DIGITAL ECONOMY DEVELOPMENT, PUBLIC SECTOR TRANSFORMATION, AND SUSTAINABLE DEVELOPMENT: EVIDENCE FROM NIGERIA AND POLICY IMPLICATIONS FOR KANO STATE

Digitalization is widely regarded as a catalyst for inclusive growth and improved governance; however, the mechanisms through which it promotes sustainable development in Nigeria remain insufficiently examined. This study examines whether public sector transformation mediates the relationship between digital economy development and sustainable development. Annual data covering 2000–2024 were compiled from national and international databases and analyzed using an autoregressive distributed lag (ARDL) error-correction framework. The results indicate that the development of the digital economy has a positive and statistically significant long-run effect on public sector transformation (β = 0.618, p < .001), whereas public sector transformation positively affects sustainable development (β = 0.767, p < .001). The direct effect of digital economy development was statistically non-significant after the introduction of the mediator, whereas the estimated indirect effect was 0.474, with a 95% confidence interval of 0.224–0.730. The negative and significant error-correction terms indicate convergence toward long-run equilibrium, and the diagnostic tests support the models’ adequacy and stability. The findings indicate that Kano State should combine digital infrastructure investment with public-sector reform. Priorities include digital public services, workforce capacity building, broadband expansion, cybersecurity, electronic revenue administration, and inclusive digital programs for women, young people, rural communities, and small businesses.[1]