THE EFFECTS OF REMITTANCE ON POVERTY REDUCTION IN NIGERIA

This study examines the impact of remittances on poverty reduction in Nigeria, addressing the persistent issue of high poverty levels despite substantial remittance inflows. The primary objective was to assess how remittances influence poverty rates and investigate the causal relationship between remittances and poverty alleviation. Utilizing an ex-post facto research design and econometric methods, the study analyzed secondary data from the Central Bank of Nigeria covering 1990 to 2023. The econometric model included variables such as poverty rate, remittances, foreign direct investment, inflation rate, domestic investment, GDP growth rate, and unemployment rate. Statistical techniques, including unit root tests and cointegration tests, were employed in the analysis. The findings revealed a weak negative relationship between remittances and poverty rates, indicating that while remittances provided crucial financial support to households, their overall impact on poverty reduction was limited. This limitation was attributed to a dependency on remittance income, which did not promote productive economic activities. Additionally, foreign direct investment and domestic investment emerged as significant drivers of economic growth and poverty alleviation. In conclusion, the study highlights that remittances play a critical role in household welfare but are insufficient for sustainable poverty reduction. Recommendations were made for the Nigerian government to enhance financial literacy, encourage productive investments, improve access to banking services, and engage with the diaspora to leverage remittances for economic development.