Impact of Internally Generated Revenue on Infrastructure Development in Oyo State

This study investigates the relationship between internally generated revenue performance and infrastructure development outcomes in Oyo State, South West Nigeria. As federal revenue transfers to states have become increasingly volatile, the ability of states to generate their own revenue has assumed greater importance for sustaining public infrastructure investment. Oyo State, with its large urban population and diverse economic base, represents an important case study for examining this relationship. This study uses secondary data collected from the Oyo State Internal Revenue Service, the Ministry of Finance, and the Bureau of Statistics for the period 2019 to 2023. IGR data include personal income tax, consumption taxes, fees and fines, and other non-tax revenues. Infrastructure development is assessed using capital expenditure on roads, water, and education as reported in state budget performance documents. Ordinary least squares regression and time series analysis are applied. Results reveal a significant positive relationship between IGR growth and capital expenditure on infrastructure. Years of higher IGR performance were associated with measurable improvements in road rehabilitation and school construction completion rates. However, leakages in revenue collection and expenditure diversion were identified as factors limiting the full translation of IGR growth into infrastructure outcomes. The study concludes that strengthening IGR collection efficiency is essential for accelerating infrastructure development in Oyo State. It recommends that the state government invest in tax administration technology and strengthen revenue leakage controls.

Keywords: internally generated revenue, infrastructure, Oyo State, fiscal autonomy, capital expenditure.