African Journal of Business, Economics and Management
Research Article
• Open Access
Effect of Socioeconomic Factors on Internally Generated Revenue in Northwestern States in Nigeria
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The ability of subnational governments to generate internal revenue is a cornerstone of fiscal autonomy and sustainable development, particularly in regions facing structural socioeconomic challenges. This study investigated the effects of socioeconomic factors on Internally Generated Revenue (IGR) in Northwestern Nigeria, a region characterized by widespread poverty, limited fiscal autonomy, and institutional governance issues. Using Structural Equation Modeling (SEM) as the main analytical technique and ordinal logistic regression as a robustness test, the study provides empirical evidence on how these factors influence IGR performance. The SEM results revealed that all five socio-economic factors, poverty (POV), limited fiscal autonomy (LFA), unemployment (UNEMP), demographic factors (DEMF), and external factors (EXF) exert a positive and statistically significant influence on IGR. This indicates that improvements in governance, fiscal decentralization, population management, external partnerships, and socio-economic inclusion can significantly enhance the revenue-generating capacity of states in the Northwest. The model explained 81.2% of the variation in IGR (R² = 0.812), confirming a strong explanatory power. The ordinal logistic regression confirmed the robustness of the findings, yielding consistent direction and significance of all variables. The study concludes that a strategic, multi-sectoral approach that targets socio-economic reform, institutional strengthening, and fiscal empowerment is essential for improving internal revenue generation in the region. The findings offer critical insights for policymakers, development agencies, and local authorities aiming to enhance subnational fiscal sustainability in Nigeria.
Keywords
Internally Generated Revenue, Socioeconomic factors, Northwestern Zone.References
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