ABSTRACT
This study
takes a critical evaluation at the measurement and determinants of poverty in
the Nigerian economy. Poverty concerns individual’s inability to cater
adequately for the basic needs of food, clothing and shelter. It reflects
inability to meet social and economic obligations; lack of gainful employment,
skills, assets and self-esteem. It is anchored on limited access to social and
economic infrastructures such as education, health, potable water and
sanitation, thus limiting the chance of advance welfare to utmost level of
capability.
Despite
sustained rates of economic growth in Nigeria, statistics on incomes and
social indicators show poverty to be widespread, severe and almost increasing.
Although government poverty alleviation programmes feature in many communities,
but their effectiveness in addressing poverty is constrained by patterns of
political patronage. This has led to inequality in the distribution of
facilities and services, leaving the inaccessible or socially and politically
marginal communities unserved. While the alleviation of poverty still remains a
major objective of development policy in Nigeria, the debate continues as to
most effective way to achieve this objective.
TABLE OF CONTENTS
1. Title page
i
2. Certification
ii
3. Acknowledgement
iii
4. Dedication
iv
5. Abstract
v
CHAPTER ONE
INTRODUCTION
1.1 Introduction
1-4
1.2 Statement of Research Problem 4-6
1.3 Aims and Objectives of the Study 6
1.4 Statement of Research Hypothesis 6
1.5 Research Methodology 7
1.6 Significance of the Study 7-8
1.7 Scope and Limitation of the Study 8
1.8 Review of relevant Literature 8
1.9 Definition of Terms 8-11
1.10 Plan of the Study
11
CHAPTER TWO
LITERATURE REVIEW
2.1 Concept and nature of poverty 12 -18
2.2
The incidence of poverty in Nigeria
2.3
The effects of poverty
2.4 Review of poverty alleviation
measures adopted in Nigeria
2.5
Reason for failure of the poverty alleviation programme
CHAPTER THREE
STRUCTURAL COMPOSITION
3.1 Introduction
3.2 Measures of poverty
3.3 Determinants of poverty
CHAPTER FOUR
RESEARCH METHODOLOGY, DATA ANALYSIS
AND INTERPRETATION OF REGRESSION RESULTS
4.1 Methodology
4.2 Methods of estimation of analysis
4.3 Specification of the model
4.3.1 Econometric model specification
4.3.2 A priori expectation
4.3.3 Specification bias
4.3.4 Limitation of study
4.4 Specification of data
4.5 Empirical results and interpretation of
the
results
CHAPTER FIVE
SUMMARY, RECOMMENDATIONS AND CONCLUSION
5.1 Summary of findings 74
5.2 Recommendations 76
5.2.1 General
recommendations 76-77
5.2.2 Sectoral recommendations
5.3 Conclusion
CHAPTER
ONE
1.1
INTRODUCTION
Poverty is one of the
intractable problems facing mankind today.
In 1995, an estimated 1.3 billion people out of the estimated 5.8
billion people in the world were living in the shackles of extreme poverty,
living on less than one dollar a day (Human Development Report, 1998)
Poverty is a
plague-affecting people all over the world and it is a condition that denies
individuals the right to exercise their full potentials. There is no universally accepted definition
of poverty, but poverty can be defined as having insufficient income to meet
the basic human needs of life. If the
real national income of a country is small that country will be poor, and a
higher standard of living for its people can be achieved only by an increase in
the total volume of production. Poverty
has often been defined as a situation of low income or low consumption.
Essentially, it is not
difficult to recognize the poor. The
poor are those who are unable to obtain adequate income, find a stable job, own
properties or maintain healthy living condition. They also lack an adequate level of
education, cannot satisfy their basic health needs and their minimum basic
needs of food, clothing and shelter.
Poverty amidst plenty is a striking feature of the Nigerian scene. Nigeria is the richest in the
continent yet millions of her people are poor.
According to the Human Development Report (1998), Nigeria is one
of the 25th poorest countries in the world and more than one third of her populace
is not expected to survive beyond the age of 40. This is not the Nigerian dream. It is the Nigerian paradox. Poverty is a more serious problem in our
society than in societies with much less income and wealth. Poverty amidst poverty is easier to
understand and even condone but in a land of abundance, it is difficult to
comprehend why some people are inadequately fed, clothed and sheltered. Poverty is a reality that needs to be
studied, understood, appreciated and then eradicated.
However, attempt made to
alleviate poverty in Nigeria
has been fruitless. A true welfare
package which should be aimed at sustaining and augmenting the living standard
of the poor has not been formally implemented in Nigeria. The most recent poverty programme is the
Poverty Alleviation Programme (PAP) introduced in 1999 by the Obasanjo
administration which has only helped in elevating poverty in the country.
