Petroleum Profit Tax Revenue and Economic Growth in Nigeria: Empirical Evidence, 2010–2023
Edeh Mark Bekweri *
Department of Accounting, Miva Open University, Abuja, Nigeria.
Ihedinma Godfrey Ikechukwu
Department of Economics, Miva Open University, Abuja, Nigeria.
Njoku Hyacynth Tochukwu
Department of Public Policy and Administration, Miva Open University, Abuja, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
Aims: This study examined the contemporaneous relationship between Petroleum Profit Tax (PPT) revenue and economic growth in Nigeria over the period 2010–2023, while accounting for exchange-rate and inflation dynamics.
Study Design: The study adopted an ex post facto annual time-series research design.
Place and Duration of Study: The study covered Nigeria using national annual macroeconomic and petroleum tax data for 2010–2023.
Methodology: Annual data were obtained from the Nigeria Extractive Industries Transparency Initiative and the Central Bank of Nigeria. Fourteen observations were analysed using ordinary least squares regression. Gross domestic product and PPT revenue were log-transformed, while the exchange rate and inflation rate were included as control variables. Diagnostic and sensitivity tests were conducted to assess the reliability of the estimates.
Results: The overall regression model was statistically significant, F(3, 10) = 30.80, p < .001, R² = .90. Petroleum Profit Tax revenue was not a statistically significant predictor of GDP (B = -0.05, p = .706), while the exchange rate was statistically significant (p < .001). Inflation was not statistically significant at the 5% level (p = .091). The real-GDP robustness model similarly showed that PPT revenue remained statistically insignificant (B = -0.032, p = .460).
Conclusion: The findings do not provide evidence of a significant contemporaneous association between PPT revenue and Nigeria’s GDP after controlling for exchange-rate and inflation dynamics. Given the short annual series and associated time-series limitations, the results are best interpreted as exploratory evidence rather than causal or long-run estimates. The findings highlight the importance of considering broader macroeconomic conditions when assessing the growth implications of petroleum tax revenue.
Keywords: Petroleum profit tax, economic growth, gross domestic product, tax revenue, exchange rate, inflation, oil revenue, fiscal policy, time-series analysis