Government Expenditure and Poverty Reduction in Nigeria, 1986-2022: A Disaggregated Approach
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Published:
May 16, 2023
Keywords:
Poverty, Government Expenditure, Multidimensional, Headcount Index
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Abstract
Poverty in Nigeria is a complex issue that demands urgent government attention. With approximately 63% of the population living below the poverty line in 2022, understanding the relationship between government expenditure and poverty is crucial. Despite existing studies focusing on the impact of government expenditure on economic growth, few have explored the relationship between government expenditure from different sectors and poverty. This study aims to address this gap by investigating the effects of government expenditure in various economic sectors on poverty in Nigeria from 1986 to 2022. Using government expenditure on education, health, security, building and construction, and roads as proxies, and the head count index as a proxy for poverty, this study analyzed secondary data from the CBN Statistical Bulletin and National Bureau of Statistics. The Johansen cointegration and vector error correction mechanisms were employed as estimation methods. The findings indicate that all selected government expenditures had positive short-term effects on poverty, but negative long-term effects, except for government expenditures on roads. This suggests that government expenditure has a reducing effect on poverty in the long term, but is not effectively addressing poverty in the short term. The study concludes that government expenditure plays a significant role in reducing poverty in the long run. As a recommendation, the study suggests prioritizing infrastructure development, particularly in road construction and public transportation, to improve citizens' mobility, reduce transportation costs, and facilitate easy movement with the motive of reducing the poverty rate among Nigerians.
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Ejemezu, C., & Ajala, R. B. (2023). Government Expenditure and Poverty Reduction in Nigeria, 1986-2022: A Disaggregated Approach. African Journal of Stability & Development, 15(1&2), 25-56. https://doi.org/10.53982/ajsd.2023.1501_2.02-j
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References
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Paternostro S, Anand R, & Erwin R.T (2007) How does the Composition of Public Spending Matter. https://ideas.repec.org/p/wbk/wbrwps/3555.html
Riman, H.B., Bassey, J.U., Ibi, E.E., & Edu, B.E. (2020). Poverty, health expenditure, and health status: A long term perspective with evidence from Nigeria. Available at SSRN: https://ssrn.com/abstract=1540303 or http://dx.doi.org/10.2139/ssrn.1540303.
Salah, A, Muhammad, S, & Kishwar, N. (2016). Modelling causality between financial deepening and poverty reduction in Egypt. https://www.researchgate.net/publication/276836298_Modeling_Causality_Between_Financial_Deepening_and_Poverty_Reduction_in_Egypt
Taiwo, J. N., & Agwu, M.E. (2016). Problems and prospects of poverty alleviation programmes in Nigeria. International Journal of Business and Management Review, 4 (6), 18-30.
William B. (2014.) History of William Beveridge (1879-1963) www.bbc.co.uk/history/historic-figures/beverridge_william.shtml. BBC 2014.
Ade T. Ojo (2005) Informal Financial Sector and Sustainable Development in Nigeria. Proceedings of the National Conference on informal financial sector and sustainable development in Nigeria. African Financial System and Development. University of Ado Ekiti Nigeria.
Aku, P.S., Ibrahim, M.J. and Bulus, Y.D. (1997). Perspective on poverty alleviation strategies in Nigeria. Proceedings of the Nigeria economic society annual conference on poverty alleviation in Nigeria 1997. Ibadan: NES, 41-54.
Akujuru, C.A., & Enyioko, N.C. (2019). The impact of N-power programmes on poverty alleviation in Nigeria: a study of rivers state. Global Journal of Political Science and Administration, 7(3), 29-50.
Alalade, O. A., Longe, M. P., Oluwatosin, T., James-Ojibo I. U., Asiyanbi, A. O., & Awoyemi, A. O. (2020). Effect of N-power scheme on poverty reduction among graduate youths in Kwara State, Nigeria. Nigerian Journal of Rural Sociology, 20(1), 77-82.
