Reversing The Covid-19 Setback on Income Poverty Reduction: What Policy Options for Nigeria?

Abstract

Empirical studies have shown that the outbreak of COVID-19 globally has drastically created a reversal in the successes earlier recorded by governments’ efforts across nations. This study, therefore, investigated the sources of pre-COVID reduction in poverty and determined the policy options that could best enable the reversal of the setback to poverty reduction in Nigeria. The study employed the Autoregressive Distributed Lag (ARDL) model to analyze time-series data from Nigeria for a period from 1990 to 2020. The result found that while growths arising from ARGDP (share of agriculture to real GDP) and IRGDP (share of industry to real GDP) have negative relationships with growth in the incidence of poverty, growth from SRGDP (share of services to real GDP), though statistically significant at a 5% level, was found to be poverty enhancing. The result also revealed that growth in Human Capital (HC), Inequality (INQ), INQt-1, INFt-1 were found to be statistically significant. INQ and INF (Inflation) were found to be positively related to growth in the poverty rate, thus implying that growth in any or both of these can be poverty-enhancing. Also, growth in HC was found to exhibit an inverse relationship with growth in POR. The result further revealed that all the variables Government Social Recurrent Expenditure (GSEX), Capital Transfer (CT), and Social Transfer (ST) and their lagged values were found to be significant and poverty-reducing in Nigeria. The study, therefore, recommended policies that are aimed at improving the impacts of these variables.