Enhancing sustainable infrastructure development: A boon to poverty reduction in Nigeria

Abstract

This study provides an adequate account of the effect of infrastructure on poverty reduction in Nigeria over the period 1996–2019. The basis of evidence is anchored on the adoption of Autoregressive Distributed Lag bounds testing approach to cointegration and Granger causality test based on vector error correction mechanism. Using economic infrastructure spending (capital expenditure on economic services) and social infrastructure expenditure (like health and education) as infrastructure investment indicators, findings indicate that infrastructure development is found to be significant to poverty reduction. In addition, the causal direction between infrastructure and poverty seems to be bidirectional in the long run. This implies that improving infrastructure investment could be key to enhancing poverty-reducing effect, while poverty reduction would possibly engender better performance in the public sector, thereby resulting in efficient and effective allocation of resources towards developing substantial infrastructure. Hence, it is posited that with growing awareness that the provision of infrastructure in most developing countries, including Nigeria, is inadequate, introducing and implementing new and sustainable infrastructure investments are critical to ensuring poverty alleviation.