Aliyu, I. H., & Chukwudi, O.C. (2015). Political democracy, managing poverty and development in Nigeria. International Letters of Social and Humanistic Sciences, 55(25).
Aluthge, C., Jibir, A. & Abdu, M. (2019). Impact of government expenditure on economic growth in Nigeria, 1970–2019. CBN Journal of Applied Statistics, 12(1), 139-174.
Aregbesola, B. (2019). Health care in Nigeria: Challenges and Recommendations. https://socialprotection.org/discover/blog/health-care-nigeria-challenges-and- recommendations
Aregbeyen, O., & Akpan, U. (2013). Long term determinant of government expenditure: A Disaggregated analysis for Nigeria. Journal of Studies in Social Sciences, 5(1).
Ayogu, G.I., Abasi, U., & Ecoma, L. (2012). Tradermoni micro credit scheme and poverty reduction in Nigeria. International Journal of Advanced Research in Management and Social Sciences, 8 (4), 197-208.
Babayo, S. & Umar, A. (2019). National poverty eradication programme (NAPEP) in Nigeria: A Critical Analysis 2001-2015. Jigawa Journal of Politics 2(1), 1-26.
CBN (2017). Annual Report Publication of Central Bank of Nigeria. (CBN).
CBN (2021). Annual Report Publication of Central Bank of Nigeria. (CBN).
Dandume, P.Y. (2014). Institution and economic growth performance in Nigeria. International Journal of Business and Management. Retrieved 2nd June 2021 from https://www.academia.edu/5682874/Institution_and_Economic_Growth_performance_in_Nigeria.
David A., Moses. A, Terhemen A. (2016). A time series model of poverty incidence in Nigeria. Journal of scientific and engineering Research, 3(2), 261-282.
Ebunoluwa, O., & Yusuf, W. (2018). Effects of economic growth on poverty reduction in Nigeria. IOSR Journal of Economics and Finance (IOSR-JEF) e- ISSN: 2321-5933, p-ISSN: 2321-5925. Volume 9, Issue 5 Ver. I (Sep – Oct. 2018), pp. 25-29. Www.Iosrjournals.Org.https://smartlib.umri.ac.id/assets/uploads/files/6882e-c0905012529.pdf
Fan, Hazell P.B & Sukhadeo Thorat. (2012). Linkage between government spending, growth and poverty in rural India. www.ifpri.org. https://www.ifpri.org/publication/linkages-between-government-spending-growth-and-poverty-rural-india-0.
Goulden C. & Amp D’Arcy C. (2014) “JRF Programme paper, Anti-poverty strategies for the UK: A definition of poverty.” Joseph Rowntree Foundation.
Halidu, S.G., Lawal, S., & Jamilu, A. (2017). Impact of government poverty alleviation programmes on rural development in Kaduna and Gombe States: Implications for Public Administration. Ife Social Sciences Review 25(2) 59 - 79
Ibrahim, V.H., Ameji, E.N., & Taiga, U.U. (2022). Government Expenditure and Infrastructural Development in Nigeria: An Empirical Analysis of its Economic Effects. KIU Journal of Social Science, 9(2), 101-110
Kasali,T. A., Ahmad S.A., & Ean L.H. (2015). Does microfinance operation have effect on poverty alleviation in Nigeria? European Journal of Contemporary Economics and Management, 2 (2), 54-69.
National Bureau of Statistics. (2023). Review of 2009/2010 absolute poverty rates across Nigeria. www.nigeriasta.gov.ng/elibrary. Retrieved 7 th June 2023.
Nua J. D. & Onoja, A.O. (2015). Impact of poverty alleviation programmes on indigenous women’s economic empowerment in Nigeria: Evidence from Port Harcourt Metropolis. The Journal of Sustainable Development, 14 (2), 90-105.
Nyasulu, G. (2009). Poverty alleviation programmes and sustainable youth empowerment in Nigeria. PhD thesis, James Cook University Retrieved 01/03/2024.
