Impact of Remittances Inflows and Macroeconomic Stability on Poverty in 1 Nigeria (1977-2014)

10 The study explored the trend and effects of macroeconomic conditions on poverty (using 11 household consumption as proxy for poverty) in Nigeria. It also analyzed how foreign migration 12 remittances affect aggregate household poverty. It relied on secondary data analyzed using trend 13 and cointegration analysis. It was found that on the long run, when gleaned from the perspective 14 of aggregate household consumption, level of poverty in the country could be explained by 15 economic growth (GDP per capita current USD, lngdp), volume of export trade as percentage of 16 GDP (lnexptrgdp), official exchange rate of Nigerian Naira to USD (lnforex), inflation rate 17 (lninf) and age dependency ratio of population (proxy for aggregate level of unemployment) 18 (lnagedprat). Efforts must be put in place to promote youth employment opportunities, export 19 market access to Small and medium scale enterprises, proper management of foreign exchange 20 regimes. Since migration is not a sustainable source of income for the country, Nigerian 21 authorities must provide education and skills acquisition opportunities too and enhanced working 22 conditions to reduce dependency on immigration as a source of poverty reduction in households.

The good news is that for the first time ever, migration is included in the global development According to Imai et al. (2014), most studies exploring the relationship between migration and 2 economic growth or poverty have erstwhile depended on cross sectional data. This study differs 3 by using a time series modelling to explore the possible link between migration remittances and 4 aggregate consumption (our proxy for welfare growth). It is not clear in empirical terms how 5 foreign migration remittances alongside macroeconomic factors have contributed to poverty levels 6 of emigrants' countries (especially that of Nigeria). Therefore, an empirical investigation into such 7 relationships as this current will give policy makers evidence on relationship between foreign 8 immigration incentives and poverty alleviation drive in emigrating countries. Results can inform 9 policymakers better on the right tools to use in formulating and implementing policies that will 10 effectively tackle global poverty and how to effectively manage immigration crises thus 11 contributing to attaining the Sustainable Development Goals.

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The aim of this research therefore, is to find the nexus between welfare and international 14 migration. Specifically the study seeks to: (i) chart and analyze the trend of foreign immigration  Gelderblom 2006) or probably by wage differential levels between regions, corrected for the 1 probability of seeing employment in the destination area (Todaro 1976). Thus, if the expected 2 income gains derivable from a move from place A to place B is higher than the costs of migration, 3 a potential migrant is expected to move (Bauer and Zimmermann 1995;Chiswick 2000). 4 Gelderblom (2006) therefore concluded that poverty and unemployment were therefore the major 5 push factors in the area of origin, and the possibility of employment and an improved income 6 major pull factors in the destination area. Some studies have found that migration remittances, 7 after such labour push have exerted positive relationship between remittances and economic 8 growth to the extent that they significantly contributed to the value added in agriculture, 9 manufacturing and service sectors of the economy (Nyan 2013). The insight from the foregoing 10 gave the author evidence to assume that aggregate consumption expenditure in Nigeria could be 11 affected by remittances since remittances are used in consumption by households and partly for 12 investments. According to Glystos (1993) most remittances are spent on consumption but a 13 substantial part goes into housing and a moderate amount into investment. Glystos' report 14 corroborated this using a report in which he indicated that 62.6% of remittances from migrants in 15 their home countries (Greece and Germany) were spent on consumption.
(2017) indicated that income, inflation and the real exchange rate exerted significant positive long-1 run effects on household consumption expenditure in Ghana.   The study adopted a survey approach to econometrically determine the relationship between 12 aggregate poverty and foreign migration remittances to Nigeria over a period of 39 years. It relied 13 primarily on secondary data from World Bank World Development Index (WDI) and Central 14 Bank of Nigeria (CBN) spanning from 1977 to 2014. The sampling method was a purposive 15 sampling method based on period when data on all the variables of interest were available in the 16 time series data from the institutional data used.

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The key approach in this paper is similar to Mukherjee and Benson (2003) as cited and adopted in 19 Grounder (2012) which is based on modelling the natural logarithm of total per capita 20 consumption of households, an indicator of household welfare, against a set of exogenous 21 determinants. However, this present study differs in the sense that this study looks at the role of 22 foreign migration remittances as an explanatory variable (or determinant) among other 23 macroeconomic factors in determining aggregate per capita household consumption in Nigeria.