The proportion of poverty is
often determined by the poverty line, usually based on the level of income or
consumption expenditure by households, although poverty is felt and observed
especially by the poor themselves.
Poverty can be identified in two ways: Absolute and Relative Poverty. If the physical human subsistence that is
nutrition, clothing and housing is not guaranteed, it can be referred to as
Absolute Poverty and Relative poverty refers to a person or household whose
provision with goods is lower than that of other persons or households.
Absolute and Relative
poverty can also be seen from two perspective microeconomics and
macroeconomics. In micro economics
terms, poverty refers to a situation in which individual persons or households
are not able to satisfy their basic needs.
From a macroeconomic perspective, poverty exists when the average
inhabitants of a country live below the minimum subsistence level. Thus, while the macroeconomic concept
specifies the country, micro economic perspective is concerned with households
or individuals.
Governments concern for
the fate of the poor in developing countries has heightened in recent years but
the economies of these countries were constrained with a rather hostile
external and internal economic and environmental hardship. Some of these entanglement encountered are a
recurring external debt-servicing burdens, disequilibrium in terms of trade,
high and widespread unemployment, high rate of inflation, capital flight, low
capacity utilization and high population growth. To that extent, sharp criticisms emanated
from the various corners of the country about the inability of the government
to design and implement strategies for meeting the basic human needs of the
society so as to ensure a just and egalitarian society. Apparently, the plights of the poor and the
need to rearticulate development programmes have dominated discussions of
contemporary schemes. However, Nigeria is yet
to formulate a rehabilitative welfare package directed towards alleviating
poverty problems despite the attention and seriousness it deserves. A large proportion of Nigerians in the rural
area still lack access to the basic social services. This is unconnected with the nature of the
strategies, which are broad based and not targeted at any particular group. Various development plans designed to cushion
the social welfare of the people has not been implemented to the latter. Better still, the expenditure structures of
the government really give credence and confirm her unflinching commitment to
the people’s welfare. Yet, mass poverty
has remained the most prevalent socio-economic problem in Nigeria
society.
Finally, the indicators of
poverty in Nigeria
will remain alarming. Poverty
alleviation in Nigeria
requires among other strategies, the access of the poor to productive assets,
the raising of their returns on the assets, increasing their access to
education and health services, improving their employment opportunities and
supplementing their resources with income or resource transfer.
1.2
STATEMENT OF RESEARCH
PROBLEM
Poverty in Nigeria has
continued to growth worse and wide spread.
Despite the institutionalization of several poverty alleviation
programmes, which are not universal, many have performed below expectation due
to insincerity of purpose on the part of the government, bureaucracy and
inability to distinguish between economic development planning and social
development planning.
Firstly, the degree of
inequality in the Nigerian economy and its effects on the overall performance of
the economy need be highlighted. This
shows fully the extent of poverty and reflects how easily thee rich are getting
richer while the poor are getting poorer thus widening the inequality gap.
Secondly, the
effectiveness of government programmes towards poverty alleviation needs to be
examined. This helps reflects how
concerned the government are in the area of eradicating poverty and how fully
the policies adopted are implemented to ensure a measurable size of poverty
eradication in the overall economy through employment of efficient work force
and encouraging them through a good wage system.
Thirdly, the problem of
the determination of the magnitude of poverty in the Nigerian economy and how it
is been affected by total savings, private consumption expenditures and inflation
rate. This problem exposes the ugly
situation of the Nigerian economy in terms of poverty and its overall effects
on local consumption of Nigerians, their savings due to reduced income in form
of wages and investing power of Nigerians since the little earned goes to
consumption.
Therefore, the relevant
problem which the study seeks to find solution to is the degree of inequality
in the Nigerian economy, ineffective government programmes towards poverty
alleviation and determination of the magnitude of poverty in the Nigerian
economy.
1.3
THE AIM AND OBJECTIVES OF
THE STUDY
The major objective of
this research is to highlight how economic analysis can contribute to our
understanding of the nature and causes of poverty among various socio-economic
groups in Nigeria. Specific objectives of the research include
the following.
i.
To highlight the degree of inequality in the Nigeria society
and its implication on the overall economy
ii. To examine the relative effectiveness of
government programmes towards poverty alleviation
iii. To determine how total savings, private consumption
expenditures and inflation rate affect the magnitude of poverty in the Nigerian
economy.
