Does Income Distribution Affect Poverty Rate in Nigeria?

The persistence of poverty amidst growing inequality in Nigeria raises fundamental questions about the interaction between income distribution and poverty dynamics. This study investigates the correlation between income distribution and the national poverty headcount in Nigeria between 2000 and 2025. The broad objective is to examine how income concentration and distributional disparities shape poverty outcomes, while specific objectives focus on assessing the responsiveness of poverty headcount to the income shares of the top 10%, top 20%, and bottom 10% of earners. The study is underpinned by the Kuznets Inverted-U Hypothesis and Relative Deprivation Theory, providing both structural and socio-psychological lenses for analyzing inequality-poverty interactions. Employing an ex-post facto research design, the study relies on secondary data obtained from the World Development Indicators, the National Bureau of Statistics, and the International Monetary Fund. The Auto-Regressive Distributed Lag (ARDL) model was applied to capture both short- and long-run relationships. Empirical findings reveal that the income share of the highest 10% significantly increases national poverty headcount (Coefficient = 0.32, p-value = 0.00), while the income share of the highest 20% significantly reduces poverty headcount (Coefficient = -0.30, p-value = 0.00). Furthermore, the poverty headcount exerts a significant effect on the income share of the lowest 10% (Coefficient = 0.15, p-value = 0.00). The study concludes that poverty in Nigeria is highly sensitive to income concentration at the top, underscoring the need for progressive tax systems, targeted social welfare interventions, and microfinance support for low-income earners. These findings provide valuable policy insights for reducing poverty and addressing inequality in Nigeria.