Poverty is increasingly being recognised as both a policy and economic problem in
Nigeria. This is stressed by the Interim Poverty Reduction Strategy Paper in Nigeria as well
as the Poverty and Vulnerability Assessment of the country. Although the documents provide
trends and profile of poverty and vulnerability in Nigeria, they do not investigate the
determinants of poverty. However, understanding the determinants of poverty is critical for
policy analysis and the design of effective poverty reduction strategies. In some instances
there have been few studies investigating the determinants of poverty in Nigeria (see
Omonona, 2000 and Olaniyan, 2002). However, these studies do not explicitly consider
capabilities as determinants of poverty despite the fact that capabilities dictate the state of
deprivation and poverty among households.
There is also an increasing recognition that poverty reduction should be the over
arching goal of development in Nigeria. It is therefore not surprising that in recent time
government and the civil society in Nigeria, with the support of the donor agencies have
devoted considerable resources at reducing poverty. This gave rise to the 1994
comprehensive poverty assessment of the economy and the populace. The outcome of which
led to the formulation of the draft national strategy for poverty alleviation code named
"Community Action Programme for Poverty Alleviation" (CAPPA) in 1996. Others include
the establishment of a national poverty reduction focused Family Economic Advancement
Programme (FEAP) in 1997 and the Poverty Alleviation Programme of the present civilian
government in 1999, and the National Poverty Eradication Programme in 2000, among
others. However, these efforts at poverty reduction have largely remained unfelt by the poor.
While the emphasis in most of the interventions is on provision of physical infrastructure to
support the poor and the acquisition of human capital, there has been little or no consideration
for the institutional development of local level institutions or mechanism to ensure delivery
of support to the poor. The absence of such institutions and the weakness of existing ones
largely disenfranchised the poor from participating in the decision making process of
interventions and issues that affect their welfare. Some recent studies do indicate that local
institutional strengthening through the active participation of the poor in project design and
implementation is a necessary factor in poverty reduction in Nigeria. This recognition
probably explains the promotion of group formation as an important requirement for the poor
to benefit from some of the public instituted poverty reduction programme.