Foreign Financial Inflows and Poverty in Nigeria

Abstract

This paper aims to study the effect of foreign financial inflows on poverty in Nigeria (1981-2015). The impetus for this study stems from the paradoxical observation that, although Nigeria is blessed with a high influx of foreign financial inflows (FFI), the country grieves from severe and lasting poverty. It is expected for every economy that there is existence of foreign financial inflows that the rate of poverty should be at its minimal level. The major objective of this research work is to examine how foreign financial inflows influences poverty in Nigeria. In the process of carrying out this research work, various variables such as inflation, gross domestic product, exchange rate, foreign direct investment, remittance, oil revenue and non-oil revenue were adopted. The data used in this research were secondary data obtained from the Central Bank of Nigeria Statistical Bulletin 2016 and World Development Indicators (WDI). The augmented dickey fuller test (ADF) for unit root test, Correlation analysis, Bound test and Autoregressive Distributed Lag Model (ARDL) were used in the estimation to this paper work. Findings were drawn from the research that foreign direct investment and oil revenue are significant to poverty reduction in Nigeria while the rest of the variables adopted were insignificant. Therefore, recommendation is suggested that the government should create a conducive environment for investors to be willing to invest so as to increase the foreign direct investment and also encourage the export of oil product in order to increase revenue from it.