Institutional Quality, Tax Capacity, and the Resource Curse Mechanism in Sub-Saharan Africa: Panel Evidence and Implications for Nigeria

This doctoral study develops an econometric examination of the channels through which natural resource abundance affects tax capacity and, through tax capacity, institutional quality outcomes in Sub-Saharan Africa, with particular reference to Nigeria. The resource curse literature has documented a robust negative correlation between resource dependence and governance quality, but the specific fiscal mechanisms by which resource revenues crowd out tax effort and weaken fiscal contract incentives between governments and citizens have not been cleanly identified at the panel level. The study constructs a panel dataset of 42 Sub-Saharan African countries over 30 years, combining World Bank fiscal data, the International Survey on Revenue Administration indices, and the Natural Resource Governance Institute's resource governance scores. A dynamic panel GMM model is estimated with non-tax resource revenue instrumented by exogenous commodity price movements, identifying the causal effect of windfall resource revenues on tax effort and institutional quality through the fiscal contract channel. Threshold regression tests whether institutional quality moderates the resource-curse-tax-effort relationship, predicting that above a governance quality threshold, resource revenues and tax capacity are complements rather than substitutes. Detailed country case studies for Nigeria, Ghana, Botswana, and Tanzania illuminate divergent institutional trajectories under comparable resource endowments. The study expects to find a significant institutional threshold above which the resource curse mechanism is attenuated, with Nigeria below this threshold throughout the study period. Keywords: resource curse, tax capacity, institutional quality, fiscal contract, Sub-Saharan Africa.