Title
page i
Declaration iii
Certification iv
Dedication v
Acknowledgments vi
Table
of Contents vii
List
of Tables ix
List
of figures x
Abstract xi
CHAPTER 1: INTRODUCTION
1.1
Background
of the Study 1
1.2
Statement
of the Problem 4
1.3
Research
Objectives 6
1.4
Objectives
of the Study 6
1.5
Research
Hypothesis 7
1.6
Significance
of the Study 7
1.7
Scope
of the Study 8
CHAPTER 2: REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework 10
2.1.1 Concept of poverty 10
2.1.2 Methods of poverty reduction 14
2.1.2.1 Economic growth approach 14
2.1.2.2 Basic needs approach 15
2.1.2.3 Rural development approach 15
2.1.2.4 Target approach 16
2.1.3 Poverty profile in Nigeria 16
2.1.4 Review of poverty reduction policies in Nigeria 18
2.1.5 Strategies for poverty reduction in Nigeria 22
2.1.6 The concept of economic growth 24
2.2 Theoretical Literature Review 25
2.2.1 The basic needs analysis theory of poverty (BNA analysis) 25
2.2.2 Individual deficiency theory 29
2.2.3 Progressive social theory of poverty 30
2.2.4 Geographical disparities theory 31
2.2.5 Cyclical interdependence theory of poverty 32
2.2.6 Theory of social exclusion/cumulative disadvantage 33
2.2.7 Economic growth theories 34
2.2.7.1 Neo-classical theory 34
2.2.7.2 The endogenous growth theory 35
2.3 Empirical Literature Review 37
2.4 Summary of Empirical Literature 47
2.5 Identified Gap in Empirical Literature 49
CHAPTER 3: RESEARCH METHODOLOGY
3.1 Research Design 49
3.2 Theoretical Framework 49
3.3 Model Specification 50
3.4 Estimation Procedure 52
3.4.1 Unit root test 55
3.4.2 Co-integration test 56
3.4.3 Error correction mechanism 58
3.4.4 Coefficient of determination 60
3.4.6 Diagnostic tests 61
3.5 Sources of Data 61
3.6 Description of Data 61
CHAPTER 4: RESULTS AND DISCUSSION
4.1 Pre-estimation Test Results 61
4.1.1 Unit root test 64
4.1.2 Lag selection criterion 65
4.1.3 ARDL bounds test for cointegration for model 1 66
4.1.4 Model estimation 67
4.1.3.1 Short run estimation of the ARDL model 67
4.1.3.2 Long run estimation of the ARDL model 1 69
4.2 Discussion of Results 70
4.3 Post Estimation Test Results 72
4.4 Evaluation of Research Hypotheses 73
4.5 Implications of Results/Findings 74
CHAPTER
5: SUMMARY OF FINDINGS, CONCLUSION AND
POLICY RECOMMENDATIONS
5.1 Summary of Findings 79
5.2 Recommendations 80
5.3 Conclusion 81
5.4 Areas of Further Research 82
5.5 Limitations of the Study 82
References 83
Appendix 93
LIST
OF TABLES
2.1 Summary of empirical
literature reviewed 47
4.1 Summary
of unit root test results 64
4.3A ARDL
bounds cointegration test result for model 1 66
4.3B Engel and granger
co-integration test for model 2 66
4.4A Short run estimates for model 1 67
4.4B Short run estimates for model 2 68
4.4C Long run estimates for model 1 69
4.5 Diagnostic
tests 71
LIST
OF FIGURES
1.1 Poverty profile and economic growth rate,
Nigeria (1980 – 2018) 2
2.1 Situation
analysis, response option analysis and response planning 26
4.2 Akaike information criteria 65
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF
THE STUDY
In Nigeria, about two-third of the
entire populace are relatively poor, despite the country having vast potentials
of wealth (Aliyu, 2002). The increase in Nigeria’s poverty index is not just
low income per head, saving structure and growth rate, it comprises of an
increase in inequality among individuals caused by inequality in basic needs
and other infrastructural facilities. Anderson and Travis (2016) and Omoniyi
(2018) found that Nigeria’s index on poverty has been on the increase in recent
times despite the huge revenues accruing from oil exploration in the country.
Addae-Korankye (2014)
defines poverty as obvious denial
as per well-being, in a way that citizens lack the basic resources for living,
and this consists of numerous angles, including income inadequacy and the failure
to obtain basic amenities required for survival. Growth and development of the
economy is seen as a powerful drive in alleviating poverty. Jhingan (1985)
refers development as a quantitative and continuous rise in a country’s per
capital income complemented by extension in its labour force, consumption,
capital and trade volume and welfare. This economic development or growth is
due to advanced technology, optimum efficiency and ability in the use of
resources and creation of material wealth.
Empirical studies show
that high increased poverty can have a negative impact on overall, economic
growth rate. They worsen social pressures, reduce the functioning of markets
and badly impact the employability of the (exceptionally) deprived and
disadvantaged (Chen and Ravallion, 2001).
