Comprehensive Analysis of the Effect of Oil and Non-Oil Revenues on Economic Development in Nigeria

Revenue generation as the funding source for Nigeria's development activities was challenging mainly due to mismanagement of funds by the Government, tax avoidance, and corrupt practices. Due to the COVID-19 pandemic, global crude oil prices decline tremendously, as well as a crash in the global economy. The challenges make Nigeria's federal government over-dependent on oil-generated revenues to experience several setbacks in achieving its development goals. However, for the last decade, the Government has also diversified the economy and focus on the non-oil area. Thus, this study examined the effects of generating oil and non-oil revenues on Nigeria's economic development from 1989 through 2018 using secondary data extracted the statistical bulletin of the Central Bank of Nigeria. The study employed the model for analytical co-integration and error correction. Similar analytical processes were applied to the multivariate data on components of oil and non-oil revenue, exchange rates, and real gross domestic products. Results generated indicated that the oil revenue harms real gross domestic products in Nigeria, but this is the same with effects reported from non-oil revenue. Nonetheless, Nigeria's exchange rate gives a positive sign and statistical significance for real gross domestic products. Consequently, the study concludes that the continuing decline in global crude oil prices, resistance from insurgents in Nigeria's oil-producing area, the profligate expenditure of the Nigerian Government, the global COVID-19 health pandemic, among other factors, are harming the economic development of Nigeria.