Government Revenue and Economic Growth in Nigeria

Abstract

This study examines the impact of oil revenue, non-oil revenue, and tax revenue on Nigeria’s economic growth between 1990 and 2023. Using an ex post facto research design, the study employs annual time series data obtained from the Central Bank of Nigeria (CBN), the National Bureau of Statistics (NBS), and the World Bank. The data are analyzed using unit root and cointegration tests, followed by an Autoregressive Distributed Lag (ARDL) model to capture both short-run and long-run dynamics, is complemented by ordinary least squares (OLS) diagnostics. The empirical results indicate that oil revenue has a positive but statistically unstable effect on real GDP, reflecting the volatility of international oil markets. In contrast, non-oil revenue exerts a more robust and consistently positive influence on economic growth over the study period. Tax revenue is found to significantly promote growth, particularly in the long run, suggesting that improvements in tax administration and compliance enhance the growth impact of public finance. The study concludes that diversifying revenue sources away from oil and strengthening the non-oil tax base are crucial for achieving resilient and inclusive growth in Nigeria. Policy efforts should prioritize broadening the non-oil revenue base, deepening tax reforms, and reducing fiscal dependence on oil.