Social Protection Expenditure and Income Inequality in Nigeria

Poverty and inequality have persisted despite the increased scale of social protection implemented in Nigeria since the early 2000s. This study examines whether public expenditure on social protection has reduced income inequality in Nigeria between 2000 and 2025. Annual data is used with modelling the Gini index as a linear function of social protection expenditure (as percentage of the gross domestic product GDP), the growth rate of GDP per capita, the rate of inflation, the poverty headcount ratio, and the level of unemployment in an autoregressive distributed lag (ARDL) framework with 24 observations (2002–2025). Phillips Perron tests indicate a mixed-series of I(0) and I(1). The short-run change in expenditure is not significant (p = .994) and contemporaneous social protection expenditure has a negative and significant coefficient, contrary to the sign expected, over inequality. Inequality is significant and positively related to growth, inflation, and unemployment, whereas the poverty headcount is insignificant. The error correction term (−1.72, < .001) suggests fast and frequent error-correction. These estimates do show that there was residual serial correlation, but. The investment figure and the level of inequality were both rising over this period. Qualitative evidence of low coverage, weak targeting and poor coordination is corroborated by the results, which currently do not show any evidence of the impact of social protection spending on reducing inequality. The paper is recommending more expansion and targeted transfers, a more up-to-date National Social Register, individualization of the relationship between transfers and employment and investment in human capital, and increased financing and monitoring.