CHAPTER 1

INTRODUCTION

1.1 BACKGROUND OF STUDY

Poverty and unemployment an identical bane is a global trend which affects

people in various depths and levels at different times and phases of existence.

The extent of association between poverty and in unemployment in the

developing countries is often a subject of considerable debate. There is actually

no nation that is absolutely free from poverty and unemployment. The major

difference is the degree and pervasiveness of this similar blight.

Nigeria is the most populous country in Africa and the eight in the world with a

population of 140 million by 2006 census with a nominal GDP of $207. Billion

per capita income of $1401 it has tyrants. As a result second largest economy in

Africa (salami 2002). As impressive as the above figures may appear youth

unemployment has been one of the major problems facing Nigeria. A high level

of un and underemployment is one of the critical socio-economic problems

facing Nigeria. While the labor force with an increasing proportion of youth

employment opportunities is inadequate to absorb labor market entrants. As a

result youth are especially affected by unemployment. Moreover young people

are more likely to be employed in jobs of low quality. Underemployed working

long hours for low wages engaged in dangerous work or receive only short

term and/or informal employment arrangements. The inadequate employment

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situation of youth has a number of socio-economic political and moral

consequences. This has resulted in poverty in Nigeria which is chronic and

rising. The share of the total population living below the$1 (one dollar) a day

threshold of 46 percent is higher today than in 1980‟s and 1990‟s this despite

significance improvements in the growth of GDP in recent years

Unemployment and poverty are so intertwine that one can easily confuse one

for the other. Although it is possible for one to be employed and still remain

poor this is to be a case of underemployment. Unemployment and

underemployment reflect the failure to make use of an important factor of

production labor for fostering economic growth in Nigeria. Low returns to

labor as well as high unemployment indicates poverty. Poverty makes it

difficult to make investments in education and health that would increase ones

productivity. The social aspects of the problem that lies in association of

unemployment with social exclusion and a sense of hopelessness. Structural

unemployment and wide spread poverty are believed to be the basis for the

activities of miscreants such as militant youth in the Niger Delta and the present

deadly Boko Haram in northern Nigeria upsetting the seemingly peaceful and

stable political situation . The activity of BokoHaram has resulted in many

deaths and destruction of property worth millions of dollars.

Unemployment in Nigeria is defined as the proportion of labor force that was

available for work but do not work. In the week preceding the survey period for

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at least 39 hours. Official figures from the bureau of statistics puts the figure of

unemployed at 19.70 per cent about 30 million but this figure still did not

include about 40 million others captures in world bank statistics in 2009. By

implication it means that if Nigerians population is about 140million then%

Nigerians are un employed (Njoku and Okezie 2011) from this perspective of

the recent events in the middle east and north where unemployment and poverty

among others played a key role in the uprising one can only conclude that

Nigeria‟s unemployment and high poverty level poses even greater threat to its

development security and peaceful co-existence it is in light of proffering

solutions to the problem of poverty and unemployment that the current study is

germane

The world bank and United Nations Development programme (UNDP)

2002Human Development Index (HDI) which looks beyond GDP to a broader

definition of wellbeing of 0.461 aptly indicates the nations development. Over

the years successive government have adopted various policies and programmes

to deal with the problem of poverty and unemployment in the country.

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1.2 STATEMENT OF THE PROBLEM

The issue of Poverty and unemployment has continued to be a core subject

matter in Nigeria and other African countries alike

Human poverty is more than income poverty it is the denial of choices and

opportunities for living a tolerable life (United Nations 1997) poverty amid

plenty id challenge.

On the other hand unemployment is one of the developmental problems that

face every developing economy in the 21

st

century. International statistics show

that industrial and service workers living in developing regions account for

about some percentage of the unemployed (Patterson et al 2006).

