Does sub‐national government revenue have an effect on socio‐economic and infrastructural development in Nigeria? A geographical analysis

Abstract

AbstractGiven the geographical variation in socio‐economic and infrastructural development in Nigeria, this study examines the possible effect of the different sources of sub‐national government revenue across the country. This is in contrast to previous studies that are either based on individual unit level of analysis or examined the relationship between the aggregated composition of government revenue with socio‐economic and infrastructural development in the country. The data for this study were assembled from the National Bureau of Statistics, Federal Ministry of Health and Federal Ministry of Education and were analysed using spatial statistics and stepwise linear regression. Findings show that sub‐national government revenue is spatially dispersed, while federal allocation (FA) accounted for the major source of sub‐national government revenue, indicating poor internal revenue generation by states. Pay‐as‐you‐earn tax (PAYE), revenue from Ministries and Departments (MDAs), direct assessment, road taxes and FA were negatively correlated with gross domestic product (GDP) per capita, the provision of educational facilities and employment, while PAYE, revenue from MDAs and FA were associated with the provision of health facilities. The study recommends that, to boost revenue generation, states should focus on the production of commodities for which they have comparative advantage. Also, to achieve comprehensive socio‐economic and infrastructural development, the government must be strategic in the allocation of revenue, which entails having a framework that will include projects of immense benefits to the citizens while also ensuring equitable allocation of revenue in the provision of basic services.