Revenue Diversification in a Constrained Economy: Implications for Economic Growth in Nigeria

Abstract

The aftermath of lockdown occasioned by the covid-19 pandemic, in addition to global recession descended on economies of the world and more on revenue constrained economies of less developed world like Nigeria. This was manifested in the rising budget deficit rate, occasioned by limited revenue sources,high interest rates, inflation and debt stock with its attendant negative implication respectively. The study was carryout to ascertain if revenue diversification is panacea to the declining economic growth in Nigeria's constrained revenue profile and also, to identify the key target sectors for policy intervention towards achieving revenue diversification away from oil dominated sector. Utilizing the cause and effect research design, secondary data spanning the period 1986-2022 from diverse sources was analyzed using ARDL analytical tool. The results obtained showed an impressive revealions. The findings from the study established the existence of significant positive long run characteristic among the variablesincluded. Thisisimplying that any incremental policy interventions targeted to these variables, in this case the Tourism, Solid Minerals, Agric, Manufacturing, and the Diversification index variables could translate to accelerated economic growth rate in the long run rather than contemporaneous effect through increased GDP. The study therefore, recommended the need for a special attention to be accorded to these sectors in terms of policy making to encourage private investments in addition to government effort to spur the ratio of their contribution to GDP.