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NIGERIA'S POVERTY REDUCTION STRATEGIES: A CRITICAL REVIEW OF THE NATIONAL DEVELOPMENT PLAN (2021-2025)

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Poverty reduction has been a central theme in Nigeria’s development agenda for several decades. Nigeria, Africa’s most populous country, continues to grapple with high levels of poverty despite its abundant natural resources. In response to the persistent poverty challenge, the government has implemented various strategies aimed at reducing poverty and improving the standard of living. One of the most recent and ambitious plans is the National Development Plan (2021–2025), which is part of Nigeria’s broader framework for achieving sustainable development goals. This plan seeks to address the structural causes of poverty by promoting inclusive growth, economic diversification, and human capital development (World Bank, 2021).

Over the years, the Nigerian government has introduced multiple programs and strategies aimed at poverty alleviation. Programs such as the National Economic Empowerment and Development Strategy (NEEDS) and Vision 20:2020 were designed to reduce poverty and drive economic growth (Okafor & Egbu, 2021). However, despite these efforts, poverty remains widespread in Nigeria, with over 40% of the population living below the national poverty line. This underscores the need for a more comprehensive and effective approach to poverty reduction, which the National Development Plan (2021–2025) aims to achieve (National Bureau of Statistics, 2021).

The National Development Plan (2021–2025) is a successor to the Economic Recovery and Growth Plan (ERGP) (2017–2020). The ERGP focused on restoring growth, investing in people, and building a globally competitive economy. While the ERGP made some progress, it fell short of its objectives due to challenges such as inadequate funding, poor implementation, and the COVID-19 pandemic (Adewole, 2021). Consequently, the National Development Plan seeks to build on the successes of the ERGP while addressing its shortcomings. It prioritizes human capital development, infrastructure, and economic diversification, all of which are crucial for reducing poverty in Nigeria (Adeosun & Yusuf, 2021).

A key feature of the National Development Plan is its focus on inclusive growth. Inclusive growth is essential for poverty reduction as it ensures that the benefits of economic growth are distributed equitably across all segments of society. The plan emphasizes the need to create jobs, especially for the youth, and promote small and medium-sized enterprises (SMEs) as a means of generating income and reducing poverty (Federal Government of Nigeria, 2021). By fostering an enabling environment for entrepreneurship and job creation, the plan aims to lift millions of Nigerians out of poverty by 2025 (UNDP, 2021).

The plan also emphasizes economic diversification as a critical component of poverty reduction. Nigeria’s economy has traditionally been heavily dependent on oil, which accounts for a significant portion of government revenue and export earnings. However, this dependence on oil has made the economy vulnerable to external shocks such as fluctuations in global oil prices. The National Development Plan seeks to reduce this vulnerability by promoting non-oil sectors such as agriculture, manufacturing, and technology (Okoye, 2021). By diversifying the economy, the government aims to create more jobs, increase incomes, and reduce poverty (African Development Bank, 2021).

Human capital development is another cornerstone of the National Development Plan. The government recognizes that investing in education, health, and social protection is essential for breaking the cycle of poverty. The plan outlines strategies for improving access to quality education and healthcare, particularly for vulnerable groups such as women and children (UNICEF, 2021). It also aims to strengthen social protection programs to provide a safety net for the poor and marginalized. These measures are expected to enhance the productivity and earning potential of the poor, thereby reducing poverty (Adepoju, 2021).

Despite the ambitious goals of the National Development Plan, there are several challenges that could hinder its implementation. One of the major challenges is funding. The plan requires significant financial resources, and there are concerns about the government’s ability to mobilize sufficient funds to implement the various initiatives outlined in the plan (Oyedele, 2021). Additionally, issues such as corruption, poor governance, and inadequate infrastructure could pose significant obstacles to the successful implementation of the plan (Transparency International, 2021).

