Social Sciences

The Effect Of Poverty On Economic Growth In Nigeria

Bachelors Degree

Poverty is a ramped phenomenon in most parts of this country, to this effect, this study, seeks to find out the menace and impact of poverty, the obstacles to achieving government policies on poverty reduction and the means by which the obstacles can be eliminated.


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This work focuses on the effect of poverty on economic growth in Nigeria. Poverty is a ramped phenomenon in most parts of this country, to this effect, this study, seeks to find out the menace and impact of poverty, the obstacles to achieving government policies on poverty reduction and the means by which the obstacles can be eliminated. In the study, economic growth was measured using GDP growth rate and regressed poverty measured based on head count poverty rate, per capital income growth rate. Secondary data was used, collected from Central Bank of Nigeria (CBN) and National Bureau of Statistics (NBS) statistical bulletins to estimates the statistical bulletin relationship. The findings from the study showed that there was an insignificant positive relationship between economic growth and poverty based on head count also an insignificant positive relationship between economic growth and per capital income growth rate. It was concluded that poverty can become a thing of the past. If corruption , mismanagement macro –economic instability, low capacity, utilization, unemployment, rapid population growth, discrimination, bad social policy and a host of others can be eliminated. This study therefore recommended that government should invest in human capacity building, provide basic infrastructure for sustainable economic growth, make business environment friendly and attractive to investors, also the government need to implement relevant population policies to reduce population, eliminate corruption and mismanagement and provide job for the populist.

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Table of Contents

Title Page

Table of Content




1.1     Background to the Study

1.2     Statement of the Problem

1.3     Objectives of the Study

1.4     Hypothesis

1.5     Significance of the Study

1.6     Scope of the Study

1.7     Limitation of the Study

1.8     Organization of the Study




2.0               Conceptual Review

2.01             The Concept of Poverty

2.01.1                   Causes of Poverty in Nigeria

2.01.2                   Effects of Poverty

2.01.3                   Analysis of Poverty Reduction programmes in Nigeria

2.01.4                   Measurement of Poverty and Economic Growth in Nigeria

2.01.5                   Impediments to Reducing Poverty in Nigeria

2.01.6                   Breaking the Jinx of Poverty in Nigeria

2.02             Concept of Economic Growth and Development

2.1               Theoretical Review

2.1.1            Individualistic Theory

2.1.2            The Culture of Poverty

2.1.3            Situational Theory of Poverty

2.1.4            Structural/Marxian Theory of Poverty

2.1.5            Social Exclusion Theory


2.2               Empirical Review

2.20.1                   The Nature of Poverty and Development

2.20.2                   Causes of Poverty and Unsustainable Development


2.3               Theoretical Framework






3.1     Introduction

3.2     Source of Data

3.3     Model Specification

3.4     Estimation Techniques

3.5     Apriori Expectation




  • Data Presentation
  • Model Estimation
  • Analysis of Regression Results
  • Statistical Test of Significant
  • Discussion of Findings
  • Policy Implication




  • Summary of Findings
  • Conclusion
  • Recommendations



Chapter One


  1. Background to the Study

Poverty, which has no geographical boundary, is seen in all part of the country, rural and urban areas inclusive. Although the incidence of poverty is much higher in the rural areas than in the urban centers, the urban slum-dwellers form one of the more deprived groups in Nigeria. The poor are those who are unable to obtain an adequate income, find a stable job, own property or maintain healthy living conditions. They also lack an adequate level of education and cannot satisfy their basic health needs. As such the poor are often illiterate, in poor health and have a short life span. They have no (or limited) access to basic necessities of life such as food, clothing, and decent shelter. They are unable to meet social and economic obligations. They lack skills and gainful employment and they have few (if any) economic assets and sometimes lack self-esteem. Quite often the poor lack the capacity to escape from their situation by themselves.

The above characteristic is what causes the social conditions of extreme poverty to persist and to be transmitted from one generation to the next. Poverty in Nigeria is found among four identifiable economic group namely the rural landless, the small farmers, the urban under-employed and the unemployed. Generally, the poor are dis-proportionately located in rural areas and slums in urban areas. These are areas of the city distinguished by their advanced stage of physical degradation and occupied by individuals believed to be experiencing various forms of social deprivation like unemployment and inadequate welfare services. The trend in both rural and urban poverty in Nigeria, though fluctuated over the years has been on a worsening trend. Relatively the depth and severity of extreme poverty increased rapidly in urban than in rural areas. The problem has been traced to the high population growth rates and rural-urban migration that has made the quality of life in urban slums worse while urban services and infrastructures are over stretched. Pathetic enough, the World Bank rated Nigeria as the 137th in the world while the United Nations Development Programme rated Nigeria as the 10th poorest country in the world.

Over the years, some macroeconomic programmes have been undertaken with the aim of reducing, if not totally eradicating, poverty in Nigeria. These programmes were expected to at least raise the standard of living of Nigerians. Some of these programmes include the establishment of the people’s bank, community bank and small-scale industries credit scheme, establishment of the National Directorate of Employment, the Family Support Programme and the National Agricultural Development Agency, Directorate of Food, Roads, and Rural Infrastructure (DFRRI), Family Advancement Economic Programme and the Poverty Alleviation Programme. The impact of these programmes on alleviating poverty has been contentious. Some studies in Nigeria have argued to the contrary, that the poor has benefited more from these macroeconomic policies (Obadan, 1994; Faruquee, 1994; Canagarajah, et al., 1997).

