External Loans and Poverty Challenge in Nigeria, 2010-2020: Towards Deconstruction of an Antithesis

Abstract

This study investigated the correlations between external loans and poverty elimination efforts in Nigeria from 201o to 2020. Owing to several reasons which include inadequacies of her domestic savings and foreign exchange, Nigeria’s macroeconomic space has over time witnessed perennial external borrowings which, for instance, rose from US$4,534.19 billion as at 30th September, 2010 to US$33,348.08 billion as at December 31, 2020 or N12,705,618.48 trillion. The key concern, however, is how the country has leveraged on those borrowings in order to reduce her soaring poverty rates put at over 83 million citizens living below poverty line of $1.90 per day. Consequently, the primary objective of this study was to investigate how impactful the external loans had become on the poverty-alleviation efforts of the developing economy. To achieve the objective, the following hypothesis was posed: how has Nigeria’s external borrowings supported poverty alleviation efforts in the country? Anchored on the Big Push Theory propounded by Paul Rosenstein-Rodan in 1943, the study adopted ex-post facto research design and documentary method for data collection. Qualitative descriptive method was used for data analysis. Among other things, the study found out that Nigeria’s external borrowings have not offered support for poverty alleviation with its characteristic low disbursements. It equally found out that the loans were not invested in productive sectors for beneficial effects on poverty alleviation. In view of the findings, the study recommended that there is need for poverty alleviation to be made the primary focus of Nigeria’s future external borrowings. It also recommended the need for external loans to be massively invested into projects with high capital returns which will produce desired effect on poverty reduction.