Foreign Aid and Poverty Reduction in Nigeria: An Empirical Analysis


  • Malachy A. Ugbaka
  • Solomon E.Effiong
  • Joseph U. Umanah


Foreign Aid, Poverty Reduction, OLS


Foreign aid argument domestic resources required for economic development and growth in less developed countries (LDCs). Foreign aids have assisted a number of economic recuperation, reconstruction efforts and structural adjustment programs organized to pull the Africa economy out of poverty trap. Discussions of foreign aid have concentrated on Africa since it has gotten the best measure of help on per capita premise than some other area; yet poverty and economic performance has been the weakest. In spite of its abundant oil assets Nigeria's economic performance has been frightening poor, per capita income has endured significant erosion since the crest in the mid-1980s that happened when oil prices were at verifiable abnormal states. Again being the biggest developing economy in Sub Saharan African region, the nation still stays among the most unfortunate of the sub Saharan African nations with the least human development index (HDI). Given that foreign aid may advance economic improvement and poverty reduction, it is appropriate to ask whether or not and to what degree should Nigeria keep on depending on foreign aid to accomplish economic growth and reduce poverty, given its negative impacts and the potential for intense cut back in foreign aid. The objective of the paper is to examine empirically the connection between foreign aid and poverty reduction in Nigeria. The paper utilizes time series secondary data from World Development Indicators (WDI) covering over Nigeria for the period from 1986 to 2017 which data were accessible. The methodology employed includes descriptive statistics and the Ordinary Least Square (OLS). The results reveal that there is a positive relationship between foreign aid and poverty reduction. The paper submits that the use of foreign aid should be encouraged since it promotes poverty reduction. Consequently, the international community should step up their aid assistance to developing countries by meeting their promises to increase aid flow as agreed.

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