Title page

Approval page




Table of content



1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study




3.0        Research methodology

3.1        sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis



4.1    Introductions

4.2    Data analysis


5.1    Introduction

5.2    Summary

5.3    Conclusion

5.4    Recommendation












Examining the empirical relationship between government revenues and expenditures, expenditures and economic growth is a fundamental step in understanding the behavior of Nigerian public expenditure and the economy. The study have found that growths in both real gross domestic and government revenue causes growth in government expenditure. The implication is that government expenditure is not employed as a fiscal instrument and the revenue growth drives the government expenditure for the study period. The volatility in oil-driven revenue profile of Nigeria requires public expenditure management reforms and the need to check the productiveness of government expenditure and diversify the revenue drive.






                                        CHAPTER ONE


1.1 Background of the study

The growing disparity between revenue and expenditure in many countries has been a source of concern to many economists, analysts and researchers. Such fiscal imbalances with the attendant adverse effects on economies have provoked intensive research on the causes and effects of such disparities, resulting to four alternative hypotheses relating to the relationship between government expenditure and revenue. The hypotheses are; the revenue-and-spend hypothesis, the spend-andrevenue hypothesis, the fiscal synchronization hypothesis or the fiscal neutrality hypothesis and the institutional separation hypothesis. In other to test the validity of these hypotheses, many authors have employed different methodologies, and their results have shown conflicting outcomes as shown in the literature. The main objective of this study is to ascertain the direction of causality between the disaggregated values of government revenue and expenditure in Nigeria by deploying a robust econometric methodology. The result would assist policy makers to recognize the source(s) of any fiscal imbalance that might exist and consequently, direct efforts to developing suitable strategies for a sound fiscal framework. Policy makers and researchers have long been interested in how prospective changes to the revenue sources impact on the overall economic growth. According to Kiabel and Nwokah (2009), within the last decade, the issue of domestic resource mobilization has attracted considerable attention in many developing countries due to debt difficulties coupled with domestic and external financial imbalances. An understanding of this relationship is critical in the formulation of a sound or excellent fiscal policy to prevent or reduce unsustainable fiscal deficit (Eita and Mbazima, 2008). It is also highly consequential in evaluating government’s role in the distribution of resources (Chang, 2009). Revenue generated through tax is a major source of government revenue all over the world. A critical challenge of tax administration in the 21st century is how to advance the frontiers of professionalism, accountability and awareness of the general public on the imperatives and benefits of taxation in our personal and business lives which include: promoting economic activity; facilitating savings and investment; and generating strategic competitive advantage (Kiabel and Nwokah, 2009). Government use tax proceeds to render their traditional functions, such as the provision of public goods, maintenance of law and order, defense against external aggression, regulation of trade and business to ensure social and economic maintenance (Azubike, 2009). Nigeria has been one of the most backward developing countries in terms of harnessing revenue owing to weak standard of good governance. In recent years, the most worrisome about Nigeria’s economy is that corruption and mismanagement prevented the strait of the country’s resources from taxation and other sources into lasting improvements in self-sustaining economy. Thus despite increasing revenue generation that supposedly have been plough into productive ventures, the economy is still characterized with high rate of unemployment of 21.4% and 23.9%, high rate of inflation of 11.8%, and 10.3%, high interest rate of 22.51% and 22.42%, low capacity utilization of oil industry of 24.33% and 24%, in 2010 and 2011 respectively (CBN, 2012). There also exist low investment, high level of corruption, weak institutions, low per capita income, poor infrastructure, deteriorating economic activities, accumulated debt, still prevail. It is with a great dismay that the poor indices stated above is lack of provision of public goods as enshrined in theory of public goods popularized by Samuelson in 1954. As stated by Sanni (2007), Nigeria’s fiscal operations over the years have resulted in varying degrees of deficit; financing of which has had tremendous implications for the economy. Hence the country is faced with increasing budget deficits year in year out creating an ever increasing gap between public expenditure and the revenue generated. Deficit financing remains high at N 117.2 billion, N 47.4 billion and N 810.0 billion in 2007, 2008, and 2009 respectively (CBN, 2010). Statistics shows that Nigeria’s oil GDP growth rate stood at 7.84% between 1986-1993, fell to 0.51% between 1994-1999, 4.75% between 2000-2002, and rose to 6.40% between 2003-2008 while non-oil GDP growth rate within the same period stood at 5.77%, 3.00%, 3.55% and 8.80% respectively with corresponding total GDP growth rate between 1986-1993 stood at 6.23%, 1994-1999 at rate of 2.33%, 2000-2002 at 4.75% and 2003-2008 at 6.40%. It is pertinent to note that, total oil revenue generated between 2000 and 2009 amounted to N34.2 trillion while non-oil was N7.3 trillion, representing 82.36% and 17.64% respectively (CBN Statistical Bulletin, 2009). This is a clear indication that our revenue generation potential is solely dependent on oil revenue even in the midst of several adjustment and implementation of various forms of tax revenue laws. This is an indication of high level of inefficiency in the tax administration in Nigeria, which is contrary to the tax-and-spend hypothesis put forward by Friedman (1978) which states that changes in government revenue bring about changes in government expenditure with sole aim of bringing growth in the economy. Besides, Naiyeju (1996) asserted that, the success or failure of any tax system depends on the extent to which it is properly managed; the extent to which the tax law is properly interpreted and implemented. Dickson and Presley (2013) further attribute this shortcoming to high rate of tax evasion, misguided tax exemptions and corruption in the administration of the tax system. Despite the tremendous growth recorded in the oil revenue, there are still reoccurring question as to whether government have fully utilized this revenue for the overall improvement of the economic activities. To this end, Storey (1953) wrote that “before independence, there have been cases of official misuse of resources for personal enrichment”. With this persistent variance one may not be wrong to question the outlook of the revenue generation base – the Gross Domestic Product (GDP) and its attendant growth rate in the light of the 2008 global economic recession and recently the fluctuation of crude oil price at the international market with its devastating effect on revenue base where Nigeria government is seeking external loans worth $5.7bn (N2.97tn) from World Bank, African Development Bank, Islamic Development Bank and China Export-Import Bank to finance 2015 budget (Iweala, 2015) in midst of existing debt profile of about N712billion recorded in 2014 and currently stand at N943billion as at January 2015. Excellent fiscal policy – as noted by Eita and Mbazima (2008), Wolde-Rufael (2008), and Fasano and Wang (2002) – is essential in bring about improved revenue generation sources and sustainable economic growth. It is also suggested (Wicken and Uctum, 1990) that the sustainability of a fiscal deficit profile is essential if it must stimulate growth. Most times when expected revenue exceeds expenditure, it is expected to stimulate growth but in Nigeria, it is the opposite giving excessive and over bloated cost of governance. To this end, Ariyo (1993) expressed the view that given the current trend, Nigeria may not be able to sustain the level of her fiscal deficit in the long-run.


