study found that project finance of PPP (0.6372), ODA (0.1355), and CMF (0.1034) had significant positive long-run effects on infrastructural development in Nigeria with their respective p-values of 0.0000, 0.029 and 0.0022 at 0.05 level of significance. But PBR (0.1329) and PRF (0.1199) had insignificant positive long-run effects on it with their respective p-values of 0.1019 and 0.3447 at 0.05 level of significance. Infrastructural development of TDI (0.0125), PPI (0.6869), RDI (0.3763), HI (0.5284) and M2GDP (0.6102) had insignificant positive effects on economic growth in Nigeria with their respective p-values of 0.2726, 1.9180, 2.4037, 0.7990, 2.1544. But EI (-0.6051) and MCAPG (-0.2228) had insignificant negative effects on it with their respective p-values of -8.3199 and 0.8319. Project finance of PBF (0.0283) had positive effect on economic growth in Nigeria with a significant p-value of 0.273 while PPP (-0.2462), PPI (-0.0643), ODA (-0.2421), CMF (-0.0128) had insignificant negative effects on it with their respective p-values of -1.2643, -0.2034, -2.2324 and -0.2894.The study concluded that project finance exerts significant positive effects on infrastructural development, yet it does not translate to meaningful economic growth in Nigeria. It recommended that economic infrastructure should be properly maintained. Education and health infrastructure should be improved upon with complete re-engineering of the regulatory processes. Adequate budgetary allocation should be made to fund educational and health institutions at all levels. Keywords: Project finance, infrastructural development, economic growth, capital market