Public Sector Account Allocations and Poverty Reduction in Nigeria

This study examined the relationship between public sector allocations and poverty reduction in Nigeria.  The purpose was to examine the relationship between federal, state and local government allocations from the federation account on Nigeria poverty index. Time series data were sourced Central Bank of Nigeria statistical bulletin from 2000-2020.  Federal Government share from the federation account, State Government share from the federation account and Local Government share from the federation account were used as independent variables. Ordinary least square methods of cointegration, granger causality test, unit root test and vector error correction model were used to determine the long run relationship between federal allocations and Nigeria poverty reduction. The model found that 76.6 percent changes in poverty index in Nigeria could be traced to federal allocations. Local government allocation and federal government allocations have negative effect on poverty index in Nigeria while state government allocation has positive effect on poverty index. From the findings, the study concludes that federal allocations have significant effect on Nigeria poverty reduction. The study recommends legal framework to back allocation formula and the spending policy at the three tiers of government.