Trade misinvoicing and domestic resource mobilization in Nigeria

Purpose - Mobilizing domestic resources has been a daunting task for the Nigerian government given its growing fiscal responsibilities and the limited domestic resources at its disposal. However, little is known empirically about the role trade misinvoicing plays in this regard. Hence, this study evaluates the effect of trade misinvoicing on domestic resource mobilization in Nigeria. Design/methodology/approach - Sourcing annual data spanning 1981–2018 on key variables of interest, this study adopts the Dynamic Ordinary Least Squares (DOLS) estimation method to evaluate the effect of trade misinvoicing on domestic resource mobilization in Nigeria. Findings - In conformity with extant studies, the result reveals that trade misinvoicing adversely affects domestic resource mobilization. It also showed that domestic resources are highly sensitive to the dynamics of trade misinvoicing in Nigeria. Other determinants of domestic resource mobilization in Nigeria include public debt, official development assistance, trade openness and inflation. Practical implications - The study suggests the need to take expeditious and pragmatic actions against the rising tides of trade misinvoicing in Nigeria with a view to improving the volume of domestic resources required for financing development objectives. This will facilitate the achievement of the Sustainable Development Goals (SDGs) and enable Nigeria to maximally enjoy gains from trade. Originality/value - There is an overwhelming evidence on the effect of foreign capital inflows on the Nigerian economy but, little is known about the effects of foreign capital outflows. Specifically, there is a dearth of studies on the effect of trade misinvoicing on domestic resource mobilization, particularly for Nigeria. Therefore, this study fills this knowledge gap by evaluating the effect of trade misinvoicing on domestic resource mobilization in Nigeria.