Poverty in a Wealthy Economy: the Case of Nigeria

Abstract

This paper describes the nature and evolution of poverty in Nigeria between 1985 and 1992. It begins with the potential wealth of Nigeria's oil economy and examines how the economic policies pursued in the 1980s and 1990s impacted economic growth and welfare. It then presents a profile of poverty in both 1985 and 1992 according to different socioeconomic characteristics of the country's population. The headcount measure of poverty in Nigeria declined from 43 to 34% between 1985 and 1992, primarily due to a 34% increase in mean per capita household expenditures. The benefits of growth were not shared equally throughout the country. The bottom 18% of the income distribution had a lower standard of living in 1992 compared with 1985 by any measure. However, all other income groups had a higher standard of living in 1992. Household expenditure growth was fastest in the southern and middle zones of the country, but it was much slower in the northern zone. Poverty in Nigeria, in addition to its overwhelmingly rural and regional characteristics, is also strongly influenced by education, age and the nature of employment. Those without an education constitute a large fraction of the poor and the extreme poor. Decomposing the factors causing the reduction in poverty shows that the overall decline of 8.9% was the net result of a 13.6% decline due to the growth factor and a 4.7% increase due to the income distribution factor. Based on this analysis, the paper proposes that promoting broad‐based growth and targeted interventions in health, education and infrastructure need to be central strategies in the fight against poverty in Nigeria.