At the dawn of the twenty–first century, strong efforts are being made around the world to accelerate the pace of economic growth and development. Concerns such as poverty eradication, empowerment of women, improvements in the education, health and environmental protection for people living in the developing countries have received increased attention in the world. The increasing attention paid to growth, development and social capital in the global arena is silently overthrowing the economic and social conflicts that are prevalent in most developing countries (UNDP Report; 2002, and Asley and Maxwell, 2001).

In fact, an average Nigerian is said to be living below one dollar. Research has it that the foundation of most social vices and corrupt practices both in high and low places in this scourge called poverty. At present, Nigerian is rated as one of the poorest country of the world, a country with abundant resources both in human and mineral replication. It is as a result of this and others maladies that are experienced by the citizens of the world especially the third world countries, that the United Nations Assembly in September 2000 in a meeting popularly referred to as Millennium Submit in the United State of American an eight point development target tagged the Millennium Development Goals (MDGs). The broad objectives of the MDGs are to reduce extreme poverty. (United Nations, 2003:2 and Oxam, 2003)

As a member of the United Nations, Nigeria keyed into the MDGs and subsequently produced a policy document called the National Economic Empowerment and Development Strategy (NEEDS) with specific goals; wealth creation, empowerment generation, poverty reduction and value re-orientation. The NEEDS as a national policy was intended to meeting some of the goals of the MDGs, especially poverty reduction. In assessing the performance of MDGs and NEEDS in Nigeria, especially when it relates to ‘poverty eradication’ one can say without fear of contradiction that MDGs have performed below the expectations of Nigerians (Journal of Sustainable Development Vol. 3, No. 4; Dec 2010).

Recently the depth and severity of extreme poverty in Nigeria has been alarming. And over the years, the government undertook some macroeconomic policies with the aim of reducing, if not totally eradicating poverty. The impact of these policies on alleviating poverty has been contentious. Some studies in the past have argued that the poor has benefited more from these policies while some found that there was positive real growth yet poverty and inequality still worsened. This can be traced to the nature of growth pursued and the macroeconomic policies that underline it. This study empirically evaluates the effect of poverty on economic growth in Nigeria using secondary data covering the period 1991-2012.

1.2 Statement of the Problem

This study aims at determining the effect of poverty on the economic development of Nigeria: A case study of Niger state. Although, the government over the years has formed various programmes towards bring poverty to it’s kneel such efforts involved the introduction of National Economic Empowerment and Development Strategy (NEEDS) and Poverty Alleviation Program (PAP) latter converted to National Agency on Poverty Eradication Program (NAPEP) by the federal government of Nigeria under the democratic dispensation of Olusegun Obasanjo (1999 – 2007) others include seven points agenda and the current transformation agenda.

However, in spite the intense effort by Government and other agencies such as Millennium Development Goals (MDGs) etc; poverty and hunger, illiteracy, gender inequality, child mortality, maternal mortality, diseases and negative environmental practice has become a die – hard character notable in Nigerians economy, hence, its persistence. The implication therefore is that until, the obstacles to the attainment of poverty goals is eradicated, poverty will continue to increase and the following consequences will arise

  • Persistent increase in crime rate leading to insecurity of lives and property.

  • Children will continue to drop out of school which will result in high rate of illiteracy and will have a parallelizing effect on the education system of Nigerian.

  • Inability to afford good medication which will give rise to poor health and a high death rate.

  • More so, when poverty strikes, hunger will set in and it resultant effect is that those inflicted will have no choice but to eat whatever they see. This is tantamount to malnutrition.

  • House hold resources will prove in sufficient to secure the essentials of good living

1.3 Objectives of the Study

The main objective of this research work is to ascertain the effect of poverty on economic growth in Nigeria.

Specifically the study is intended to examine:

  1. The causes of poverty in Nigeria.

  2. The role of the government policies/agencies and other non – governmental agencies in poverty reduction.

  3. Factors militating against the attainment of poverty reduction in Nigeria.

1.4 Hypothesis

The hypothesis is formulated as follows:

H0; Null hypothesis (poverty has no effect on economic growth in Nigeria)

H1; Alternative hypothesis (poverty has effect on economic growth in Nigeria).

1.5 Significance of the Study

The primary importance of this study is that it will bring forth the effect of poverty in Nigerian. It would help highlight the major benefits of reducing the menace of poverty in Niger state and the growth and development of the Nigerian economy as well as the pending challenges to be surmounted for sustainability purposes.

The findings of the study will also add to the existing knowledge of the impact of effect of poverty in economic development. By affirming the findings of other studies carried out and broaden the bases of comparability of country experiences.

The findings of the study would also contribute to the number of reference materials for future research endeavours for interested students and other class of researchers. It will equally serve as reference point to the government and other agencies in policy planning to reduce poverty.

1.6 Scope of the Study

The macroeconomic policies such as; NEEDS, PAP, NAPEP, Seven – point agenda and the current economic transformation agenda are meant to address issues of poverty and hunger, diseases, universal basic education, gender inequality, health and environmental sustainability etc. However due to time constraint, the delimitation of this research work is within period 1991 to 2012.

1.7 Limitation of the Study

Research of this nature is never without hindrances, as a matter of fact, many problems were encountered and the degree of severity varies. Some of such problems include: First, the secondary data used had been collected overtime which may not be error free as it has its inherent weakness despite steps taken to ensure its viability and reliability. Hence those weaknesses may undermine the quality of the data collected in addressing the study. Secondly, money, time, analysis of data are among other constraint to this study.

1.8 Organization of the Study

This study is made up of five chapters, chapter one is the introduction, chapter two comprises the literature review and theoretical framework. Chapter three is the research methodology. Chapter four is the data presentation and analysis and chapter five is the summary, conclusion and recommendations of the study.


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