Effect of Internally Generated Revenue (IGR) on Debt Management in South-South Nigeria

This study examines the effect of internally generated revenue (IGR) on debt management in SouthSouth Nigeria, focusing on direct tax revenue (DTR), license revenue (LR), state levies (SL), and government rental income (RI) as key components of IGR. The study adopts an ex post facto research design, utilizing secondary data, covering the period 2013–2024. The population consists of the six South-South states: Akwa Ibom, Bayelsa, Cross River, Delta, Edo, and Rivers, with data analyzed using both descriptive and inferential statistics, including the Pedroni Residual Cointegration Test, Residual Cross-Section Dependence Test, and panel regression analysis. Regression results indicate that DTR has a significant negative effect on DSR (β = −0.045, t = −2.664, p = 0.010), demonstrating that higher tax revenue reduces debt service pressures. Conversely, LR (β = 0.025, t = 2.471, p = 0.015) and SL (β = 0.021, t = 2.160, p = 0.031) have significant positive effects, suggesting that increases in these revenue streams are associated with higher debt obligations. RI is not statistically significant (β = 0.008, t = 0.745, p = 0.459), indicating minimal influence on debt servicing. The study concludes that enhancing direct tax revenue and optimizing predictable revenue sources are critical for improving debt management, while less stable revenue streams require careful administration. It is recommended that state governments strengthen tax administration and broaden the tax base to maximize revenue collection, review and optimize licensing policies to ensure efficiency, regulate and standardize state levies to prevent excessive debt pressures, and improve the management of government rental income while prioritizing more stable revenue sources. These measures will provide evidencebased guidance for strategic fiscal planning and sustainable debt management in South-South Nigeria.