The Impact Of Economic Growth In Poverty Alleviation In Nigeria

INTRODUCTION

1.1 Background Of The Study

Nigeria economic growth has had a chequered history. As observed in the literature, the economy started as a monoculture economy with agriculture being the chief contributor. The discovery of oil in commercial quantity in 1956 relegated the prime role of the hitherto revered agricultural sector to the background (Abdulraheem, 2011). The declining rate of the agricultural sector notwithstanding, the GDP growth rate of Nigeria skyrocketed until recently when it went into recession in the last two years. According to Ekpo and Umoh (2015), in the period 1960-70, the Gross Domestic Product (GDP) recorded 3.1 per cent growth annually. They further stated that during the oil boom era, roughly 1970-78, GDP grew positively by 6.2 per cent annually - a remarkable growth. However, in the 1980s, GDP had negative growth rates. In the period 1988-1997 which constitutes the period of structural adjustment and economic liberalisation, the GDP responded to economic adjustment policies and grew at a positive rate of 4.0. According to Central Bank of Nigeria (CBN) (2010), from 5.98% in 2008, the growth rate of real Gross Domestic Product (GDP) registered 6.66% in 2009. Despite the positive growth rate of Nigeria GDP, poverty rate in Nigeria has continued to soar (Salami, 2011) and Aiyedogbon and Ohwofasa (2012) states that Nigeria is the most populous country in Africa and the eight in the world with a population of over 140 million people by 2006 census. With a nominal GDP of $207.11 billion and per capita income of $1,401 it has the second largest economy in Africa. The aforementioned impressive figures notwithstanding, Nigeria is still in the league of poverty stricken countries.

Consequently, poverty profile in Nigeria began to trend. For example, poverty level in Nigeria rose from 28.1% in 1980 to 46.3% in 1985. In 1992 it was 42.7% but it sky rocked to 65.6% in 1996 and later nosed down to 54.4% in 2004 (Omadjohwoefe, 2011). Between 2004 and 2010, with an estimated population of about One Hundred and Sixty Million people (160million), about One Hundred and Twenty Million people are reported to be poor (NBS, 2012). This poverty trend has continued to rise despite government efforts in attacking it.

Omadjohwoefe (2011) enumerated some of the government programmes aimed at fighting poverty in Nigeria. These include: Agricultural Development Projects (ADP), River Basin Development Authority, Operation Feed the Nation (OFN), Green Revolution (GR), Family Economic Advancement Programme (FEAP), Family Support Programme (FSP), National Poverty Eradication Programme (NAPEP), National Empowerment and Development Strategy (NEEDS). Then came Millennium Development Goals (MDGs), which was introduced as the a new global partnership to tackle poverty - the global development dilemma. Millennium Development Goals (MDGs) terminated in 2015 and Sustainability Development Goal (SDG) was launched but answer has not been given to the rising poverty incidence in Nigeria. However, it is argued that poverty can be alleviated through growth Son and Kakwani (2004) . But the reverse is the case in Nigeria. According to Son and Kakwani (2004), poverty alleviation can be achieved by economic growth and/or by the distribution of income. Juxtaposing economic growth and poverty level in Nigeria reveals a paradox of growth in the face of poverty and inequality, hence the need to investigate the impact of growth on various macroeconomic poverty indicators. This is important because knowing their impact will help in formulating polices that will help in giving poverty a tough fight and reduce it.

1.2 Statement Of The Problem

This study was informed by the rising poverty level in Nigeria (Orajaka and Okoli, 2018). According to Orajaka and Okoli (2018), despite Nigeria’s plentiful agricultural resources and oil wealth, poverty is widespread in the country and has increased since the late 1990s. Some 70 per cent of Nigerians live on less than US$1.25 a day. IFAD (2012) and Orajaka and Okoli (2018) went further to state that poverty is especially severe in rural areas, where up to 80 per cent of the population lives below the poverty line, and social services and infrastructure are limited. As earlier stated, successive government have made concerted efforts through one form of poverty reduction programme or the other to combat poverty, but little or nothing has been achieved going by the rising poverty level in Nigeria. Presently, the fight against poverty in has attracted global attention. According to Adigun and Omonona (2011), the establishment of the Millennium Development Goals has set poverty alleviation as a fundamental objective of development. In recent years, there has been an upsurge of interest in the impact of development on poverty. Poverty has increasingly become a major global issue, with halving extreme poverty by 2015 constituting the first, and perhaps the most critical, goal of the Millennium Development Goals (MDGs). Incidentally, MDGs have terminated in 2015 and SDGs launched yet poverty still soars. Perceptibly, improvement in GDP is expected to alleviate the level of poverty. This is because investments in the real sectors (like agricultural, manufacturing and service) contribute to the real growth of GDP. It is also expected to create employment, increase income and consequently reduce poverty. Previous studies, as cited by Son and Kakwani (2004), suggests that rising per capita income in general leads to poverty alleviation (Fields, 1989; Roemer and Gugerty, 1997; World Bank, 1999). Another work cited by Son and Kakwani (2004) presents that a percentage change in poverty is caused by a 1 percent change in per capita income. Using cross-country regressions based on a sample of 62 developing countries, it was discovered that on average, a 1 percent increase in per capita income led to a 3.1 percent reduction in the proportion of people living below the conventional $1 a day threshold (Ravallion and Chen, 1997). But despite government expenditure in the growth induced sectors, the Nigeria poverty level continues to rise (Diao et al., 2010; Okpe and Abu, 2009; Orji, 2005). Thus, indicating that the growth elasticity of poverty in Nigeria has not been responsive. The non-responsiveness of the growth-poverty nexus in Nigeria warrants an empirical probing bridge the perceived literature gap.

1.3 Objective Of The Study 

The overall aim of this study is to critically examine the impact of economic growth on poverty alleviation in Nigeria. Specifically, the study intends to determine the effect and relationship between selected macroeconomic variables (poverty, unemployment, population, mortality rate, life expectancy rate, corruption, consumption, per capita income, illiteracy rate) and Gross Domestic Product (GDP) in Nigeria.

1.4 Research Question

The study will be guided by the following questions;

1. What is the impact of economic growth on poverty alleviation?

2. Whats the relationship between macroeconomic variables (poverty, unemployment, population, mortality rate, life expectancy rate, corruption, consumption, per capita income, illiteracy rate) and Gross Domestic Product (GDP) in Nigeria?

1.5 Significance Of The Study

The outcome of this study will be most relevant to the Nigeria government and policy makers. Since the study tends to investigate the impact of growth on various macroeconomic poverty indicators, It will help in formulating polices that will help in giving poverty a tough fight and reduce it.

Additionally, subsequent researchers will use it as literature review. This means that, other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regards to the impact of economic growth on poverty alleviation in Nigeria.

1.6 Scope Of The Study

The study is structured to examine the impact of economic growth on poverty alleviation in Nigeria, with all focus on macroeconomic variables (poverty, unemployment, population, mortality rate, life expectancy rate, corruption, consumption, per capita income, illiteracy rate) and Gross Domestic Product (GDP) in Nigeria. The study covers the period of 30years, from 1990 - 2020.

1.7 Limitations of the Study 

Although the research has reached its aim, there were some unavoidable limitations. First because of time limit, this research was conducted using 1996-2004. Furthermore, insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.

1.8 Definition Of Terms

Poverty

This is a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living. Poverty means that the income level from employment is so low that basic human needs can't be met.

Economic Growth

The process by which a nation's wealth increases over time.

Poverty Alleviation

This is a set of measures, both economic and humanitarian, that are intended to permanently lift people out of poverty.