Income Redistribution, Growth and Poverty Dynamics During the Period of Economic Reforms in Nigeria

Income inequality and poverty in Nigeria are closely related. This study decomposed change in poverty in Nigeria into the growth and redistribution components using income and expenditure. Household survey data collected by the National Bureau of Statistics in 1998 and 2004 were used. Results show that in 2004, income inequality was higher in rural areas than urban areas. Income poverty head count in 1998 was 40.51%, and this increased to 51.59% in 2004. However, expenditure poverty head count decreased from 62.22% in 1998 to 54.37% in 2004. Within the limit of possible poverty lines, rural poverty was significantly higher than urban poverty during the two periods. Income growth reduced poverty where positive growth was obtained and redistribution reduced poverty where the Gini coefficient declined and vice versa. It was asserted that expenditure data are by far better than income for poverty assessment and recommended that welfare enhancing programs that will benefit urban/rural poor should be identified, while better economic opportunities should be created for those in rural areas in the process of the on-going economic reforms in Nigeria