Impact of foreign remittances on poverty reduction in Nigeria (1986-2020)
DOI:
https://doi.org/10.64171/JSRD.5.4.23-33Keywords:
Foreign remittance, Poverty reduction, Household consumption expenditureAbstract
In an era of declining Official Foreign Assistance (OFA) to the developing nations, remittances have become alternative source of foreign finance to these economies. This study focused on the impact of foreign remittances on poverty reduction in Nigeria (1986-2020). The specific objectives were; to determine the impact of remittances on poverty reduction in Nigeria; to examine the causality relationships between remittances and poverty reduction in Nigeria. Utilizing secondary data from the Central Bank of Nigeria and the world Bank, It employed the Vector Error Correction Model (VECM), using Household Consumption Expenditure as the dependent variable, while remittances, per capita income, life expectancy and real Exchange Rate as the independent variables. The findings revealed that remittances have statistically insignificant impact on poverty reduction in Nigeria at t–statistic (0.09124) > (0.05) significant level. Furthermore, there is causality relationship between remittances and poverty reduction in Nigeria. The study therefore recommended that government should priotize diaspora investments in the form of technical assistance, over and above other investment facilities such as national and state bonds, treasury bills, etc to attract real development in human capital and infrastructure which can accelerate economic growth, job creation and poverty reduction in Nigeria faster.
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