Real Sector Development and Poverty Reduction in Nigeria

Donny Marclary Ayibazuomuno Dr Sigah and Lubo Ebisine
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Donny Marclary Ayibazuomuno Dr Sigah: Department of Economics, Faculty of Social and Management Sciences, University of Africa, Toru Orua, Bayelsa State, Nigeria.
Lubo Ebisine: Department of Economics, Faculty of Social and Management Sciences, University of Africa, Toru Orua, Bayelsa State, Nigeria.

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 8, 1817-1829

Abstract: This paper examined the link between real sector development and poverty reduction in Nigeria. The objective of the study is to examine the impact of real sector variables on poverty rate in Nigeria. The datasets were analyzed using parsimonious error correction model (ECM) and post-estimation tests. The results of the unit root showed that all the variables are stationary at first difference. Evidence of a long-run association between real sector development and poverty headcount was established from the Johansen cointegration test results. It was found from the parsimonious ECM that agriculture value added to GDP significantly reduced poverty headcount during the study period. The estimated parameter showed that a per cent increase in agriculture value added to GDP leads to a significant reduction in poverty by 0.743 per cent. Similarly, manufacturing value added to GDP contributed significantly to reducing poverty. It was found that the poverty headcount was reduced by 0.454 per cent following a 1 per cent increase in the manufacturing value added. On the contrary, service value added to GDP exacerbated the prevalence of poverty during the study period. A 1 per cent increase in the service sector value added to GDP is associated with a 1.0479 increase in poverty headcount. Given the findings, this study recommends that policymakers prioritise investments in the agriculture and manufacturing sectors to deepen the level of development and create more opportunities for poverty reduction.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bcp:journl:v:8:y:2024:i:8:p:1817-1829

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