Moreover, the COVID-19 pandemic has exacerbated poverty in Nigeria, pushing millions of people into extreme poverty. The pandemic has led to job losses, reduced incomes, and increased food insecurity, particularly among the poor. The National Development Plan acknowledges the impact of COVID-19 and outlines measures to mitigate its effects. These include targeted interventions to support the most affected sectors and populations, as well as strategies to strengthen the country’s health system to better respond to future pandemics (WHO, 2021).

In conclusion, Nigeria’s National Development Plan (2021–2025) represents a comprehensive strategy for addressing poverty and promoting sustainable development. By focusing on inclusive growth, economic diversification, and human capital development, the plan aims to tackle the root causes of poverty and lift millions of Nigerians out of poverty by 2025. However, the success of the plan will depend on the government’s ability to overcome the challenges of funding, governance, and infrastructure. It is therefore imperative that the government ensures effective implementation, monitoring, and evaluation of the plan to achieve its poverty reduction goals.

1.2 Statement of the Problem

Despite numerous poverty reduction strategies over the years, poverty remains a pervasive issue in Nigeria. The high poverty rate, exacerbated by economic instability, has hindered the country's development. Past initiatives, including the Economic Recovery and Growth Plan, have made limited progress due to poor implementation, funding challenges, and external factors like the COVID-19 pandemic. This study seeks to critically examine the National Development Plan (2021–2025) as a potential solution to Nigeria’s poverty crisis, addressing its strengths and weaknesses, and evaluating whether it can effectively reduce poverty in the country.

1.3 Objectives of the Study

The main objective of this study is to determine the effectiveness of the National Development Plan (2021–2025) in reducing poverty in Nigeria.

Specific objectives include:

i.               To evaluate the impact of the plan on inclusive economic growth.

ii.             To determine the role of economic diversification in poverty reduction as outlined in the plan.

iii.             To find out the extent to which human capital development initiatives contribute to poverty alleviation under the National Development Plan.

1.4 Research Questions

i. What is the impact of the National Development Plan on inclusive economic growth in Nigeria?

 ii. What is the role of economic diversification in reducing poverty as outlined in the National Development Plan?

 iii. How does human capital development contribute to poverty alleviation under the National Development Plan?

1.5 Research Hypotheses

Hypothesis I
H0: There is no significant impact of the National Development Plan on inclusive economic growth in Nigeria.
H1: There is a significant impact of the National Development Plan on inclusive economic growth in Nigeria.

Hypothesis II
H0: There is no significant role of economic diversification in reducing poverty under the National Development Plan.
H2: There is a significant role of economic diversification in reducing poverty under the National Development Plan.

Hypothesis III
H0: There is no significant contribution of human capital development initiatives to poverty alleviation under the National Development Plan.
H3: There is a significant contribution of human capital development initiatives to poverty alleviation under the National Development Plan.

1.6 Significance of the Study

This study is significant as it provides a critical review of Nigeria’s current poverty reduction strategy, the National Development Plan (2021–2025). It will be useful to policymakers, development practitioners, and researchers interested in understanding the effectiveness of poverty reduction strategies in Nigeria. The study will also contribute to the broader discourse on sustainable development in developing countries and offer insights for improving the implementation of poverty alleviation programs.

1.7 Scope of the Study

This study focuses on the National Development Plan (2021–2025) and its impact on poverty reduction in Nigeria. It covers three main components of the plan: inclusive economic growth, economic diversification, and human capital development. The study will evaluate the effectiveness of these components in reducing poverty within the Nigerian context.

1.8 Limitations of the Study

The study is limited by the availability of data, as some of the information on the implementation of the National Development Plan may not be fully accessible. Additionally, the study focuses on the early years of the plan’s implementation, which may limit the ability to draw long-term conclusions about its effectiveness in reducing poverty. Moreover, external factors such as the COVID-19 pandemic may influence the outcomes of the study.

1.9 Definition of Terms

Inclusive growth: Economic growth that is distributed fairly across society and creates opportunities for all segments of the population.

Economic diversification: The process of reducing reliance on a single sector, particularly oil, and promoting growth in other sectors such as agriculture, manufacturing, and services.

Human capital development: Investment in education, health, and social protection to enhance individuals' skills, productivity, and earning potential.

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