FOREIGN AID, REMITTANCES AND HOUSEHOLD WELFARE IN NIGERIA

Abstract This examines the dynamic relationship between foreign aid, remittances and household welfare in Nigeria using annual data from 1986 to 2024. The data for the study were sourced from Central Bank of Nigeria statistical bulletin and World Bank’s Development Indicators. The study employed both descriptive statistics and analytical technique of Autoregressive Distributive Lag (ARDL) and Granger Causality Test. The dependent variable is household welfare proxied by GINI coefficient while the explanatory variables include official development assistance (ODA), multilateral aid (MLA), bilateral aid (BLA), technical corporation grant (TCG), remittances (RMT), GDP per capita (GDPPC), exchange rate (EXR) and consumer price index (CPI). The results of ARDL bounds test establishes a strong long-run relationship between foreign aid, remittances, and household welfare in Nigeria. The results of the first objective reveal that official development assistance (ODA), multilateral aid (MLA), and bilateral aid (BLA) positively and significantly impact household welfare in both short-run and long-run, while technical cooperation grants (TCG) show a negative and insignificant effect in both short-run and long-run. Findings of the second objective show that remittances also exhibit a positive and significant influence on household welfare in both the short and long run. The third objective of the study further reveals bidirectional causality between household welfare and both ODA and TCG, while BLA and RMT exhibit a unidirectional causal effect on household welfare. Also, remittance inflows may prompt increased foreign aid, particularly during crises, highlighting their complementary role in enhancing household well-being.