IMPACT OF POVERTY ON THE ECONOMIC GROWTH OF NIGERIA

CHAPTER ONE

GENERAL INTRODUCTION

1.1Background to the study

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 often been defined as a situation of low income or low consumption.

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 Nigeria society.

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)Nigeria has one of the greatest development potentials in Africa given the vastness of her resources and above all her rich human resource endowment. But regardless of these potentials Nigeria is still among the poorest countries of the world. The economy is mired by multiple difficulties. On the basis of widespread economic crisis, and the recent global economic meltdown, the country is unable to raise the standard of living of its citizens to an appreciable height. Thus poverty, in both absolute and relative terms, constitutes one of the most serious problems confronting Nigeria. Statistically, between 1960 and 1980, the poverty level covered about 28.0 percent of the population; by 1996 it rose alarmingly to about 66 percent of the population (Aliju, 2001).

According to the United Nation Development Program Human Development Report (2008-2009) which combined such components as; level of inequality, life expectancy at birth, standard of living and access to knowledge, and education, between 2004 and 2009 poverty in Nigeria has worsened from 0.43 to 0.49. This shows that despite its vast resources, Nigeria ranks among the 25 poorest countries of the world. In fact, poverty has been a serious challenge to governments in Nigeria. Its effect, which includes lack and deprivation in the basic necessities of life, is worrisome.

Poverty humiliates and dehumanizes its victim Ukpong (1996). To this end government and people in authority almost always strive to ensure that adequate structural programs are enshrined to see that poverty if not eradicated, is reduced to the barest minimum. Poverty alleviation strategies ranging from Operation Feed the Nation of 1978, the Green Revolution of 1982, the Directorate of Foods Roads and Rural Infrastructures DFFRI, the National Directorate for Employment NDE, Poverty Alleviation Program PAP, the National Poverty Eradication Program, NAPEP up to the Seven – Point Agenda were all attempts made by various governments in the country in order to curb the menace of poverty.

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. Firstly, the high rate of unemployment may also be responsible for poverty in Nigeria. The inability to get good jobs that produce a decent income leads to low productivity. In addition, many graduates wander the streets without any reasonable prospect of gainful employment in Nigeria. Bureau of Statistics puts Unemployment Rate in Nigeria to 23.9% percent in the third quarter of 2018 from 18.80 percent in the second quarter of 2018. Unemployment Rate in Nigeria averaged 10.63 percent from 2006 until 2018, exceeding an all time high rate of 19.70 percent in the fourth quarter of 2009 and a record low of 6.4 percent in the fourth quarter of 2014. By implication, it means that if Nigeria’s population is 186million, which means about 35 million Nigerians where unemployed as at 2018 (NBS 2018).

Secondly, inadequate education often stands as a bottleneck in any economy; according to the World Bank (2007) education plays an important role in economic growth and national productivity as well as innovation and democratic values. Illiteracy as well as a lack of education is common in poor countries. This is because governments in sub-Saharan African countries lack the resources to provide adequate public schools in rural areas, such that less than 60% of children in sub-Saharan Africa have an elementary education. Most times poor people in these countries drop out of schooling to enable them to concentrate on making a minimal wage for a living. This prevents people from having the opportunity to secure decent jobs and opportunities to develop themselves to enable them to fully participate in society. In Nigeria the educational system is very poor when compared with other countries in the world.

Thirdly, Social and economic unrest from the domestic and international scene arose from the failure of the government, which lacked the ability to successfully implement political transition programmes that may have actualized stability such that distortion resulted in recession. A restricted domestic market prevented productive ventures from flourishing because of and withdrawal of investment from such country and subsequent job and economic insecurity. The economy of Nigeria advanced 2.28 percent year-on-year in the third quarter of 2019 compared to an upwardly revised 2.12 percent rise in the previous period. It was the fastest expansion since the fourth quarter of 2018, as oil output grew the most in over three years. GDP Annual Growth Rate in Nigeria averaged 3.81 percent from 1982 until 2019, reaching an all time high of 19.17 percent in the fourth quarter of 2004 and a record low of -7.81 percent in the fourth quarter of 1983 (NBS, 2018).