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The major data utilized in this study included natural logs of selected time series data briefly listed  developing countries. It showed that cross-country and country case studies have provided overwhelming evidence to justify the fact that rapid and sustained growth is critical to generating 1 virtuous circles of prosperity and opportunity. However, the caveat DFID gave is that "the extent 2 to which growth reduces poverty depends on the degree to which the poor participate in the 3 growth process and share in its proceeds." Hence DFID recommends the promotion of rapid and 4 sustained economic growth which is environmentally sustainable to implement a successful 5 strategy of poverty reduction. Hence in this study the apriori expectation is that GDP growth may 6 influence poverty (aggregate consumption) either positively or negatively. United Nations Conference on Trade and Development, UNCTAD (2013) notes that trade plays a 10 major role in job creation and poverty reduction globally. It recommends policies that will 11 engender countries' competitiveness and increasing exports. This should also include poverty 12 reduction through "breaking into global value chains (GVCs) to generate employment or to 13 replace imports and restore production so that jobs return." They also showed that trade can 14 facilitate decrease of inequality between countries but could also result in increase of inequality 15 within countries. It is against this backdrop that this study tests the hypothesis to affirm the 16 possibility of Export Trade calculated as exports of goods and services as percentage of GDP (%) 17 (coded as lnexptrgdp) exerting any significant effect on aggregate consumption.  Three macroeconomic factors that can affect economic stability and consequently affect poverty 24 include inflation and foreign exchange regimes in the country as well as the levels of foreign 25 direct investments. IMF (2001) further notes that "monetary and exchange rate policies can affect the poor primarily through three channels: inflation, output, and the real exchange rate." Inflation, 1 they note hurts the poor. This is because inflation acts as a regressive tax and restricts growth.    The bounds test allows a mixture of I(1) and I(0) variables as regressors, therefore, the ARDL 4 technique has the advantage of not requiring a specific identification of the order of the underlying 5 data and it is quite suitable for small or finite sample size. In addition, the bound testing approach hypothesis (H A : δ 1 ≠ δ 2 ≠ δ 3 ≠…≠ δ n ≠0) (a long-run relationship exists). The estimated F-statistic 14 value will then be evaluated using the critical values tabulated in Table CI ( denoted VAR (p), for the following function were aggregated: where z t is the vector of both x t and y t , where y t is the dependent variable defined as  10 where  is the first-difference operator. The long-run multiplier matrix  as: The diagonal elements of the matrix are unrestricted, so the selected series can be either I(0) or 14 The vector error correction mechanism (VECM) approaches described above are imperative in the 15 testing of at most one cointegrating vector between dependent variable t y and a set of regressors unrestricted intercepts and no trends was followed.

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The Equation (2) can be estimated in two steps. In the first step, the null hypothesis of 'non- Where, λ indicates the speed of adjustment parameter and EC is residual obtained at the first step. On the other hand, while net international migration was upwards before 1977 in Nigeria as 5 indicated in Figure 3 the period between 1977 upwards in Nigeria had been consistently negative 6 in terms of net migration. This implies that there had been more of emigration than immigration 7 to Nigeria from 1977 to 2014.

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The estimates of Equation (4) using the ARDL model is reported in Table 1. Using Hendry's 15 general-to-specific method, the goodness of fit of the specification, that is, R-squared and adjusted 16 R-squared, is 0.99 and 0.998 respectively. The implication of these is that the 99 percent variation 17 in food production index was explained by the independent variables in the model. In the first step 18 we first step, we estimated the various specifications of the Equation (4) and the most 19 parsimonious estimation results are reported in Table 3.    In Table 2 the results of the bounds co-integration test demonstrate that the null hypothesis of no 6 co-integration against its alternative had to be rejected at the 1% significance level as indicated by 7 its very high F-ratio (F= 5.890 See Table 2) which is significant at 1% and above bounds critical   Table   3 CI (iii), restricted intercept and no trend. Breusch-Pagan-Godfrey test for heteroscedasticity and model stability test using CUSUM test. 10 The model estimated (  Figure 3: Results of Jarque-Bera test for normality of residuals estimated Finally, we apply the Wald test to assess whether long run relationship exists between the 7 variables. The value of F-statistics, which is 5.890, already confirms the cointegration among the 8 variables. Then we normalise the coefficients of lagged level variable by dividing on the 9 coefficient of household consumption (lnhshdc) (assuming all the other coefficients are zero) and 10 hence obtained the long run elasticities. The normalised equation is given in Table 3. The results

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show that international migration remittances are positively related to aggregate household 12 consumption and its impact is significant on the long run at a statistical significance level of 1% (t 13 ratio = 3.845). This outcome is not surprising. It is in tandem with Blench (2004) and specifically, 14 Black et al (2004), who noted that "across West Africa, migration represents a significant 15 livelihood strategy for poor people". It could be asserted therefore that this explains why this management of migration with the establishment of a regional consultative process. One of the   Now we estimate the error correction model as given in Equation (5). The results are presented in 4   Table 4. Table 4 shows that error correction term has negative sign (coeff. = -0.871, p< 0.01) and 5 significant at 1 percent level which confirms the existence of long run relationship at first step.

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The speed of adjustment coefficient, -0.871 is considerably low indicating a slow convergence to