1.4
STATEMENT OF RESEARCH
HYPOTHESIS
The following hypothesis
were determined for testing
i. HO: That
the degree of inequality in the Nigerian economy does not have an implication
on the overall performance of the economy
HA: That
the degree of inequality in the Nigerian economy will have an implication on
the overall performance of the economy
ii. HO: That
the government programmes are not effective in the alleviation of poverty in
the Nigerian society
HA: That
the government programmes are effective in the alleviation of poverty in the
Nigerian society
iii. HO: That total savings, private consumption
expenditures and inflation rate will not affect the magnitude of poverty in the
Nigerian economy
HA: That
total savings, private consumption expenditures and inflation rate will affect the
magnitude of poverty in the Nigerian economy
1.5 RESEARCH METHODOLOGY
The methodology that was
adopted in this research work was the use of econometrics and statistical
approach. Notably among them is the use
of regression analysis and analysis of variance (ANOVA).
The researcher made use of
secondary type of data which were extractions from newspapers, textbooks,
journals, magazines, and internet.
1.6 THE SIGNIFICANCE
OF THE STUDY
The significance of this
research work is to determine the various causes of poverty so as to enable
Nigerians move away from their poor status to that of a more satisfactory
state, to see how the improved status of the people can be of benefits to the
economic activities of the business firms and to assist the government in
formulating and implementing programmes that would eventually eradicate poverty
in the society.
1.7
SCOPE AND LIMITATION OF
THE STUDY
The study covers the
period 20 years spanning between 1987– 2007. The area of major concern is the
causes of poverty, its magnitude and effect on the Nigerian economy.
Just like any other study
of this nature in a depressed, under-developed or developing economy, the study
met some setbacks as expected of an exercise of this nature.
Notable among these
setbacks was that of inadequate information or materials like books, journals
and periodicals to consult for knowledge development.
Another hindrance was that
of money which restricted the coverage of the work at hand. The last hindrance was that of time which was
shared among several activities.
1.8
THE REVIEW OF RELEVANT
LITERATURE
In the course of this
research work, the works of various authors, professionals, businessmen and
knowledgeable persons in the field was reviewed.
1.9
THE DEFINITION OF
TERMS/CONCEPTS
Poverty: On the surface,
defining poverty would appear to be a simple matter. However, there are many perceptions to
it. Among economist, poverty has often
been defined as a situation of low income or low consumption. The classic definitions are as follows:
Human Poverty: This is the
lack of essential capabilities such as being literate or adequately nourished.
Income Poverty: The lack of
minimum adequate income for expenditure and maintain healthy living conditions
Extreme Poverty: Indigence or
destination usually specified as the inability to satisfy minimum food needs.
Overall Poverty: This is the
inability of an individual to satisfy essential non-food as well as food needs
Relative Poverty: This is also
called secondary poverty. It occurs as
households overtime fall short of the resource to maintain their living
standard. It changes across countries or
overtime.
Absolute Poverty: This is also
known as primary poverty. It is a
situation where households cannot meet the basic physiological survival needs
(food, clothing and shelter). It is
defined by a fixed standard.
Poverty Line: It is that
income level below which a minimum nutritionally adequate diet plus essential
non-food requirements are unaffordable.
It is a measure that separates the poor from the non-poor.
Human Development Index (HDI):
This measures the average achievement of a country in basic human
capabilities whether they live a long and healthy life, educated and
knowledgeable and enjoy a decent standard of living. The three key components of HDI are standard
of living, knowledge and longevity. The
attractiveness of the HDI, based on these three quantifiable components, is
that it is simple, complex and objective rather than subjective.
Integrated Poverty Index (IPI):
IPI combines the population below the poverty line with the income gap
ratio (the percentage income gap between the country and the country with
maximum GNP per capita among countries under study), the distribution of income
among the poor and the annual rate of growth of the GNP per capita.
Basic Need Index (BNI):
BNI uses education and health data to indicate social development.
Gender Development Index (GDI):
The GDI measures the magnitude of the disparity. Firstly, by expressing each of the three
components of the HDI in terms of the female value as a percentage of the male
value and secondly, by multiplying the overall HDI by the simple average
female-male ratio to obtain the gender-disparity adjusted HDI.
Vicious Circle of Poverty:
It is conceived as a vicious circle of compounding circumstances that
leave the poor with few, if any, choices.
Individuals constrained within this circle experience little improvement
from year. The common feature of poor
people whether male or female or whether found in developing or developed
countries is that they are constrained within the vicious circle of poverty.
1.10
THE PLAN OF THE STUDY
This research work is
divided into five (5) chapters.
Chapter one contains the
background to the study, statement of research problems, aims and objectives,
hypothesis testing, research methodology, significance of the study, scope and
limitation, literature review and definition of terms.
Chapter two undertakes the
review of relevant literature on poverty.
Chapter three considers
the theoretical framework and features of poverty as well as delving to
criteria for measuring poverty in Nigeria.
Chapter four focuses on
the research methodology, data analysis and interpretation of results.
Chapter five contains the
summary of findings, conclusions and recommendations.
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