The Effects of Foreign Aids on Infrastructural Development and Poverty Alleviation in The Developing Countries: A Case Study of Nigeria

Concept of foreign aid was examined. Nigeria was receiving foreign aid for long time and some improvements have been done in economic development. Our investigation was on the point how deep it was impacted. Following the empirical literature, this study adopts the model employed by Ajisafe (2017) and Chotia and Roa (2017) to examine the impact of foreign aid and infrastructural development on poverty reduction. The study makes use of annual dataset to examine the impact of foreign aid and infrastructural development on poverty reduction in Nigeria over the period of 1981 to 2016. Data on foreign aid measured by Total Official Development Assistance received (constant 2010 US$), infrastructural development (proxy by total electricity net generation. Electric power and distribution losses as a ratio of output, mobile cellular subscriptions, Internet subscribers per 100 population, improved sanitation facilities as a ratio of population with access. Improved water facilities as a ratio of population with access, the total road network in km per square km of the exploitable land area), poverty (proxy by household consumption per capita). This study provides an analysis of the impacts of foreign aid and infrastructural development on poverty reduction in Nigeria. The major findings of the study are three: one, foreign aid exerts a positive impact on poverty reduction in Nigeria in both short and long terms. Two, the infrastructural development also impacts positively on poverty reduction in Nigeria both in the short and long run; and three, the interaction of foreign aid inflows with infrastructural development yields a negative impact on poverty reduction in Nigeria. The study, therefore, concluded that foreign aid alone could not by itself reduce poverty, but has to be strengthened by infrastructural development. Some recommendations for policymakers were done.