Fourthly, Corruption has become a cankerworm in Nigeria such that government revenue is shared among political office holders and their cronies, while the masses are left to wallow in poverty. Nigeria is the 144 least corrupt nation out of 175 countries, according to the 2018 Corruption Perceptions Index reported by Transparency International. Corruption Rank in Nigeria averaged 121.48 from 1996 until 2018, reaching an all time high of 152 in 2005 and a record low of 52 in 1997.This indicates that the well-being of the people are practically ignored by political leaders. Thus, corruption has led to increased poverty and income inequality and has contributed to increased crime rates in Nigeria.

Fifthly, Inequality: Inequality implies having large discrepancies in resource distribution, whether one is considering income, consumption or other welfare indicators or attributes (Oyekale, Adeoti&Oyekale 2007). Income disparity occurred in Nigeria as a result of the high economic growth that Nigeria experienced from 1965 to 1975.The result of the 2018 survey by NBS in Nigeria shows that persons between 15 and 64 (the economically active population), constituted 56.3 percent, while those aged 65 years and above constituted 4.2 percent. Before now, not a few economic watchers have queried the recorded Gross Domestic Product, GDP, growth rates in Nigeria, which over time are contrary to the growing rate of poverty. Income inequality has therefore increased the dimension of poverty in the country.

Finally, Laziness: Laziness is rampant among Nigerians and it has become a common disease most especially from youths who hail from wealthy households. Everyone wants to be comfortable, but they are not ready to work towards it. This often leads to greed such that people do whatever possible to keep the family wealth for themselves. In most families, everyone depends on the breadwinner, who works hard to keep the family going, and when he dies the family become poor because the dependants are lazy; they subsequently mismanage the funds that are bequeathed to them and become poor. In most Nigerian families, the death of the breadwinner means the death of the whole family’s fortunes; because everyone depended on him or her to provide for the needs of the household (Aigbokhan, 2008).

1.3 Research questions.

The research work sought to answer the following research questions.

i. What are the impacts of poverty determinants on the growth of Nigerian economy?

ii. What is the trend of poverty on the growth of Nigerian economy?

 1.4 The aim and objectives of the study

The major objective of this research is to examine the impact of the determinants of poverty on the growth of Nigerian economy. Specific objectives of the research include the following.

i. To evaluate the impacts of poverty determinants on the growth of Nigerian economy.

ii. To examine the trend of poverty on the growth of Nigerian economy.

1.5 Statement of research hypothesis

The following hypothesis were determined for testing

Ho: that poverty determinants has no significant impact on the growth of Nigerian economy

H1: That poverty determinants has significant impact on the growth of Nigerian economy

1.6 The significance of the study

The significance of this research work is to determine the various determinants of poverty in the sense that it will give an insight to the government in the formulation of appropriate policies that will effectively reposition the productive sector. This will efficiently serve the developmental needs of the country and also give plausible solutions to ameliorate poverty in the drive for Nigeria to attain economic development.

The study is also expected to serve as a stepping stone to other researchers to acquire more facts about poverty and it’s implications on economic growth as evident in Nigeria gross domestic product (GDP).

1.7 Scope and limitation of the study

The study, implications of the determinants of poverty on the growth of Nigerian economy. it covered a period 20 years (1999 – 2018). The area of major concern is the determinants of poverty, its implications and effect on the growth of Nigerian economy. Due to the vitality and vast nature of the topic under investigation, one of the major limitations was how to approach the study to capture the most significant variables and that of inadequate information or materials like books, journals and periodicals to consult for knowledge development which will enhance a better result. 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. However, a drastic step was taken to obtain data from reliable sources such as CBN statistical bulletin, NBS statistical publications etc. to overcome such limitations

1.8 Organization of the study

This research work is divided into five (5) chapters.

Chapter one contains the background to the study, statement of research problems, The research questions, aims and objectives, hypothesis testing, significance of the study, scope and limitation and organization of the study, 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 and chapter five contains the summary of findings, conclusions and recommendations.