STATES GOVERNMENTS EXPENDITURE AND POVERTY ALLEVIATION IN NIGERIA: A PANEL INVESTIGATION

Abstract

This study examined how expenditure of state governments from the federation account has alleviated poverty level in Nigeria. In order to achieved the objectives of the study, data on poverty level in 36 states of Nigeria, statutory revenue allocated to the states of the federation, value added tax revenue shared to the states, external debt incurred by the states and price level in the states over the period 2011 – 2016 were sourced from the National Bureau of Statistics and the Federal Ministry of Finance and examined using panel and partial eyciency frontier (PEF) analyses. The results of our investigation demonstrated that statutory revenue allocations and value added tax distributed to the tiers of government (states) have serious implication on poverty alleviation and improvement in welfare of the citizens in Nigeria. The study further shows that external debt incurred by states has negative implication on poverty as such debt diminished the welfare of the people by worsening poverty. However, the result of this investigation, indicated that the impact of statutory revenue allocation, VAT, external borrowing and price level on poverty level vary significantly across the 36 states of Nigeria. This implies that some states used revenues allocated to them to alleviate poverty more than others. Specifically, Rivers, Lagos, Akwa Ibom, Delta and Kano states were found to be more eycient in using revenue allocated to them to reduced poverty while Adamawa, Ebonyi, Ekiti, Gombe, Kwara, Nasarawa and Plateau states were less eycient in reducing poverty using government spending. Based on these findings, the study suggests: an upward review of statutory revenue allocated to the states from the federation account, enhance the revenue yielding capacity (VAT) of the states through the enthronement of fiscal federation and the prudent management of available resources as possible ways of reducing poverty and improving the socio-economic wellbeing of the people in Nigeria.