Government Expenditure and Poverty Reduction in Nigeria (2000-2022)

Abstract

This study investigates the association between government expenditure and poverty reduction in Nigeria from 2000 to 2022, employing a panel dataset and the Ordinary Least Squares (OLS) regression method. The Multidimensional Poverty Index (MPI) is the dependent variable, while government spending on education, health, and infrastructure is the independent variable. The analysis is conducted using E-VIEW statistical software. The study’s primary findings reveal that an increase in government education expenditure has a statistically significant and negative effect on poverty reduction, both in the short and long run. Conversely, government health expenditure demonstrates a significant negative impact only in the short run, losing its effectiveness in the long run. On the other hand, government capital expenditure exhibits a significant negative influence on poverty reduction in both the short run and long run. These results emphasise the critical importance of prioritising investments in education and infrastructure for sustained poverty reduction endeavours in Nigeria. In terms of policy implications, the study underscores the necessity of augmenting government spending on education to foster inclusive education and address the predicament of out-of-school children. Additionally, policymakers should consider healthcare systems’ long-term viability and efficacy while allocating health expenditures. Sustained investment in capital projects and infrastructure development is indispensable for poverty reduction. The study’s findings significantly contribute to existing knowledge and underscore the pivotal role of these sectors in poverty reduction strategies. Consequently, it underscores the urgency of targeted and enduring investments, efficient resource allocation, and comprehensive strategies to combat poverty and foster inclusive development within the country effectively