Government Expenditure, Government Effectiveness and Poverty Reduction in Nigeria

This study explored the connection among government social spending, government effectiveness and poverty reduction in Nigeria, using time series data spanning from 1981 to 2023. The study employed the ADF structural breakpoint unit root, Granger causality, AutoRegressive Distributed Lag (ARDL) and diagnostic models. Poverty Reduction (measured by household final consumption expenditure) was specified as a function of government social recurrent expenditure, government social capital expenditure, worldwide governance indicator (measure of government effectiveness), unemployment rate, total population per year, consumer price index and human development index. It was realized from the ARDL output that government social recurrent spending (LNGSREXP) exerted a substantial (p-value = 0.00 & 0.00<0.05) positive influence on poverty level in Nigeria both in the short-term and long-term. Government social capital spending (LNGSCEXP) and consumer price index (CPI) exerted a substantial (p-values = 0.00 & 0.00<0.05; 0.01 & 0.02 <0.05) and negative influence on poverty level both in the short-term and long-term. Worldwide governance indicator (WGI), total population per year (LNPOP) and human development index (HDI) exerted an inconsequential (p-values = 0.39 & 0.40 > 0.05; 0.32 & 0.34 > 0.05; 0.38 & 0.36 >0.05) negative influence on poverty level in Nigeria both in the short-term and long-term. Unemployment rate (UNEMPLr) exerted an inconsequential (p-values = 0.31 & 0.30 > 0.05) positive influence on poverty level. Granger causality test result indicated that LNGSREXP, LNGSCEXP, LNPOP and HDI share a significant one-directional causality relationship with LNPOV, while WGI and CPI share no significant causality relationship with LNPOV. Sequel to the findings, it was suggested that there is a dire need for effective monitoring and evaluation of the various recurrent income channels to the Nigerian populations including social transfers, remunerations, other social benefits, etc., so as to ensure that the vulnerable ones (especially the less privileged ones) should through these means enjoy the dividends of democracy and good governance in the country.