Fiscal Reforms, Domestic Revenue Mobilisation, and Sustainable Development in Nigeria: An ARDL Bounds Testing Approach to Long-Run and Short-Run Dynamics.

Nigeria's persistent inability to translate fiscal reforms and increasing domestic revenue mobilisation into meaningful improvements in sustainable development has raised concerns about the effectiveness of its fiscal architecture and institutional capacity. Against this backdrop, this study examined the dynamic relationship between fiscal reforms, domestic revenue mobilisation, and sustainable development in Nigeria over the period 1990–2024. Sustainable development was proxied by the Human Development Index (HDI), which reflects improvements in health, education, and living standards. Fiscal reform, tax revenue, government expenditure, economic growth, and inflation were incorporated into the model based on their theoretical relevance and established empirical significance in explaining sustainable development outcomes. Annual time-series data were sourced from the World Bank and the Central Bank of Nigeria (CBN). The study employed the Autoregressive Distributed Lag (ARDL) bounds testing approach because the variables exhibited mixed orders of integration, making the technique appropriate for estimating both the short-run and long-run dynamics within a unified framework. The bounds test confirmed the existence of a stable long-run relationship among the variables. In the short run, fiscal reform exerted a weak positive effect on sustainable development, whereas tax revenue, economic growth, and government expenditure had no statistically significant effects. By contrast, inflation significantly undermined sustainable development, highlighting the adverse consequences of persistent macroeconomic instability. The error correction term was negative and statistically significant, indicating a rapid adjustment towards long-run equilibrium following short-run disequilibria. In the long run, fiscal reform significantly promoted sustainable development, while inflation continued to exert a significant negative effect. Tax revenue, economic growth, and government expenditure remained statistically insignificant, suggesting weak fiscal transmission mechanisms and persistent institutional inefficiencies. Furthermore, the interaction between fiscal reform and tax revenue was negative and significant in both the short and long run, implying that inadequate policy coordination and implementation capacity weakened the effectiveness of fiscal reforms in translating revenue gains into sustainable development outcomes. The study concluded that fiscal reform constituted the principal long-run driver of sustainable development in Nigeria, whereas inflation remained a major impediment. Accordingly, it recommended strengthening fiscal policy coordination, enhancing tax administration, improving transparency and accountability in public financial management, reinforcing institutional capacity, and maintaining macroeconomic stability to promote inclusive and sustainable development in Nigeria.

ARDL bounds testing; Domestic revenue mobilisation; Fiscal reforms; Inflation; Sustainable development.

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