Sustainable Financing for Nigeria’s Development: Empowering Domestic Resource Mobilization for Sustainable Growth

Abstract

Despite the growing discourse on sustainable development, empirical insights into how domestic resource mobilisation impacted sustainability outcomes in Nigeria remained limited. Previous studies often overlooked the dysfunctional interplay among public finance, private investment, and governance. This study contributed uniquely by empirically disentangling the long-run interactions between domestic resource mobilisation and sustainability outcomes in Nigeria, explicitly accounting for these interdependencies. Using annual data from 1990 to 2023 sourced from the World Bank and the Central Bank of Nigeria, the study employed the Dynamic Ordinary Least Squares (DOLS) technique, and Johansen’s co-integration test confirmed long-run relationships at the 5% significance level. Private sector investment (PSI) exhibited a significant negative relationship with the Sustainable Development Index (SDI), reflecting investments in extractive and real estate sectors that were environmentally harmful and socially exclusive. Economic growth (GRT) also had a negative impact, indicating unsustainable, capital-intensive expansion. Financial inclusion (FI) negatively affected SDI, suggesting that access to finance remained concentrated among urban elites. Government expenditure on social services (GES) showed a marginally negative effect, likely due to inefficiencies or misallocations. In contrast, domestic resource mobilisation (DRM), particularly through non-oil revenue, showed a strong positive relationship with SDI. The corruption perception index (CPI) also had a positive effect, underscoring the importance of anti-corruption efforts. The study recommended targeted tax incentives for green sector investments, performance-based public spending reforms, the digitisation and broadening of non-oil tax collection, and the establishment of an independent anti- corruption agency with enforcement powers to enhance governance and optimise DRM for sustainable development.