Ogunsakin, S., & Olumide, F.F. (2017). Financial inclusion as an effective policy tool of poverty alleviation: A Case of Ekiti State. Journal of Economics and Finance 8(4), 1-10.
Oke, R., Oladeji, S. I., & Olofin, O. P. (2020). Education and the challenge of poverty alleviation in Nigeria. Asian Research Journal of Arts & Social Sciences, 11 (1), 12-23.
Okulegu, B.E. (2013). Government spending and poverty reduction in Nigeria’s economic growth. International Journal of Social Sciences and Humanities Review, 4(1), 103- 115.Olagunju O. A,Akinribido B, Yusuf S.A (2019) Poverty Effects of Minimum Wage Increase in Nigeria. More journal of Agricultural Research. October 2018. https://www.researchgate.net/publication/357314137_Poverty_Effects_of_Minimum_Wage_Increase_in_Nigeria#fullTextFileContent
Olaifa, F.G., & Benjamin, O.O. (2020). Government capital expenditure and private sector investment in Nigeria: Co-integration Regression and Toda-Yamamoto Causality Analysis. Advanced Journal of Social Science, 6 (1), 71-82.
Olasehinde, O.D., & Adekoya, R.B. (2014). Agricultural financing: A panacea to unemployment in Nigeria. Journal of Business and Technological Education (JOBTED), 8(1), 75-80.
Omotara A. (2016). An investigation of the nexus between poverty and the informal sector in developing economies, A case study of Nigeria . Masters thesis 2497. Retrieved 7th June 2023 from ttp://thekeep.eiu.edu/thesis/2497.
Onah, R., & Oliseh, C. (2019). National social investment programme (NSIP) and sustainable poverty reduction in Nigeria: Challenges and Prospects. IOSR Journal Of Humanities And Social Science (IOSR-JHSS) www.losrjournals.org/iosr-jhss/papers/Vol.%2024%20issue 10/series-11/D2410112031.pdf.
Oriavwote, V.E. & Ukawe, A. (2018). Government expenditure and poverty reduction in Nigeria. Journal of Economics and Public Finance, 4(2), 156-163. https://doi.org/10.22158/jepf.v4n2p156.
Oserei, K., & Uddin, G. (2020). The myth and reality of government expenditure on primary health care in Nigeria: Way forward to inclusive growth. https://Mpra.Ub.Uni-Muenchen.de/99094/.https://www.readcube.com/articles/10.2139%2Fssrn.3588120.
Osundina, Ebere, C., & Osundina, A. (2014). Disaggregated government spending on infrastructure and poverty reduction in Nigeria. Global journal of human-social science: E-Economics, Volume 14, Issue 5 version 1.0 https://www.researchgate.net/profile/.
Paternostro S, Anand R, & Erwin R.T (2007) How does the Composition of Public Spending Matter. https://ideas.repec.org/p/wbk/wbrwps/3555.html
Riman, H.B., Bassey, J.U., Ibi, E.E., & Edu, B.E. (2020). Poverty, health expenditure, and health status: A long term perspective with evidence from Nigeria. Available at SSRN: https://ssrn.com/abstract=1540303 or http://dx.doi.org/10.2139/ssrn.1540303.
Salah, A, Muhammad, S, & Kishwar, N. (2016). Modelling causality between financial deepening and poverty reduction in Egypt. https://www.researchgate.net/publication/276836298_Modeling_Causality_Between_Financial_Deepening_and_Poverty_Reduction_in_Egypt
Taiwo, J. N., & Agwu, M.E. (2016). Problems and prospects of poverty alleviation programmes in Nigeria. International Journal of Business and Management Review, 4 (6), 18-30.
William B. (2014.) History of William Beveridge (1879-1963) www.bbc.co.uk/history/historic-figures/beverridge_william.shtml. BBC 2014.