Department of Economics, Faculty of Social Sciences, University of Abuja, Abuja, Nigeria
Department of Economics, Faculty of Social Science, University of Abuja, Abuja, Nigeria
This study investigates the effect of oil price variations on non-oil revenue performance in Nigeria which, to our knowledge, has not received adequate empirical scrutiny. This issue is at the forefront of government policy plans which seek to improve non-oil revenue inflows. Utilizing dynamic time series modelling approach to analyze data from 2010M1 to 2020M12, the findings reveal that oil price dampens non-oil revenue mobilization efforts in the short-run but is positive in the long run. This indicates that the Dutch disease hypothesis holds in the short-run but not in the long run. Also, a depreciation of the exchange rate was found to improve non-oil revenue inflows. Robustness checks using disaggregated non-oil revenue: trade taxes (import duties and levies) and domestic taxes (value-added tax, corporate, and personal income tax) validate the findings. Therefore, policy measures aimed at building up domestic revenue are required to minimize oil revenue dependency.