ISAR Publisher

International Scientific and Academic Research Publisher

Submit Manuscript

Exploring the Nexus between Oil Revenue and Public Infrastructure Development in Nigeria


Author: Umar, Usman Abubakar* and Abdullahi, Salihu
Department of Economics, Gombe State University, Gombe, Nigeria.
Published Date: 2025-07-13
Keywords: Oil Revenue, Infrastructure Development, Non-Oil Revenue, ARDL, Granger Causality, Nigeria.
Abstract:
This study examines the relationship between oil revenue and public infrastructure development in Nigeria from 1999 to 2023. Stationarity tests using the Augmented Dickey-Fuller (ADF) and Phillips-Peron (PP) shows that the variables are stationary at different levels, I(0) and I(1). The ARDL Bounds Co-integration test confirms the presence of a long-run relationship among the variables. In the short run, past oil revenue and non-oil revenue have significant positive effects on infrastructure development, while oil price and GDP have negative impacts. Corruption is not statistically significant. In the long run, oil and non-oil revenues continue to show strong positive effects, while GDP remains negative, and both oil price and corruption are insignificant. The Granger causality test shows that non-oil revenue and GDP help predict infrastructure spending, while oil revenue does not. Corruption is Granger caused by GDP, and it also Granger causes oil revenue. The model explains 94.5% of changes in infrastructure spending. Based on these results, the study recommends linking oil revenue directly to infrastructure through clear fiscal rules and spending oil and non-oil revenues more effectively on infrastructure spending. Nigeria should reduce its heavy dependence on oil by improving domestic revenue generation. Strengthening institutions, promoting transparency in the oil sector, and adopting long-term infrastructure plans that are less affected by economic shocks are also necessary. Finally, stronger accountability systems are needed to reduce the indirect effects of corruption on public investment.