FDI AND POVERTY ALLEVIATION IN NIGERIA - AFRICA

INTRODUCTION - BACKGROUND OF THE STUDY
           Poverty is the condition of having insufficient resources or income to meet the basic needs of life. It could be seem from the multidimensional aspect, involving not only lack of income, but also ill-health, illiteracy, lack of access to basic social services and little opportunity to participate in the processes that influence people’s lives. According to the Encyclopaedia Americana (cited in Ijaiya and Mobolaji, 2004) poverty is viewed from the perspectives of moneylessness and powerlessness. Moneylessness means insufficiency of cash and chronic inadequacy of resources of all types to satisfy basic human needs such as nutrition, warmth, rest and body care. Powerlessness on the other hand means lack of opportunities and choices to govern oneself. It describes a set of people who lack the opportunities and choices and whose lives seem to be governed by forces and persons outside their control.


          The definition of poverty distinguishes two types of poverty: the absolute and relative poverty. One can sometimes make the distinction between the poor and the non-poor against absolute standard of welfare (e.g. amount of income, life expectancy and housing conditions). For instance, if you know about the family living just on the local staple (“garri” potatoes, rice etc). you might conclude that, that family is poor. The relative measure of poverty identifies the poor by relating their position to that of other individuals in their environment or another. The extreme poor, also referred to as “hard-core poor”, are more likely to be underweight; have higher mortality rates; prone to disease and illness; less likely to have assets and have series fluctuations in their employment status (Sowa, 2003).

          Two factors are responsible for poverty according to Yahie (1993) these include:
(a)          Structural factors that are more permanent and dependent upon a host of exogenous factors such as limited resources, lack of skills, locational disadvantage and other factors that are inherent in the socio-political set-up.
(b)         Transitional factors that are mainly due to structural adjustment programs and changes in domestic economic policies that may result in price changes and increased unemployment.

The United National Development Program (1998) provides six typologies of poverty some of which overlap.
1.            Human poverty: This means lack of essential human capabilities such as being literate or adequately nourished.
2.            Income poverty: This means the lack of minimally adequate incomes or expenditure.
3.            Extreme poverty: This type of poverty is specified as the inability to satisfy minimum food requirements.
4.            Overall poverty: This refers to a less severe level of poverty usually seen as the inability to satisfy essential non-food as well as food needs of which the former varies considerably across societies.
5.            Relative poverty: Is defined by standard that change across countries or overtime often in terms of the capital income and often loosely used to mean overall poverty.
6.            Absolute poverty: This is defined using an international standard of $1 a day as the poverty line.

Recognizing that economic growth is necessary and that poor policies and structural weakness mainly bring about worsening economic and social conditions, the United National (UN) in its millennium summit in 2000, agreed upon a set of millennium development goals (MDG’s) to be reached by year 2015 as a way of guiding future efforts to address poverty. One important commitment required to meet the MDG’s was for the wealthy nations to increase their aid to 0.7 percent of Gross National Income.

          Nigeria faces a major development challenge of how to revue the high poverty level prevailing among her population. Central to this challenge is how the country can effectively and substantially feed over 140 million people as well as accelerate economic development, just as the prominent requirement for foreign aid to Nigeria is that it should facilitate reduction in poverty and hunger as stipulated in one of the eight millennium development goals. Moreso, the past 50 years of Nigeria’s history has been characterized by high economic volatility, political instability and social unrest which have militated against the effective management of its wealth. Hence, there is a negative impact of resources arising from large inflows of foreign capital and resulting high currency exchange rates, which makes manufacturing non-competitive and encourage de-industrialization.

          Generally, there are two schools of thought as regards the impact of foreign aid on poverty. The first school of though believes that foreign aid would help augment the efforts of the government on the standard of living of its people and also aid economic growth. While the other school of thought believe that foreign aid to developing countries harms their economy, since the aids are most of the time not properly utilized, and at times out rightly looted.
          Thus, in a resource rich state like Nigeria, where politics, public service and social existence is often entangled with business interest and as such feeds corruption and mismanagement, the contribution of foreign aid to the improvement of poverty is the country remains an acid test for aid effectiveness.
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