Full Project – The impact of inflation and poverty on Nigeria economic growth

Full Project – The impact of inflation and poverty on Nigeria economic growth

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This study employed the use of  the Augmented Dickey-fuller unit root test, Ordinary least square (OLS), LM serial correlation, granger causality test and Heteroskedascity test respectively in other to empirically investigate the  impact of inflation and poverty on Nigeria economic growth for the period spanning from 1986 – 2018. The estimated result showed that inflation has a significant effect on Nigeria economic growth, there was a positive relationship between GDP and inflation and the P-value of 0.0071 showed that inflation has a direct substantial impact on the level of growth in the economic. On the other hand, unemployment which is the proxy to poverty depicts an inverse association to GDP. The result shows that unemployment has no impact or influence on the growth of the economy.





The word inflation in the main rings a bell in the market economy of the world, and has become a domestic name in most African countries today Nigeria inclusive.  Inflation is so enormous that it threatens any economy although some authors argue that it modest is required for sustainable financial development in any case, it is noticed that swelling is antagonistic to monetary development. The issue of expansion unquestionably is certainly not another event since it has stayed a significant issue in the nation throughout the years. Swelling is viewed as one of the most repetitively utilized term in financial dialog .there are different way of thinking on expansion yet there is an assent or endorsement among business analyst that swelling is a consistent ascending in the costs of products and administration tenaciously. In the expressions of Adenuga et al (2012), it is a beast which undermines all economies as a result of its bothersome impacts. Expansion can be characterized as a significant and supported increment in the general value level over some stretch of time. As per Omaru and Zubairu (2012), the idea of expansion can be characterized as a perseverance ascend in the general value level range of merchandise and ventures in the nation over the significant stretch of time. Albeit a few people, makers, buyers, proficient, exchange unionist, laborers and the preferences, talk regularly about expansion especially if the trouble has expected an incessant character, yet just extraordinary not many knows or even try to think about the instrument and outcomes of swelling. Throughout the years in Nigeria, the economy has been encountering ascend in cost and there has been financial development after some time too. Consequently, it is our mean in this examination is to test whether ascend in cost has positive or negative impact on monetary development in Nigeria. The issue of expansion has been a subject of worry for market analysts extra time as it stays a reality that the genuine pay of the residents are influenced during swelling except if with compensatory salary by means of sponsorship or inside and out increment in the laborers’ pay rates. The end is another monetary issue which when not joined by expanded efficiency will prompt progressively inflationary inclinations in the economy in light of the fact that the estimation of cash would have fallen when the expanded salaries neglect to achieve greater profitability from the pay increments. As indicated by Fatukasi (2012) in Nigeria, regardless of the few endeavors guided by the legislature to control expansion, these endeavors have not yielded positive or wanted outcomes as significant expense level kept on causing mishaps in the development pace of the expectation for everyday comforts of the most Nigerians who are either on fixed salary or are jobless. He included that it effectsly affects venture efficiency, parity of installment and in this manner decreased development pace of the GDP (Gross domestic product). Moreover, Fatukasi (2012) called attention to that expansion inflationary rates frequently lead to major financial contortions, for example, equalization of installment shortfall, downgrading of naira, decrease in obtaining intensity of the regular workers which makes the laborers associations to set out on repetitive disturbances for higher wages.

Neediness then again, has been a serious circumstance and is one of the world’s disrupted issues or issues particularly in creating nations. It is multidimensional in nature and can be clear in various structures, for example, lack of material salary sufficient to ensure great way of life, hunger and under nourishment, disease, constrained instruction and key help, tireless ascent in mortality and horribleness because of disorder vagrancy and insufficient lodging, shaky condition, social rejection and separation (Ogbeide, Nwamaka and Agu, 2015).

