Foreign Capital Inflows and Poverty Reduction in Nigeria: An Implication for Sustainable Development

  • Johnson Kolawole Olowookere
  • Samson Oluwole Olowo
  • Oladotun Toriola Mabinuori
  • Timothy Ayomitunde Aderemi Bells University of Technology, Ota
Keywords: FDI; FPI; ODA, Remittances, External Debt


This study aims at examining the contributions of the different components of foreign capital inflows in driving one of the key goals of sustainable development-poverty reduction in Nigeria. In achieving the objective of this study, annual data between 1990 and 2019 were utilized with the application of FMOLS and Granger causality technique of estimation. The findings of this research work are as follows; firstly, foreign capital inflows and poverty reduction have a long run equilibrium relationship in Nigeria. Furthermore, there is a unidirectional causality flowing from poverty reduction to foreign direct investment. Poverty reduction Granger causes foreign portfolio investment. Also, feedback relationship exists between poverty reduction and remittances. This implies that poverty reduction is a strong factor causing the inflows of foreign capital such as FDI, FPI and remittances in Nigeria. Moreover, the majority of the components of foreign capital inflows such as FDI, FPI and remittances contributed immensely to the reduction of poverty in Nigeria. This implies that foreign capital inflows have the capacity to propel the achievement of Sustainable Development Goal one - poverty reduction in Nigeria. Therefore, this study makes the following recommendations for the policymakers in Nigeria and by extension Africa that, any time these policymakers set to achieve Sustainable Development Goal one i.e poverty reduction, foreign capital inflows such as remittances, foreign portfolio investment, FDI and external debt should be given priority in their country. And such, the policy that facilitates the sporadic inflows of these variables should be embarked upon by the Nigerian policymakers in particular and African policymakers in general. 


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