Impact of Foreign Aid on Poverty and Economic Development in Nigeria

Topics: Poverty, Development aid, Aid Pages: 59 (16044 words) Published: March 25, 2010
This project focuses on the poverty profile in Nigeria, the foreign aids given to the nation to help alleviate poverty and how it affects the economic development of Nigeria. According to the World Bank website, “poverty is hunger. It is lack of shelter. Poverty is being sick and not being able to see a doctor. It is not being able to go to school, not knowing how to read, and not being able to speak properly. Poverty is not having a job, and is fear for the future, and living one day at a time. It is losing a child to illness brought about by unclean water. And lastly, it is powerlessness, lack of representation and freedom.”

Poverty is the inability to achieve a certain minimum standard of living. It is multidimensional, involving not only a lack of income, but also ill- health, illiteracy, lack of access to basic social services, and little opportunity to participate in processes that influence people’s lives. Mollie Orshansky, who developed the poverty measurements used by U.S government states that poverty is “to be poor is to be deprived of goods and services, and other pleasures that people around us take for granted” (Schwartz, 2005) Poverty is pervasive; as about 1.2 billion people in the world still live on less than a dollar a day and nearly 850 million people go hungry every night. (World Bank) According to Jhighan (2003), poverty is a misery-go-round plaguing the less developed countries.

The poverty level in Nigeria; as described by the World Bank (1996) is a paradox that contradicts the immense wealth it has. Nigeria is a country endowed with human, agricultural, petroleum, gas and large untapped mineral resources. It earned over US$300 billion from just petroleum during the last three decades of the twentieth century. Rather than recoding remarkable progress in national, socio-economic development, Nigeria has retrogressed to being one of the 25 poorest countries of the 21st century while she was among the richest 50 in the early 70s.

Nigeria enjoyed steady economic growth and relative stability in the 1960s and 70s especially with emergence of the mining industries. The per-capita income grew steadily and few people were between the poverty line as the agricultural public and industrial sectors absorbed a highest percentage of the labor force. In the early 1980s, severe economic crisis shook Nigeria bringing along with them real and perceived increases in the level of poverty in the country. This was due to factors such as declining prices of oil, the country’s main export, rises in the real international interest rates that compounded the external debt and subsequent slowing down of economic activities and growth. The major underlying cause of all these was domestic policy mistakes. (Aigbokhan, 2000)

In 1980, poverty was regarded as a rural phenomenon but by 1985, it had spread to urban areas. This was due to the high rural urban migration that accompanied the impetus to development generated by oil revenues. Also, the collapse of oil exports income and massive importation of food to meet the production capacity in the agricultural sector severely affected urban dwellers. Economic reforms were introduced by the government in 1986; Structural Adjustment Programme (SAP), which led to the removal of reduction of subsidies that were incidentally strategic to improving human welfare. Government spending on social services became dismal while the quality and quantity of public social services declined, especially in poor communities. Its social costs are reflected in increasing unemployment, cuts in social services, and general increases in the prices of basic commodities. The economic reform programme placed untold hardship on the vulnerable groups of the society such as the women, children and the aged, who make up a larger share of the poor. The standard of living of the general populace fell and led to poor access to food, shelter,...

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