Key Drivers of Poverty in Developing Nations: A Case of Nigeria

Abstract

Effort is made in this study to examine the key drivers of poverty in Nigeria from 1992-2021. This work which toes a slightly different path seeks to decipher if there are unconventional drivers of poverty in Nigeria, aside the orthodox drivers; education and health. The study employed the Ordinary Least Squares method to analyze the potential impact of migration, governance, corruption, income levels, foreign direct investments, external factors and public debt on poverty levels in Nigeria. The secondary data used for the study were obtained from the World Bank, UNDP, ILO, IMF, and the CBN. The results of the analyses revealed that mitigation of corruption, higher income levels, increase in foreign direct investment, effective governance and public debt all have the potential of reducing poverty in Nigeria. Specifically, migration and investment were found to have significant impact on poverty levels in the country. Foreign direct investment was found to have negative relationship with poverty, implying that increase in foreign direct investment reduces poverty. Furthermore, public debt was found to share a negative relationship with poverty levels in Nigeria. Though salient factors which are peculiar to Nigeria such as poor utilization of borrowed funds and mismanagement of borrowed funds tend to dampen this impact. The study recommends improved security to attract more foreign direct investments, prudent management of borrowed funds by spending on productive ventures, and reduction of corruption through the reform of the judicial system.