The Effect of Public Sector Corruption on Fiscal Performance in Nigeria

THE EFFECT OF PUBLIC SECTOR CORRUPTION ON FISCAL PERFORMANCE IN NIGERIA

CHAPTER ONE

1.1 Background of the Study

Corruption has remained one of the most serious challenges confronting Nigeria’s economic development and governance. It undermines public trust, distorts resource allocation, and reduces the efficiency of fiscal management. Fiscal performance, which reflects how effectively government revenues are collected and expenditures are managed, depends largely on transparency and accountability in public administration (Transparency International, 2023).

In Nigeria, corruption has become deeply rooted in various sectors, especially in public procurement, tax administration, and budgeting processes. Misappropriation of funds, embezzlement, and inflated contracts have hindered economic growth and infrastructure development (Akanbi, 2021). Despite the establishment of anti-corruption agencies such as the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC), fiscal leakages remain widespread.

Corruption reduces government revenue, increases budget deficits, and weakens the delivery of essential services. It also discourages foreign investment and leads to misallocation of public funds. As Nigeria continues to battle high debt and revenue shortfalls, improving fiscal performance requires a deeper understanding of how corruption affects public finance.

This study therefore investigates the effect of public sector corruption on fiscal performance in Nigeria.

1.2 Statement of the Problem

Despite several anti-corruption reforms, Nigeria continues to experience poor fiscal outcomes. Weak revenue collection, excessive recurrent spending, and wasteful capital projects suggest that corruption remains a key factor affecting fiscal discipline. As a result, public resources often fail to translate into improved welfare for citizens.

The problem lies in determining how corruption specifically influences fiscal performance indicators such as revenue generation, budget implementation, and expenditure efficiency. This study aims to provide empirical insight into that relationship.

1.3 Objectives of the Study

1. To examine the trend of public sector corruption and fiscal performance in Nigeria.

2. To determine the impact of corruption on government revenue generation.

3. To assess how corruption affects budget implementation and expenditure efficiency.

4. To suggest policy strategies for improving transparency and fiscal management.

1.4 Research Questions

1. What is the trend of corruption and fiscal performance in Nigeria?

2. How does corruption affect revenue collection?

3. What is the impact of corruption on expenditure and budget performance?

4. What measures can reduce corruption and enhance fiscal efficiency?

1.5 Hypotheses

• H₀: Public sector corruption has no significant effect on fiscal performance in Nigeria.

• H₁: Public sector corruption has a significant effect on fiscal performance in Nigeria.

1.6 Significance of the Study

This study will help policymakers and anti-corruption agencies understand the link between corruption and fiscal inefficiency. It provides evidence-based recommendations to strengthen transparency and accountability in public finance management. The findings will also benefit researchers interested in governance and economic reform in developing countries.

1.7 Scope of the Study

The study focuses on Nigeria and covers the period from 2010 to 2024. It examines key fiscal indicators such as revenue, expenditure, and budget performance, as well as corruption indices from Transparency International and the CBN.

1.8 Definition of Terms

Fiscal Performance: The effectiveness of government in managing revenue and expenditure.
Corruption: The abuse of public office for private gain.
Public Sector: Government institutions responsible for delivering public goods and services.

References

Akanbi, O. (2021). Corruption and Fiscal Management in Developing Economies. Lagos: University Press.
Transparency International (2023). Corruption Perception Index Report. Berlin: TI.
Central Bank of Nigeria (2023). Fiscal Statistics Bulletin. Abuja: CBN.