ABSTRACT
This research was
carried out in other to find out the impact of public spending on Poverty in
Nigeria. Annual data on Government Capital Expenditure, Government Recurrent
Expenditure, Gross Fixed Capital Formation and Poverty were collected from the
National Bureau of Statistics, Nigeria and the Central Bank of Nigeria covering
the period of 1981-2015. The results indicated that Government Recurrent
Expenditure did not significantly impact poverty in Nigeria whileGovernment
Capital Expenditure and Gross Fixed Capital Formation the proxy for private
sector investment significantly impacted on Poverty in Nigeria during the
period under review. The researcher recommends that policy directed towards an
increment in Government Capital Expenditure and Gross Fixed Capital Formation
to further reduce poverty rates be implemented. The researcher also recommends
significant increase in Government spending on recurrent goods together with
proper implementation devices to straighten the pathway towards poverty rate
reduction in Nigeria. This would lead to significant reduction in poverty
rates, breech the inequality gaps, reducing unemployment and stimulate economic
growth and development.
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
Nigeria, popularly
referred to as the giant of Africa because of her endowments and riches in both
human and natural resources, and also her affiliation with many powerful
economies of the world, is still faced with one of the most challenging global
problems –poverty.
Nigeria is still classified as economically retarded in terms
of general social welfare. Over the years, it is evident that Nigeria has
experienced some level of economic growth, but as a result of mismanagement of
resources amongst other ills, poverty continues to thrive in the economy.
Over the years, public
spending has been allocated into different sectors of the economy. Thus this
has led to an increase in total budgetary allocation per annum. Despite this,
there has minimal positive impact on poverty and inequality in the country;
hence the galloping widening of the gap between the rich and poor which stifles
the quest of the poor towards self-actualization and improved living standards
(since a vast majority of them have very little funds).
According to French
Economist, Esther Duflo, poverty can be controlled or even eradicated with the
right policies. “All it takes is for politicians to translate research into
action” implementing programs that have been shown to work.
According to Amartya
Sen (1981), poverty analysis should focus on individuals’ potential to function
rather than the results the individuals obtain from function. Hence
government’s spending towards human capital development is one of the paths
towards poverty reduction.
British Economist
Keynes asserts that public spending should be increased when private spending
and investment are insufficient. He explains that current spending which is
expenditure on wages and raw materials and capital spending which involves
physical assets likes roads, bridges, hospitals buildings and equipment go a
long way toward bettering the society.
Public spending as a
“tool” for suppressing poverty in Nigeria has been a very challenging issue
majorly because of several political and societal vices inherent in the
society. Vices like: misallocation of resources, embezzlement of funds, with
corruption as the bedrock of all. This has been the key driver and propagator
of poverty in Nigeria.
Government or public
spending through subsidies and the likes, is primarily aimed at stimulating economic
growth through harnessing and empowering members of the society regardless of
the existing notion – corruption. Government or public spending is imperative
to mitigating poverty in Nigeria.
1.2 Statement of the
Problem
Government Expenditure
is a major component of national income. This means it is very crucial to
ascertaining economic growth and development in a nation. Government
expenditure or public spending is important tools geared at helping members of
society attain some substantial level of stability (social welfare). For
example, public spending through agricultural subsidies help encourage
commercial farming. In spite of this, a vast majority of people doubt the
impact of public spending due to the political ills, since the poverty rates has
not reduced significantly.
Despite the
discrepancies, public spending still remains a very promising tool towards
reducing the rate of poverty in Nigeria. Consequently, this study seeks to
ascertain the impact of public spending on poverty in Nigeria.
1.3 Objective of the
Study
The objective of this
study is to ascertain the impact of public spending on poverty in Nigeria from
1981-2015
The specific objectives
are:
·
To determine the relationship between
public spending and poverty in Nigeria
·
To ascertain the impact of public
spending on poverty in Nigeria
1.4 Research Questions
Based on the objective
of this study, the study intends to ask the following questions:
·
What is the relationship between public
spending and the poverty in Nigeria?
·
What is the impact of public spending on
poverty in Nigeria?
1.5 Research Hypothesis
The researcher has
formulated these hypotheses as a guide to this study.
H01: There is no significant
relationship between public spending and poverty in Nigeria
H02: Public spending has no significant
impact on poverty in Nigeria
1.6 Significance of the
Study
Results of this study
will be beneficial to individuals, firms, industries, researchers, the
government and its parastatals; and also international organizations. Members
of the society will have a better view and understanding of the role of public
spending and its relation to poverty. Government will also be exposed to the
flaws hindering poverty rate reduction and procure better policies with good
implementation.
1.7 Scope
of the Study
This research seeks to
evaluate the impact of public spending on poverty in Nigeria. The scope of this
study will cover the periods of 1981-2015.
1.8 Limitation of the study
In this research, some
of the factors which affected the researcher were: time, finance, collection of
data and gathering of relevant materials. The data collected is Secondary data
sourced from the National Bureau of Statistics, Nigeria; The Central Bank of
Nigeria.
1.9 Definition of Terms
·
Poverty:
is a state or condition in which an individual or society lacks the financial
resources and necessities to enjoy a minimum living standard and well-being
that is generally accepted in society.
·
Absolute
poverty: a condition characterized by severe deprivation of
basic human needs including food, water, sanitation, shelter, clothing, health,
education.
·
Relative
poverty: a standard which is measured in terms of the
society in which an individual lives and which therefore differs between
countries and overtime.
·
Poverty
line: the minimum level of income deemed adequate in a
particular country.
·
Poverty
trap: a state where poverty tends to persist due to
self-reinforcing mechanism.
·
Public
spending: refers to the money or funds spent by the
government on public services and other state controlled operations, projects
and investments
·
Budget:
is an estimation of revenue and expenses over a specific future period of time
which is compiledand re-evaluated on a periodic basis.
·
Economic
growth: is an increase in the output that an economy
produces over a period of time, the minimum being two consecutive quarters.
·
Economic
development: can be defined as efforts that seek to
improve the economic wellbeing and quality of life for a community by creating
or retaining jobs and supporting or giving incomes and the tax base.
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