Nigeria is a country of high ethnic and linguistic diversity, threatened by internal fissures and
persistent levels of violence. It is argued that, ethnically polarized societies are prone to
competitive rent-seeking activities by different groups and will have difficulty agreeing on public
goods such as infrastructure, education, and good policies. This in part explains high level of
inequity in income distribution and poverty in the country. High potential for large regional
differences in economic and social conditions makes Nigeria susceptible to disintegration if the
regional differences in standards of living continue to grow. Thus, the study aims to give insight
into the extent to which income inequality has been socially embedded (polarization) in Nigeria,
when the rich and the poor are distinguished not only by their wealth, but also by their language,
ethnicity, or other social characteristic and account for the factors responsible. Data used for the
study were from the 2003/2004 National Living Standard Survey data set collected by Nigeria
National Bureau of Statistics. Duclos, Esteban and Ray (2004) (DER) method which is based on
identification (the degree of equality within each group) - alienation (the degree of income
differences among groups) framework, derived from rigorous axioms, avoiding arbitrary choices
of income ranges and let the area of identification influence be determined by nonparametric
kernel techniques, was decomposed. The results reveal a polarization measure of 0.25 (a = 0.5)
with 0.41, 0.74 alienation and identification components respectively. High level of
identification component suggests emerging level of bi-polarization in Nigeria. Variations
between the zones (0.83) explain polarization more than intra-zonal variation (0.17). Urban
sector (0.25) is slightly more polarized than rural sector (0.24). The population of secondary
school leavers, unemployed and retirees, has become significant enough to explain part of
polarization in the country (0.15 and 0.35 respectively). Thus, employment creating initiatives
and effective social policies will go a long way in alleviating polarization in the country.
Equitable distribution of income and poverty reducing policies will also reduce other negative
aspects of polarization like severe poverty and higher level of between group inequalities.