Human Capital Formation and Poverty Dynamics in Nigeria (1990–2024)

Abstract

Poverty remains a persistent and multidimensional challenge in Nigeria despite numerous policy interventions aimed at improving living standards. This study examined the effect of human capital formation on poverty dynamics in Nigeria, with the objective of determining whether investments in education, health, and employment significantly reduce multidimensional poverty. The study was anchored on the Basic Needs Theory, which emphasizes access to essential services such as education, healthcare, and decent work as fundamental to poverty reduction. A quantitative research design was adopted using annual time-series data covering the period 1990 to 2024. Poverty incidence, proxied by the National Multidimensional Poverty Index (NMPI), served as the dependent variable, while education expenditure, life expectancy, and unemployment rate were employed as indicators of human capital formation. The Ordinary Least Squares (OLS) technique was applied to estimate the long-run relationships among the variables, supported by relevant diagnostic tests to ensure robustness. The findings revealed that education expenditure and life expectancy exerted significant negative effects on poverty, indicating that improvements in education and health outcomes reduced multidimensional deprivation. Conversely, unemployment showed a positive and significant relationship with poverty, suggesting that labour market exclusion intensified poverty conditions. The study concluded that sustained investment in education, healthcare, and employment generation is essential for meaningful poverty reduction and recommended strengthened government commitment to these critical sectors.