DOES CAPITAL FLIGHT MOVE NIGERIA TO THE WORLD’S POVERTY HEADQUARTERS? AN IMPLICATION FOR SUSTAINABLE DEVELOPMENT
DOES CAPITAL FLIGHT MOVE NIGERIA TO THE WORLD’S POVERTY HEADQUARTERS? AN IMPLICATION FOR SUSTAINABLE DEVELOPMENT

Summary/Abstract: The aim of this study is to examine the relationship between capital flight and poverty levels in which past studies have not fully explored in Nigeria. Data were collected from the Central Bank of Nigeria Statistical Bulletin from 1981 to 2017. The objective of the study was examined within the framework of Johansen cointegration test, Dynamic Ordinary Least Square and Granger causality. Consequently, the findings that emanated from this study could be summarized as follows: all the variables of interest are integration of order one and possess long run convergence. Direct foreign investment and household consumption per capita have a significant negative relationship. External debt service payments, exchange rate and openness of the economy have a negative relationship with household consumption per capita. Though, this relationship is not significant at 10 percent level of significance. Moreover, external debt service payments and poverty levels do not have a causal relationship. No feedback effect exists among openness of the economy, external debt service payments, direct foreign investment and poverty levels. But there is a uni-directional causal relationship which flows from direct foreign investment to external debt service payments in the country and poverty levels Granger cause foreign reserves in Nigeria but not vice versa. Based on the findings that emerged in this study if the Nigeria wants to achieve the sustainable development goal of poverty reduction comes 2030, policy makers in the country should ensure that direct foreign investment should be invested in the domestic economy. The country should as a matter of urgency recourse to the usage of domestic debts instead of external debts. Also, there should be an aggressive campaign and policy against importation of materials that can be manufactured domestically in order to solve exchange rate volatility and depletion of foreign reserves that trade deficit could cause the country.

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