Abstract

Poverty in Nigeria is more prevalent in the rural sector due to dwindling and inequitable distribution of real income. Remittances can be poverty reducing. However, the extent to which remittances affect poverty has not been adequately documented in Nigeria. This paper uses Nigerian National Living Standard Survey (NLSS), 2004 to analyse the impact of domestic remittances (from Nigeria) and foreign remittances (from African and other countries) on poverty in rural Nigeria. The socioeconomic characteristics showed that on the average, households that received foreign remittances had older heads (61.7 years), smaller household size (4.0± 2.5), bigger land size (18.53 ± 26.5 ha), higher literacy rate (0.50 ± 0.5) and non-poor (0.08 ± 0.3) with higher annual per capita expenditure (₦111,768  â‚¦179,868).  Poverty analysis showed that both types of remittances reduce the level, depth and severity of poverty in rural Nigeria. However, poverty is reduced more when domestic, as opposed to foreign remittances are included in household income, and when poverty is measured by the more sensitive poverty measures: poverty gap and squared poverty gap. At a poverty line of ₦23,733 per annum, a 10% increase in domestic remittances decreased Poverty Incidence(PI), Poverty Gap (PG) and Squared Poverty Gap (SPG)  by 1.80%, 1.60% and 1.60%  while 10% rise in foreign remittances reduced poverty incidence (PI), Poverty  gap (PG)  and Squared poverty gap (SPG) by 0.86%, 0.62% and0.62% respectively in rural Nigeria. Across GPZs, While 10% increase in foreign remittances reduced PI (-0.88%) in North-Central it had no effect in North-East (NE) (0.00%). Same increase in domestic remittances reduced PI, PG, SPG most in the South-South (-0.29%, -1.85% and -0.75%) and least in NE (-0.09%, -0.82% and -0.22%).

Key words: Remittances, rural Nigeria, poverty reduction.