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
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
TABLE OF CONTENTS
- Title page i
- Certification ii
- Acknowledgement iii
- Dedication iv
- Abstract v
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
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
3.2 Measures of poverty
3.3 Determinants of poverty
RESEARCH METHODOLOGY, DATA ANALYSIS AND INTERPRETATION OF REGRESSION RESULTS
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
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
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
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
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.
- 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
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.
Afonja, B and Oguwimike, O. F (1995): Poverty; Meaning, Measurement and Causes: A Paper Presented at NCEMA
Bullion Publication of the Central Bank
of Nigeria, vol. 23, No.4, “Poverty Alleviation in Nigeria. Pp3-66,
Publication of Nigerian Economic Society; Poverty Alleviation in Nigeria, Selected Papers for 1997 Annual Conference.