Government social spending and poverty reduction in Nigeria

Abstract

The study examined the impact of government social spending on poverty reduction in Nigeria for the period 1981-2020 with time series data obtained from the Central Bank of Nigeria Statistical Bulletin. Poverty (household consumption expenditure) was specified as a function of social capital Spending, social recurrent Spending, Inflation rate, and Unemployment. The Augmented Dickey-Fuller unit root test shows that all the time series data were stationary at first difference (I(1)). The result of the Johansen cointegration proves evidence of long run relationship among the variables. The result of the Fully Modified OLS indicates that: government capital spending on social goods and services has significant impact on poverty reduction in Nigeria; government recurrent spending on social goods and services has significant impact on poverty reduction in Nigeria. The Granger causality result shows that there is a uni-directional causality relationship running from government capital spending on social goods to poverty reduction. There is a uni-directional causality relationship running from government recurrent spending on social goods to poverty reduction. This implies that social government spendings has the potency of reducing poverty if resources are effectively monitored and productively spent for the purpose they are meant for. Based on these findings, the study recommends that government should establish an agency that should ensure adequate monitoring and implementation of government social expenditure in Nigeria.