Correlates of poverty in Nigeria: an analysis of macroeconomic objectives

Abstract

The level of poverty in developing countries appears to be increasingly high, especially in sub-Saharan African countries, of which Nigeria is one. Nigeria presents a picture of abject poverty in the midst of abundant resources. For instance, in 2014, the Human Development Index value (HDI) was 0.514, which positioned her at 152 out of 188 countries. Though this value was above the average of 0.505 for countries with low HDI, it is below the average of 0.518 for countries in sub-Saharan Africa. Also, the five major macroeconomic objectives of economies the world over as well as the main overriding objective of the sustainable development goals are aimed at alleviating poverty. The bjective of this study, therefore, is to analyse the effect of the five macroeconomic objectives of achieving price stability, reducing inequality, maintaining favourable balance of payments, increasing inclusive economic growth and reducing unemployment and poverty in Nigeria, using multiple regression analysis of time series data from 1980 – 2014. The study also sought to establish the existence of a long-run relationship among the variables using the co-integration test. It further examined the type of causality existing among poverty and the parameters of the model which are inflation, balance of payments, unemployment, gross domestic product (GDP) and gross national income (GNI) per capita. The results revealed that there exists a positive effect of GDP and unemployment, while the effects  of balance of payments, inflation and GNP per capita are negative on the level of poverty. Also there is a long-run relationship among the variables. The study recommended policies that, in the long run, will promote trade, reduce unemployment, generate inclusive growth and reduce inequality. The study concluded that with macroeconomic stability, poverty will be greatly reduced.

Keywords: Poverty, Macroeconomic objectives, Regression and Nigeria