COMPARATIVE ANALYSIS OF OIL AND NON-OIL REVENUE IN THE NIGERIAN ECONOMY

Abstract

Many African countries, including Nigeria, have historically depended on natural resource revenues, often at the expense of broader economic diversification. This dependency presents a major challenge to achieving sustainable economic growth and increases vulnerability to external shocks. This study investigates the comparative effects of oil and non-oil revenue on economic performance in Nigeria over the period 1981 to 2023. The data utilized in this study were secondary sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and the World Development Indicators disseminated by the World Bank. Employing the Autoregressive Distributed Lag (ARDL) estimation technique, the results reveal contrasting dynamics. Non-oil revenue demonstrates a consistently positive and statistically significant impact on GDP growth in both the short and long run, highlighting its growing importance in Nigeria’s economic development. In contrast, oil revenue fails to show significant influence on GDP growth in either time frame, reflecting the diminishing effectiveness of oil as a growth driver amid price volatility and structural inefficiencies. These findings emphasise the need for government to implement comprehensive strategies that facilitate revenue diversification, particularly through investments in sectors including manufacturing, agriculture, and services. Encouraging innovation, enhancing infrastructure, and improving the regulatory environment for business operations are vital measures toward establishing a more resilient economic structure.