Harnessing Oil Sector Gains for Poverty Alleviation: An Investigation of The Link Between Oil Sector Performance and Poverty Incidence in Nigeria
Abstract
With vast oil reserves and substantial oil sector revenue, it is no surprise that Nigeria is a major oil-producing nation. However, despite its considerable oil wealth, Nigeria continues to grapple with poverty and inequality, with more than half of the population living below the poverty line. This puzzling discrepancy between Nigeria's oil sector gains and its persistent poverty highlights the complex relationship between resource abundance and poverty reduction. This study examines the intricate dynamic relationship between oil sector performance and poverty incidence in Nigeria, spanning a period from 1980 to 2025. By employing a diverse range of economic indicators, including real GDP, gross fixed capital formation, oil revenue, oil output, government expenditure, and institutional quality, the study determined the order of integration of variables using Phillips–Perron unit root and KPSS tests. Further analysis using VAR and ARDL bounds test revealed insights into the response of poverty incidence to oil sector performance and short-run and long-run relationships. The study found that increases in oil revenue produced a positive yet insignificant impact on poverty, while oil sector output produced a negative and significant impact. Institutional quality, represented by the corruption perception index, also produced a negative impact but was statistically insignificant. Based on these findings, the study recommended reinvesting oil revenue in productive sectors, such as agriculture and manufacturing, to create jobs and reduce unemployment. It also suggested facilitating regulatory collaborations between institutions to maximize the benefits from oil sector revenue and mitigate systemic leakages, in pursuit of sustainable development and poverty reduction in Nigeria.
Keywords
Oil Sector Performance, Vector Autoregressive (VAR), Auto-Regressive Distributed Lag (ARDL), Kwiatkowski-Phillips-Schmidt-Shin (KPSS) test and Poverty Incidence
Citations
IRE Journals:
Godwin Mfon Ekpo PhD , Nathaniel A. Udoh PhD
"Harnessing Oil Sector Gains for Poverty Alleviation: An Investigation of The Link Between Oil Sector Performance and Poverty Incidence in Nigeria" Iconic Research And Engineering Journals Volume 9 Issue 4 2025 Page 57-71
IEEE:
Godwin Mfon Ekpo PhD , Nathaniel A. Udoh PhD
"Harnessing Oil Sector Gains for Poverty Alleviation: An Investigation of The Link Between Oil Sector Performance and Poverty Incidence in Nigeria" Iconic Research And Engineering Journals, 9(4)
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