The imbalance between the public revenues and expenditures increases the deficit, which in turn creates economic difficulties and a serious dilemma for the government, especially if it hasn’t have ability to cover the deficit and fulfill its internal and external obligations from internal resources, or from effective investment projects. So the government finds itself forced to borrow from internal and external resources. Then the public debt service adds burden to government obligations in terms of debt payments and interests which consider as part of its current expenditures, with the result provided poor quality of service and increase the estimated deficit. All in all, will motivate government to borrow again from internal and external resources to fulfill the deficit or the doubled deficit thereby entering in the vicious cycle of accumulated deficit in the public budget over time. So the present study investigates the sources of government revenue and public expenditures in Nigeria.


The main objective of the study is to examine the sources of government revenue and public expenditures in Nigeria, but to aid the completion of the study, the researcher intend to achieve the following specific objectives;

  1. i) To examine the effect of government revenue on public expenditures in Nigeria
  2. ii) To examine if there is any significant relationship between government revenues source and public expenditure in Nigeria

iii) To examine the various sources of government revenues and expenditures in Nigeria

  1. iv) To offer suggested solution and recommendation to government on revenues sources and expenditure plan


The following research hypotheses were formulated by the researcher to aid the completion of the study;

H0: there is no significant relationship between government revenues source and public expenditure in Nigeria

H1: there is a significant relationship between government revenues source and public expenditure in Nigeria

H0: government revenue does not have any effect on public expenditures in Nigeria

H0: government revenue does have an effect on public expenditures in Nigeria


It is believed that at the completion of the study, the findings will aid the government in exploring the various sources of government revenue and expenditure, the study will also aid the government in revenue planning and sourcing as the study see to explore the effect of government borrowing as a source of government revenue, the study will also be useful to researchers who intend to embark on a study in a similar topic as the study will serve as a reference point to further studies, finally the study will be of great importance to student, teachers, academia’s and the general public as the study will add to the pool of existing literature on the subject matter and also contribute to knowledge.


The scope of the study covers the sources of government revenue and public expenditures in Nigeria, but in the cause of the study, there are some factors that limit the scope of the study:

  1. Data collection: Well established data are not easily available.
  2. Sizeable quantity of information obtained from papers were in organization and sometimes complex.
  3. Reluctance of the respondent to fill the questionnaires.


Government revenue

Revenues earned by the government are received from sources such as taxes levied on the incomes and wealth accumulation of individuals and corporations and on the goods and services produced, exports and imports, non-taxable sources such as government-owned corporations’ incomes, central bank revenue and capital.

Public expenditure

Public expenditure is spending made by the government of a country on collective needs and wants such as pension, provision, infrastructure, etc. Until the 19th century, public expenditure was limited as laissez faire philosophies believed that money left in private hands could bring better returns.


A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labor equivalent.



This research work is organized in five chapters, for easy understanding, as follows. Chapter one is concern with the introduction, which consist of the (background of the study), statement of the problem, objectives of the study, research questions, research hypotheses, significance of the study, scope of the study etc. Chapter two being the review of the related literature presents the theoretical framework, conceptual framework and other areas concerning the subject matter.     Chapter three is a research methodology covers deals on the research design and methods adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study.


Views: 34

Reply to This

Forum Categories

© 2020   Created by Vanguard Media Ltd.   Powered by

Badges  |  Report an Issue  |  Terms of Service