PETROLEUM REVENUE AND PUBLIC SPENDING IN NIGERIA 2005 - 2020
Keywords:Petroleum Revenue, Public Spending, Petroleum Profit Tax, Oil Royalty, Capital Spending, Oil Proceeds, Concessional Rental
The aim of this study is to investigate the impact of petroleum revenue on public spending in Nigeria with exchange rate as a moderating variable. To achieve this objective, research questions were raised, hypotheses were formulated and a review of the extant literature was made. The population of the study was the entire 36 states and the federal capital territory of Nigeria Covering twenty (2005-2020) was considered for this study, and the ex-post facto research design, which investigates possible cause-effect relationship was adopted. The data for the study were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and the Nigeria Extractive Industries Transparency Initiative (NEITI) for the various years. The data for capital spending, petroleum profit tax, oil proceeds, oil royalty, concessional rentals, and foreign exchange rate generated in this study were analyzed using mean, standard deviation, minimum and maximum values, Skewness and Kurtosis, while the impact of petroleum revenue on public spending was statistically tested with the Auto-Regressive Distributed Lag (ARDL) with t-test as a test of significance. The findings of the study revealed that petroleum profit tax has a positive significant effect on capital spending in Nigeria; oil proceed has a positive but insignificant effect on capital spending in Nigeria; oil royalty has a positive insignificant effect on capital spending in Nigeria; concessional rental has a negative but significant effect on capital spending; oil proceeds has a negative significant effect on recurrent spending in Nigeria. Based on the above, it was recommended among others that the government should encourage more private company participation so that better equipped refineries can be built and the cost of refining crude oil will reduce; more so security should be boosted on the high sea where crude oil products are being smuggled. This will help reduce the loss from illegal export of crude oil products.