The figure below presents
a clear picture of Nigeria’s poverty profile and economic growth rate from 1980
to 2018.
Fig. 1.1: Poverty profile and economic growth rate, Nigeria (1980
– 2018)
Nigeria’s poverty became predominant
since 1985 and was seen as an obstacle or limitation to economic growth due to
the measurement of poverty on per capita income of $1 per day and $2 per day (Obadan
and Odusola, 2001). The rate of increase in poverty in
Nigeria was estimated from 37 percent to 66percent between the years 1980 to
1996 respectively. Between the years, 1996 to 1999, poverty level exceeded 70
percent of the Nigerian population (World Bank, 2010).
However, Nigeria’s unwavering drive
towards poverty reduction led to increased growth in the economy far above the
national poverty rate in 1995 with more than 100% rise in GDP. This was also
recorded in the year 2010 when GDP exceeded the 100% mark but dropped
drastically to 15% growth rate and further to 6.9% as at the end of 2018, as
seen in the figure 1.1. One interesting fact about this is that all the while,
poverty index for Nigeria has been hanging above the GDP growth rate for the
majority of the years leading up to the year 2018.
Consequently, the World
Bank ranking report of 2018 placed Nigeria at the bottom of Reducing Inequality
Index (CRI) and the Human Capital Index (HCI) among the countries with very low
quality of life. The United Nations (UN, 2015) set up the Sustainable
Development Goals (SDGs) and the first goal is to eradicate poverty for all by
the year 2030. However, Nigeria’s average 7.4% growth rate in Gross Domestic
Product (GDP) has not significantly decreased her rising poverty profile (Omoniyi,
2018). According to the World Bank (2018) report
recently, the poverty capital of the world is Nigeria having overtaken India as
with the highest number of people in extreme poverty amounting to 86.9 million
people representing almost 76 percent of the entire population.
In the face of these threatening
poverty statistics for Nigeria, successive governments have outlined various
poverty reduction strategies. Government has initiated various poverty
reduction policies and programmes in order to eradicate poverty in Nigeria
since 1980. The introduction of the Structural Adjustment Programme in1986 revealed
more forceful policies and programmes to ease poverty and cushion the effects
for the poor (Obadan, 2005). Some other programmes were sectorial interventions
but their main aim was poverty reduction (Oshewolo, 2010). Landmark programmes
on poverty eradication pursued in Nigeria include: National Economic
Empowerment and Development Strategy (NEEDS),Guinea Worm Eradicating Programme
(Health), National Poverty Eradication Programme (Poverty Alleviation), Operation
Feed the Nation (Agricultural sector), Green Revolution (Agricultural sector), Free
and Compulsory Primary Education (Education), National Directorate of
Employment (Job Creation), Mass Transit Programme (Transport), Petroleum Trust
Fund (Education, Health, Rural Development), Subsidy Reinvestment Programme
(SURE-P), etc.
It is a well-known fact that poverty
reduction leads to sustained growth in the economy. The 2018 Human Development
index placed Nigeria among the 20 impoverished countries in the World using
poverty indicators such as literacy level, access to safe water, nutrition,
infant and maternal mortality, and the number of individuals on less than $1.25
a day. The World Bank report also showed that Nigeria was found to rank among
the 20 poorest nations in the world below Kenya, Ghana and Zambia. This study
is therefore, streamlined to examine poverty reduction strategies and poverty
indices in Nigeria have affected the growth of the Nigerian economy with
particular emphasis on the growth of income per capita in Nigeria for the
period 1980 to 2018.
1.2 STATEMENT OF THE PROBLEM
Nigeria’s Gross Domestic Product
(GDP) rose by 69.7% from 2000-2010 (World Bank, 2010), and in 2014 it became updated
as Africa's largest economy due to her increased GDP from 1990 base year to
2010 base year (The Economist, 2014). However, Omoniyi (2018) noted that the
level of poverty in Nigeria still needs more work. While the poverty index dropped
from 31.1% to 21.8% from 1999-2016, indicating a slight decrease in the rate of
poverty among impoverished Nigerians, the poverty headcount ratio using the
$1.90 international poverty line fell by just 6.3% (World Bank, 2018). This indicates
that the percentage of Nigerians that are poor has only reduced slightly, and
because Nigeria’s population grew by 54.3% over the past twenty years; the
absolute number of Nigerians below the international index on poverty has
actually increased (Omoniyi, 2018).
The percentage of
Nigerians who were absolutely poor rose from 54.7% in 2004 to 69.9% in 2010
(National Bureau of Statistics, 2013). More so, the NBS (2013) reported that
112 million people lived in relative poverty while it put Nigeria’s population
at 163 million. It is comparative with Uganda, which has only 28 million poor
people; this is an indication that there are about four times as many people
living in poverty in Nigeria as in Uganda. This shows that Nigeria has failed
using all standards of poverty measurement including the relative poverty
index. These figures are so despite the poverty reduction strategies of the
government through social services, human capital development strides and the
clamour for increased agricultural activities in the face of over-dependence on
the oil sector.
