IMPACT OF POVERTY REDUCTION PROGRAMMES ON THE GROWTH OF THE NIGERIA ECONOMY

ABSTRACT

The main purpose of this study is to study the impact of poverty reduction programs in the growth of the Nigeria Economy between the period 1986-2015. A review of related literature was carried out in order to till the existing gap already existence. The methodology employed in this study analytical aim explanatory research design will be adopted to access various poverty reduction program put up by various administration in Nigeria as development strategies to achieve the objective of this study. A Granger Causality test was carried out, it shows that there is no Causality relationship between the variables. Ordinary Least Square (OLS) ADF and Philips Pearson (PP) unit root test, co-integration Rank test, Error Correction Model (ECM), Durbin Waston statistic test, T-test and F-test was used to test the stationarity and Log- run-relationship between the variables. The result shows that life expectancy literacy rate, unemployment rate, per capital income has a negative relationship with the dependant variable poverty incidence in Nigeria within the period under study. The co-efficient of per capital income and literacy rate will lead to an increase in the standard of living thereby decreasing the rate and level of poverty in Nigeria. In addition, the research recommend that Government should encourage the reduction and health sectors through increasing funding, as well as ensuring that the research are properly managed and used for the development of education and health services and government should ensure that capital expenditure and recurrent expenditure are properly managed in a manner that it will raise the nations production capacity for poverty reduction proxy by (PCL). The researcher concluded that government should provide an enabling environment for their citizens to work in order to reduce poverty and increase the growth of the Nigeria economy.

 

 

CHAPTER ONE

INTRODUCTION

• Backgrounds to the Study

Poverty is a state of general deprivation; it is seen as powerlessness to improve one’s condition. Among Economics, poverty has been often defined as a situation of low income or consumption (Obadan 1973). Poverty is a condition in which a person is deprived of or lacks the essentials for minimum standard of living.

According to (World Bank Report, 1990) poverty has been defined as the inability to attain a minimum standard of living. Among economists, poverty has often been defined as a situation of low income and consumption.

Poverty maybe attributed to a number of factors, some of which are mismanagement of human and material resources, indiscipline, and lack of political will on the part of government of the country from the post independent till present day. It consists of lack of basic necessities of life, food, decent clothing and reasonable shelter.

As a result of poverty in the land, the country has woken up to witness anti-social activities and vices like armed robbery, cultism, drug trafficking, thuggery prostitution, money laundering and assassinations and insurgency like that of Boko Haram etc.

The problem of poverty in Africa has engaged the attention of the International community, governmental and non-governmental agencies, including African scholars. Poverty in African countries is massive, pervasive and chronic, engulfing a large proportion of the society (Uma and Eboh, 2003). Various international and national estimates have shown that Nigeria (in African Continent) is one of the poorest countries in the World. They had documented this high incidence of poverty. The federal offices statistics (Fos, 1999) and United Development Programmes (UNDP, 1999), observed that despite a remarkable decree in poverty in the 1980’s, the drastic increase of poverty in the 1990’s was discouraging. For more than two decades, the country enjoyed relative prosperity but prosperity progressively saw 40% of the population slide into poverty (Adegbre and Akintola, 2002).

These problems have left the country highly underdeveloped socially, economically, and technologically, this has created a situation of mass underdevelopment and other social vices articulated from the foregoing. Furthermore poverty can be look into perspective depending on their nature such as absolute poverty and relative poverty.

Absolute poverty is the lack of resources to obtain and consume certain bundles of goods and services, such as food, shelter and good health etc. It is also seen as the inability to obtain minimum necessities for the maintenance of physical efficiency. Also, it refers to lack of physical requirement of a person or household for existence and is so extreme that affect dignity.

Anyanwu (1999) stated that two types of absolute poverty exist. They are primary absolute poverty and secondary absolute poverty.

Primary absolute poverty occurs when physical human subsistence expressed in terms of nutrition’s, clothing and housing are not guaranteed. Well as that secondary absolute poverty is far beyond the basic necessities of life but include things like political power and access to luxuries.

Another school of thought looked at poverty in another perspective which is relative poverty. Relative poverty exists when a household has a per capital income of less than one third of the bank (World Bank). It s also the comparison of the living standard of people living in a given society within a specified period of time. The concept of relative poverty states that because of the distributional structure, certain economic subject are disadvantages to an unacceptable extent. Relative poverty exists when the subject under consideration is poor in relation to others who are needed to be specified. Relative poverty can be divided into two namely;

Objective relative poverty occurs when there are differences in individual satisfaction or basic needs or differences in individuals’ income value which can be objectively determined and describes by value judgment. On the other hands, subjective relative poverty occurs when such differences are being excessive irrespective of a particular individual perspective that is from micro and macro point of view from the both point of view.

