Official Development Assistance and Poverty Alleviation in Nigeria: An Error Correction Model Approach

Aderemi Timothy Ayomitunde ., Yusuf Modupe Ololade ., Sodeinde Gbemi Moses ., Aleshinloye Ibrahim Babatunde .


This study is examined the relationship between official development assistance and poverty alleviation in Nigeria which majority of studies in the past have failed to explore. Consequently, the study utilized an error correction model to address its objective. The major findings in this study are as follows. There is a significant negative relationship between official development assistance and household consumption per capita in Nigeria. This implies that official development assistance has no capacity to alleviate the current worrisome level of poverty in this country. However, FDI contributes to poverty alleviation in Nigeria though not significant. Furthermore, 11% of the error caused by shock was corrected annually in the model.  The study therefore makes these recommendations for the policy makers; whenever alleviation of poverty is the target of the policy makers in the country, the Nigerian government should be committed to the provision of conducive investment environment that can facilitate further inflows of FDI from the developed countries, especially G 7 and G 13 countries. Also, the policy makers in Nigeria should not compromise in tailoring official development assistance towards projects and programs that have trickle down effects on the masses in Nigeria.


ODA; Household Consumption Per Capita: Poverty Alleviation and ECM

Full Text:



Adebayo, B. (2018). Nigeria overtakes India in extreme poverty ranking [Online]. 21.12.2018.

Akinmulegun, S.O. (2012). Foreign direct investment and standard of living in Nigeria, Journal of Applied Finance and Banking, Vol. 2, No. 3, PP. 21-32.

Akpan H. E. & Udoma, J. A. (2011). Official Development Assistance and Economic Performance in Nigeria, 1970-2010, Journal of Monetary and Economic Integration. Vol. 12, No. 1, PP. 125-150

Ali, M., & Zeb, M. (2016). Foreign Aid: Origin, Evolution and its Effectiveness in Poverty Alleviation. The Dialogue, 11.1

Ali, M., Nishat, M. & Anwar, T. (2010). Do foreign inflows benefit Pakistan poor? The Pakistan Development Review, Vol. 48, No. 4, PP.43-57

Askarov (2015). Development Aid and Growth in Transition Countries, World Development, Vol. 66, PP. 383-399.

Black, L. D. (1968). Chapter 2: The Rationale – Why Foreign Aid? In Black, Lloyd D., The Strategy of Foreign Aid, pp. 13-21, Princeton: D. Van Nostrand

CBN (2017). Statistical Bulletin, Central Bank of Nigeria

Collier, P. & Dollar, D. (2002). Aid allocation and poverty reduction, European Economic Review 46 (8): 1475-1500

Degnbol-Martinussen and Engberg-Pedersen, (2003). Aid: Understanding International Development Cooperation, London: Zed Books.

Dickey, D. A. & Fuller, W. A. (1981). Likelihood Ratio Tests for Autoregressive Time Series with a Unit Root, Econometrica, Vol. 49, P.P. 1057 – 1072.

Eskander Alvi, D. (2008). Aid, Policies, and Growth in Developing Countries A New Look at the Empirics, Southern Economic Journal, Vol. 74, No. 3, PP. 693-706

Griffin, K. (1991). Foreign Aid after the Cold War, Development and Change, Vol. 22, No. 4, PP. 645–85. DOI:

Israel A.O. (2014). Impact of foreign direct investment on poverty reduction in Nigeria, Journal of Economics and Sustainable Development, Vol. 20, No.5 PP 23-35.

Jide, I., Felix C. & Ese U. (2014). Poverty Alleviation and the Efficacy of Development Assistance Models in Nigeria: An Appraisal, International Journal of Humanities Social Sciences and Education (IJHSSE), Vol. 1, No. 5, PP. 1-8.

Johansen, S. & K. Juselius (1990). Maximum Likelihood Estimation and Inference on Cointegration with Applications to Demand for Money, Oxford Bulletin of Economics and Statistics, 52, PP. 169-210.

Kemp, M. (1995). The static welfare economics of foreign aid, in the gains from Trade and the gain from Aid: Essays in International Trade Theory. Routledge, NY

N‟dri Kan David (2017). Contribution of Official Development Assistance to Poverty Alleviation in the Ecowas, IOSR Journal of Economics and Finance (IOSR-JEF), Vol. 8, No. 2, PP. 37-49

OECD (2016).

Ogunniyi M.B. & Igberi C.O. (2014). The Impact of Foreign Direct Investment on Poverty Reduction in Nigeria, Journal of Economics and Sustainable Development, Vol. 5, No.14, PP.12-25

Okon, E. (2012). Five Decades of Development Aid to Nigeria: The Impact on Human Development, Journal of Economics and Sustainable Development, Vol. 3, No.1, PP. 32-42.

Phillips, P. C. & Perron, P. (1988). Testing for a unit root in time series regression, Biometrika, Vol. 75, PP.335-346

Sachs, J. (2005). The End of Poverty. Penguin Books: London

Todaro, M.P. & Smith, S.C. (2009). Economic Development. England: Pearson Education Limited

UNCTAD (2018). World investment Report 2018 published by the United Nations on Trade and Investment available at

United Nations (2015). Millennium Development Goals Report, United Nations.

Wood, T. (2015). Who supports Australian aid? - Devpolicy Blog from the Development Policy Centre. Retrieved on January 28, 2016 from

World Bank (2018). World Development Indicators. Washington D.C


  • There are currently no refbacks.

Editorial Office:

Educational Research Multimedia & Publications,
S.N. 21, Plot No 24, Mirza Ghalib Road Malegaon Nasik,
Maharashtra India - 423203.
+919764558895 (whatsapp),,

Copyrights © 2010-2020 - ERM Publications, India     

This work is licensed under