Explaining Poverty and Inequality Changes in Rural Nigeria

Abstract

The problem of poverty and inequality has been a long standing issue in most Sub-sahara African countries including Nigeria. The rural poverty situation in Nigeria was assessed using three datasets which include; 1996 National Consumer Survey (NCS), 2004 National Living Standard Survey (NLSS) and 2008/09 Harmonized National Living Standard Survey (HNLSS) all sourced from the National Bureau of Statistics. The level of poverty in the rural area was more severe in 1996 than in 2004. It was 69.2 per cent in 1996 and 65.1 per cent in 2004 indicating a reduction of -5.9 per cent. In 2010, poverty headcount rose by 9.06 per cent. Elasticity of Total Poverty with Respect to Average Income Growth shows that a unit change in income growth results in -0.86 poverty headcount meaning if income rises by 10 per cent, poverty will be reduced by 8.6 percent. Poverty gap with elasticity of -1.38 shows more decrease in poverty than headcount. Severity with elasticity of -1.72 indicates that with 10 percent increase in income growth, poverty will be reduced by 17.2 per cent. Severity (α = 2) is therefore the most poverty sensitive measure. Elasticity of total poverty with respect to inequality indicates that if inequality increases by 1 unit, Headcount (P0) increases by 0.095. Similarly, poverty gap (P1) of 1.26 implies that a unit increment in inequality pushes poverty up by 1.26. The trend continues with poverty severity index, P2 which increases poverty by 2.41 percent with a unit increase in inequality. Policies targeted at reducing inequality of opportunities among rural population will go a long way in alleviating poverty and in achieving the millennium Development Goal1.