Poverty in Nigeria is rising with almost 100m of its population living on less than $1 per day, despite a strong growth in Africa’s second largest economy (Daniel, 2011). The percentage of Nigerians living in absolute poverty – those who cannot afford the bare essentials of food, shelter and clothing rose to 60.9% in 2010 compared to 54.7% in 2004 (National Bureau of Statistics, 2011). Although Nigeria’s economy is projected to continue growing, poverty is likely to get worse as the gap between the rich and the poor continued to widen. Little Wonder Kale (2011) posited that poverty in Nigeria is a paradox that despite the fact that Nigeria’s economy has continued to grow, yet the population of Nigerians living in poverty has continued to increase every year.

It is clear that Nigeria is a very resourceful country but majority of its people are poor. Since independent in 1960, several governments have embarked on how to eradicate cancer poverty though development planning. It was observed that 15 federal ministries, 14 accredited agencies and other institutions are inclusive among others in a fight to reduce poverty, yet over 90% of the populace in still living in poverty (Soludo, 2003). The country’s inability to reduce poverty in caused by no infrastructure and accountability (Okonjo-Iweala, 2003 and Omotola, 2008).

In the Northern region, poverty occurring is characterized by religious conflicts, discrimination of women from participating in certain type of work, illiteracy and low recreational facilities. In the Southern Nigeria, agricultural development livelihood, corruption, low educational standards, ethnic conflicts and migration from rural to urban cities continues to generate poor standard of living in Southern Nigeria. Generally, reduction in poverty differs depending on the policies introduced by the government in power.

Hence, the birth of the current poverty eradication programmes such as National Poverty Erradication Programmes (NAPEP) and National Economic Empowerment and Development Strategy (NEEDS) is a background that this research is being carried out. Consequently, this study will help us examine the impact of poverty reduction programmes on the growth of Nigeria economy.

1.2       Statement of the Problem

For a long time now, discussion on poverty eradication had centered on the introduction of welfare schemes that will benefit the poor. Yet the question has always been who is the poor in Nigeria are; and what is the working definition of the poor in Nigeria?

Apart from the definition offered by the World Bank and its agencies, government in Nigeria has not really identified the poor. Instead, the approach to the issues of poverty has always focused or general welfare policies’, giving the assumption that everybody within the economy is affected in the same dimension by macro-economic adjustment programmes. This assumption is baseless, giving that there are inequalities in the distribution of income, educational opportunities, and access to employment among others, there are bound to be sharp differences in earnings, income and purchasing power of citizens.

To address and determine sustainable adjustment policies to be put in place, one must first establish the relationship between per capital income and some major socio- economic indicators such as GDP, unemployment, education and health. Ones this relationship is clearly ascertained, one can then assess the impact of these variables in per capital income as well as identifying the most intensive factors when among the numerous others. Thus of course could be the starting point of all poverty eradication efforts and studies.

1.3       Research Questions

1. What impact has the various poverty Alleviation programme made in reducing poverty in Nigeria?
2. What impact will an increase in government total expenditure make in reducing poverty in Nigeria economy?

1.4       Objective of the Study

This study aimed at addressing the problems and prospect of poverty and to determine the extent at which the National poverty reduction programmes has performed its role of reducing absolute poverty in Nigeria, the objectives are as follows.

1. To examine the extent at which the poverty Alleviation programmes have reduced poverty in Nigeria economy.
2. To ascertain the extent to which increases in government expenditure influences poverty level in Nigeria.

 

1.5       Hypotheses of the Study

The research hypotheses that guided the study are as follows:

H₀:       There is no significant relationship between poverty programmes and poverty rate in Nigeria.

H_o:       Increase in government expenditure does not have a significant influence on poverty level in Nigeria economy.

1.6       Significance of the Study

The findings of this study will be useful to the policy makers in formulating appropriate programmes in eradicating poverty in Nigeria. It will also be of great help and benefit to those who may embark on a similar research or study in the future. It is particularly significant to Nigeria at this time of her National development, because the country of this should not be allowed to lack behind in implementing Agenda 21 of the united Nation programmes of action, which is aimed at ensuring suitable development.

Finally, the entire citation stands to benefit from the findings of the study. Manufacturers, business organizations are not left out too.

1.7       Scope and Limitation of the Study

The study analyzed the role, effectiveness, solution and performance of the poverty reduction programmes in the growth of Nigerian economy.