The diverse poverty ratings
in Nigeria exhibit variations on profiles; for example, total poverty hinges at
60.9%, 61.2% for $1.25 per day, 93.9% for the subjective rating while a recent research
carried out by Harmonized National Living Standard placed the poverty profile
at 69.0%. Additionally, Nigeria’s Gini coefficient was 0.268 in 1980,
0.295 in 1990, 0.430 in 2014, 0.490 in 2015 and 2016 and 0.834 in 2017and 2018
(UNDP, 2018). Similarly, the Human Development Index for Nigeria during the
same period was 0.52 in 2014; it increased to 0.53 in 2015 and 2016 and
remained at 0.532up to 2018 (UNDP 2018; World Bank 2018). These figures proved
that income imbalance and human capital development rose in Nigeria during the
period of study. This concisely indicates that there is a severe disconnect
between poverty and growth because most of the population became poorer through
exclusion.
The problem faced by
poverty reduction strategies in Nigeria ranges from inefficient employment of
common resources, weak policy environment, inadequate infrastructure, lack of
access to improved technology, diverting of public funds to individual pockets.
Other causes include the non-availability of credit instruments and exclusion
of ‘problem groups’ from participating in the democratic process etc. Thus, it
is still unsure whether it is weak institutions of poverty reduction,
over-reliance on earnings from oil or just lack of adequate funding for poverty
reduction programmes might have hindered economic growth in Nigeria.
Loans to the agricultural sector have been on a steady increase
while agricultural labour has been declining over the years due to the
over-reliance on the oil sector. Thus, we raise the question of whether the
increased poverty level Nigeria is caused by the neglect of the agricultural
sector or simply the low budgetary allocations or low credit granted to the
agricultural sector. These questions remains to be answered and they constitute
the numerous problems which this research work intends to solve.
1.3 RESEARCH QUESTIONS
The study will seek answers to the
following research questions;
1.
How does government
poverty reduction strategies (proxied by social services, human capital
development, agricultural sector development) impact on Nigeria’s GDP per
capita?
2.
What is the relationship
between Agricultural sector loans, labour, human capital and poverty alleviation
in Nigeria?
1.4 OBJECTIVES OF THE STUDY
Generally, the objective of this
study is to determine the relationship between poverty reduction strategies and
growth of the Nigerian economy. In other
words, the study will aim at deepening understanding of how government poverty
reduction strategies have affected Nigeria’s economic growth. More specifically, the study intends to;
1.
Determine how government
poverty reduction strategies (proxied by social services, human capital
development, agricultural sector development) on Nigeria’s GDP per capita.
2.
Ascertain the
relationship between Agricultural sector loans, labour, human capital and
poverty reduction in Nigeria.
1.5 RESEARCH HYPOTHESES
The study will be guided by the following
null hypotheses:
H01: There is no significant relationship
between government poverty reduction strategies
and per capita GDP
in Nigeria.
H02: There is no significant relationship
between Agricultural sector loans, labour, human
capital and
poverty reduction in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
Poverty reduction has become a
catalyst for development in Africa and other developing countries of the
world. Overtime, successive
administrations in the country had engaged in various economic reforms aimed at
reducing poverty and opening up the nation’s economic base towards greater
responsiveness to growth and development.
This study is hinged on the necessity
to examine poverty alleviation issue as well as its related matters that affect
analytically on the economic development of the Nigerian economy general. It is
believed categorically that the findings of this study will add to the field of
knowledge. Indeed, previous governments in Nigeria had assessed this with one policy
or the other aimed at alleviating poverty and encouraging growth in the economy.
This aim has been enormously subtle and it is believed that this study will
provide concepts and submissions on how these objectives could be pursued for
more accurate and result oriented.
The findings of this study and recommendations
contained will form a basis for researchers and agencies in government towards
the formulation of attainable policies for the actualization of sustainable
growth and development. The study will also help policy makers to draw
conclusions on where to strengthen efforts of the government and civil
societies in reducing poverty, provision of new innovations and better economic
welfare for the masses.
The study will equally extend
frontiers of existing literature by emphasizing roles of poverty reduction
strategies on growth and development. Finally, the study would go a long way in
providing useful information that will be of relevance to researchers,
government and policy makers in formulating effective macroeconomic policies
and developmental issues such that investors would be more acquainted with
strategies for the reduction of poverty as well as achieving economic growth.
1.7 SCOPE OF THE STUDY
This study focuses on the poverty
reduction strategies and how they have impacted on the Nigerian economy for the
period 1980 to 2018. The study covers government expenses on social and
economic services, human capital development, poverty rate, agric loans and
agriclabour input, discomfort index and per capita GDP. Human capital
development, agricultural loans and labour employed, discomfort index are all
measures of the extent of poverty reduction while per capita GDP measures the
income per head in the country.
The time scope for the study is
considered sufficient enough to determine the long run relationship between
poverty reduction strategies and indices and per capita GDP and make useful
projections for the growth of the Nigerian economy.
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