Nigeria has the largest population in Africa and is the eight most populous countries in the world. DFID (2009) observed that despite Nigeria’s oil wealth, poverty levels are high with more than half of its about 140 million people living on less than one dollar ($1) a day, one child out of every five children dies before it reaches its fifth birthday. These factors are key contributors to Nigeria being off track on the millennium development gaols.
The obstacles to promoting effective poverty reduction in the country are huge. Oil wealth has distorted the economy and has discouraged growth in other sectors. Competition for a share of oil wealth dominates politics, feeds corruption and diverts attention away from improving governance. Moreso, years of military rule has devastated the delivery of basic service, management of public finances and as such preventing the development of a social contract between the people and the government.
A combination of ‘Dutch disease’ and rent seeking behaviour has undermined activity in other areas of the economy (particularly agriculture and manufacturing) reducing non-oil sector economic growth, fuelling unemployment and increasing poverty and conflict. According to Collier et al (2003), the Dutch disease is a route by which aid might increase capital flight as it will tend to appreciate the real exchange rate thereby reducing the profitability of the tradable sector.
Worthy of note, is that there are different types of foreign aid to Nigeria, and yet, a comprehensive record of very aid received and how it was utilized seems very difficult to obtain. Thus the measurements of response of both the income and non-income determinants of poverty also seem difficult. Furthermore, corruption and capital flight have posed great obstacles to efforts aimed at reducing poverty via foreign aid and this was note by Lynda Chalker, the former British Secretary of State for International development when she revealed at the Commonwealth summit in Abuja, Nigeria on December 3, 2003 that 40 percent of the wealth created in Africa is invested outside the continent and that foreign aid has not been spared of this capital flight.
Despite the various international aid received by Nigeria, the country’s poverty indicators remains a far cry from what is expected; Nigeria has the highest number of children who are not enrolled in schools of any country in the world, has 2% of the world’s population but suffers 100% of the world’s maternal deaths (DFID,2009). In addition, access to primary healthcare, gender equality, availability and access to basic social services still remains a problem, neither has the standard of living of the people improved.
Abiola and Olofin (2008) noted that studies have examined the importance of foreign aid on food supply in countries where food crisis is prevalent, notably the low income countries in sub-Saharan Africa but not much has been done in investigating the relationship between foreign aid, food supply and poverty reduction in Nigeria.
OBJECTIVE OF THE STUDY
The main objectives of this work are:
i. To investigate the relationship between foreign aid and poverty in Nigeria.
ii. To investigate the impact of foreign aid on poverty level in Nigeria.
STATEMENT OF HYPOTHESIS
The work will be guided by these hypotheses
H0: There is no relationship existing between foreign aid and poverty in Nigeria.
H1: There is relationship existing between foreign aid and poverty in Nigeria.
H0: There is no significant impact of foreign aid on poverty in Nigeria.
SIGNIFICANCE OF STUDY
This work will help to determine the direction of impact of foreign aid on poverty in Nigeria and thus, validate or disprove the various schools of through. In addition it would serve as a guide to further enquiry and other research works.
LIMITATION OF THE STUDY
The mot debilitating limitation of this study is the inadequacy of data in that data on study poverty’s incidence in Nigeria by the relevant authority was last undated in the social welfare survey carried out by the federal office of statistics in 2007. Information made available to the researcher revealed that Mr. President has just requested the national poverty eradication programmes to collaborate with the federal office of statistics to conduct an update survey to avail him and all concerned the much needed current relevant data.