IMPACT OF FOREIGN AIDS ON POVERTY ALLEVIATION IN NIGERIA

Abstract

The aim of the study is to examine the impact of foreign aid on poverty alleviation in Nigeria over the period of 1990 to 2017. Data were collected from UNCTAD World Bank database and CBN Statistical Bulletin. Consequently, Cointegration, DOLS and Granger Causality techniques were utilized to address the objective of the study. The major findings are summarized as follow: Foreign aid has not led to poverty alleviation in Nigeria. Similarly, FDI has a negative impact on household consumption per capita and not significant at 10% level of significance. This implies that FDI does not reduce poverty in Nigeria. In addition, there is an existence of insignificant positive relationship between inflation rate and household consumption per capita in Nigeria. Furthermore, there is a unidirectional causality which runs from foreign aid to household consumption per capita. However, there is no feedback relationship between foreign aid and FDI, likewise FDI and household consumption per capita. Also, there is a unidirectional causal relationship flowing from inflation rate to household consumption per capita. Finally, due to the findings it is recommended that since foreign aid has no reducing impact on poverty in Nigeria, the policy makers should not depend on foreign aid as the only means of combating poverty in Nigeria. Therefore, a holistic approach for tackling the challenge of poverty in Nigeria is suggested and should be embraced.