Oil Revenue, Government Expenditure and Poverty Rate in Nigeria

Abstract

This study examines the impact of revenue from oil proceeds and disaggregated government spending on poverty rate in Nigeria. Different econometrics tests i.e. pre-estimation test, estimation techniques and diagnostic tests such as Augmented Dickey Fuller, Engel- Granger co-integration, Ordinary Least squares and Granger causality were analysed using the data sets within the period of 1970 and 2013. Empirical result disclosed that gross domestic product and revenue from oil proceeds exert negative effect on poverty rate in Nigeria during the reviewed period. This revealed that oil proceeds being the main revenue source in Nigeria have greater impact in ensuring equal distribution of income as a means of reducing poverty level among her citizens. Painstakingly, these proceeds are not channelled into right directions with regards to government spending on capital projects and recurrent expenditure. This further exacerbates the poverty level in Nigeria.