Revenue Generation and Budget Implementation in Southwest Nigeria: Evidence from Road Taxes and Stamp Duties

Abstract

This study examined the effect of selected revenue and demographic factors on budget implementation in Southwest Nigeria. Specifically, it investigated the effects of Road Taxes and Levies (RTL), Stamp Duties (STD), Statutory Allocation (ALL), and Population Size (SIZ) on budget implementation. The study adopted an ex-post facto research design and relied on historical secondary data. Although the population comprised the six states in Southwest Nigeria, Lagos, Oyo, and Osun States were purposively selected based on fiscal relevance and data availability. Annual panel data covering 30 years (1996–2025) were employed for the analysis. Capital expenditure and recurrent expenditure represented measures of budget implementation, while RTL, STD, ALL, and SIZ served as explanatory variables. Data were analysed using descriptive statistics, Pearson correlation, panel unit-root and cointegration tests, and panel regression techniques. The correlation results showed positive associations among the variables. The Pedroni cointegration test also confirmed a significant long-run relationship among the variables, with the Panel v-statistic of 2.614 (p = 0.004) and Panel ADF-statistic of −3.974 (p = 0.029). The VIF results indicated no serious multicollinearity, with a mean VIF of 2.47. Road Taxes and Levies recorded positive coefficients of 0.156 (p = 0.012) for capital expenditure and 0.168 (p = 0.007) for recurrent expenditure, indicating statistically significant positive effects. Stamp Duties recorded coefficients of 0.172 (p = 0.081) and 0.184 (p = 0.062) for capital and recurrent expenditure, respectively, indicating positive but statistically insignificant effects. The study concludes that revenue mobilisation and fiscal transfers are important determinants of budget implementation in the selected Southwest Nigerian states.