The neediness in Nigeria is ascending with just about 100 million of its populace living under 1$ every day disregarding a solid development in Africa’s second biggest economy (Daniel, 2011).The level of Nigerians living in outright destitution (the individuals who can’t bear to minimum necessity of nourishment, safe house and attire) rose to 60.9%in 2010 contrasted and 54.7% in 2004(National authority of insights, 2011).Although the Nigeria’s economy is relied upon to keep developing, neediness is probably going to deteriorate as the hole between the rich and the poor has keep on extending. Little meander kale (2012), clarified that destitution in Nigeria is a logical inconsistency, that regardless of the way that Nigeria’s economy is required to keep developing, yet the extent of Nigerians living in neediness has keep on expanding each year.

As per the National authority of measurements report, 112.519million out of an expected 163 million of Nigeria’s populace live in relative neediness. Discussing relative neediness, it is the examination of the expectation for everyday comforts of individuals living in a geo-graphical region or a given society at a particular timeframe. Aside from these, Nigeria flops all neediness tests that require all destitution estimation guidelines. The total destitution measure puts the nation’s neediness profile at 60.9% dollar, every day measure puts neediness measure at 61.2% and emotional measure puts neediness profile at 93.9%. An exact marker is the ongoing Blended National expectation for everyday comforts review (HNLSS) puts the nation’s destitution profile at 69.0%. The inquiry is what befallen the famous development rate averaging 7.4% in the most recent decade? In fact, there is a basic disengagement between development, destitution and expansion. The endeavor is to examine and decide the effect of swelling and destitution on the Nigeria financial development is the spotlight of the examination.

1.2       STATEMENT OF THE PROBLEM                          

The issue of expansion in Nigeria started during the disclosure of the oil excess in 1981, and this came about into parity of installment shortfall that prompted outside trade emergency which require different proportions of significant confinements. This confinement lessens crude material for residential creation and extra parts for household apparatus activity.

The lack of merchandise and ventures for nearby utilization prodded the expansion rates to ascend from 20% in 1981 to 39.1% in 1984 (Itua, 2000). The difference between the Nigeria’s financial sign, macroeconomic factors and the fact of the matter is a wellspring of concern; this is the fundamental explanation or understanding that makes the cheer of proceeded with development in the Gross domestic product in Nigeria inquisitive. Nigeria is known to be a nation loaded with wealth and destitution, actually said to be a stunning riches in the hands of the couple of and there is a wretched or outrageous neediness at the doorsteps of many. Actually amazing a consequence of not had the option to get to essential open social insurance, same as not had the option to bear the cost of three full dinner daily. As weird as this may sound, this goes one next to the other as a presentation of riches by the hands of the couple of.


To achieve the above objective of the study, the following questions were raised:

  1. What is the impact of inflation on the Nigeria economic growth?
  2. What is the effect of poverty on the Nigeria economic growth?
  3. How do we eradicate poverty and maintain price stability in Nigeria economy






Holistically, this study is to examine inflation and poverty on economic growth in Nigeria. Specifically, the study seeks to:

  1. Examining the impact of inflation on Nigeria economic growth.
  2. Investigate the effect of poverty on Nigeria economic growth.
  3. Examining the positive or negative effect of rise in price on Nigeria economic growth


  1. Ho: inflation has no significant impact on Nigeria economic growth

H1: inflation has a significant impact on Nigeria economic growth

  1. H0: poverty has no significant impact on Nigeria economic growth

H1: poverty has a significant impact on Nigeria economic growth.


The question, Why has inflation and poverty continue to rise in spite of the nonstop increase in the Nation’s GDP? This  Needs to be embarked upon and given an answer reason for this is that, inflation and poverty are the major issues that are affecting our country and this has been discussed by both experts and lay-man alike. Therefore this research may be of importance to economic decision makers, as it will serve as a knowledge and skill needed to tackle the urgent issues of the inflation and poverty in the country. Also it will thus, serve as an important help in the course of carrying out further research.


-Poverty trap: it is a rotation of poverty.

-GDP: it is the Gross domestic product (This is the summation of all goods and services produced in the country annually).

-Unemployment rate:  this will be used to capture poverty in other words will be as a proxy to poverty.


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Full Project – The impact of inflation and poverty on Nigeria economic growth