Though Nigeria recorded 7.5 percent expansion in 2012 that was faster than the

global and regional average in 20011 this growth which did not impact

positively in the eyes if majority might have neither improve the employment

rate and living standards of Nigeria in 2012. Recent data from the National

Bureau of Statistics placed the country‟s misery index at 34% a development

which analyst described as horrible and terrifying. According to the Bureau the

figure of unemployed Nigerians in the first half of 2011 was 23.9% from 21.1%

in 2010 and 19.7% in 2009. This showing that the rise in unemployment is

bound to worsen as the year goes by.

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Therefore the crucial problem of this research is on the causes and effects of

poverty and unemployment in Nigerian economy. What is the way forward?

That is how poverty and unemployment will be reduced appreciably if not

eradicated in Nigeria

1.3 STUDY OBJECTIVES

The fundamental aim of this project is to construct an applied and evident

relationship between poverty and unemployment and determine the causes

effects and remedies in Nigeria

The specific objectives of the study therefore include the following

a) To examine the relationship between poverty and unemployment

b) To examine the impact of poverty and unemployment on economic growth and

development if a nation.

c) To identify and analyze the major causes of poverty and unemployment in

Nigeria.

d) To provide workable recommendations that can be useful to assist the reduction

and elimination of poverty and in employment by policy makers.

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1.4 RESEARCH JUSTIFICATION

In Nigeria poverty and unemployment is really assuming a crisis level.

Therefore the study will be relevant in that

I. It will provide an insight into the relevant literature

II. It will help to lay a bare the causes and effects of poverty and unemployment in

Nigeria

III. It will help the general populaces to appreciate the fact that poverty and

unemployment is twin scourge that need to be faced in order to achieve

economic growth and development.

IV. It is expected that through the findings and subsequent recommendations of this

study poverty and unemployment will be reduces or eradicated.

V. Finally it is the opinion of the researcher because it will serve as a spring board

for further research.

1.5 SCOPE OF STUDY

The researcher‟s work focuses on the causes and effects of poverty and

unemployment and also how poverty and unemployment has an impact on

economic growth and development in Nigeria.

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The period of this study for the time series analysis is 20years.

1.6 HYPOTHESIS FORMULATION.

There is no significant relationship between poverty and unemployment in

Nigeria

There is significant relationship between poverty and unemployment in Nigeria

1.7 LIMITATIONS OF THE STUDY

A study of this nature cannot be completed without the researcher experiencing

some constrains. The first major limitation of the study experienced by

researcher was lack of time. This is due to the fact that both academic course

work and the study were talking place simultaneously.

Another limitation encountered by the researcher was the lack of sufficient

data particularly on poverty which greatly affected the study in terms of

carrying out a direct and detailed econometric analysis on the variables.

Finally for an in-depth work to be carried out in this study the sourcing of

data was not easy.

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1.8 DEFINITION OF TERMS.

The following definition of terms simply represents the specific meaning that

will be given to them in this study

POVERTY: - This is a living condition in which an individual‟s unable to take

care of his basic needs like clothing food shelter inability to meet social and

economic obligations lack of gainful employment and other environmental

opportunities at his disposal.

UNEMPLOYMENT: - This is a situation where by one is able and willing to

work at a prevailing wage rate but does not have work.

POVERTY RATE: - This is the percentage of a nations population with income

below the poverty line.

POVERTY LINE: - This is the value of basic necessities considered essential for

melting the minimum socially acceptable standard of living in the society.

UNEMPLOYMENT RATE: - This is the percentage of labor force without jobs

but is willing and available for work.

NATIONAL INCOME: - This is the total amount of income given to a country

from economic activities usually in a given year or the total value of goods and

services produced annually in a country.

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PER-CAPITA INCOME:- This is the average income of the people of a country

in a particular year. It is obtained by diving the national income of a country by

its population

ECONOMIC DEVELOPMENT: - This refers to the concentrated actions of

policy makers and communities that promote the standard of living and

economic health of a specific area. It can also be referred to as the qualitative

and quantitative changes in the economy.

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