Poverty Alleviation and Inequality in Nigeria

This study investigates the impact of poverty alleviation initiatives on income inequality in Nigeria for the period 2010–2024. The research was motivated by the persistent "Nigerian Paradox," where increasing government expenditure on social safety nets coexists with rising poverty headcounts and a widening wealth gap. Utilizing the Autoregressive Distributed Lag (ARDL) approach, the study analyzes the long-run and short-run dynamics between Poverty Alleviation Expenditure (PAE), Real GDP Growth, Inflation, and the Gini Coefficient. The empirical results from the Bound Test confirm the existence of a long-run relationship among the variables. Findings reveal that while poverty alleviation spending has a statistically significant negative impact on inequality in the long run, the magnitude is marginal. Conversely, Inflation was identified as the most significant driver of inequality, effectively neutralizing the benefits of cash transfers and social interventions, particularly during the 2023–2024 economic reforms. The Error Correction Model (ECM) indicates a speed of adjustment of 42.1%, suggesting that the Nigerian economy takes approximately 2.4 years to recover from short-term inequality shocks. The study concludes that poverty alleviation in Nigeria remains reactive rather than structural. It recommends a policy shift from consumption-based transfers to production-oriented interventions and emphasizes that macroeconomic stability, specifically inflation control, is a prerequisite for successful inequality reduction.