In spite of increase in the growth rate of the economy in recent times and the huge revenues derived from oil, it is worrisome to
discover that Nigeria is still suffering from high level of poverty. The study employs Shapley decomposition approach to
address the paradox of whether economic growth in Nigeria reduces poverty or not. The result indicates that the so-called
“trickle down” phenomenon, underlying the view that growth improves poverty is not supported by Nigeria’s data. The paper
therefore investigates changes and the extent of poverty in rural Nigeria from 2004 to 2010. It examines the contributions of
growth and redistribution factors to changes in poverty within the study period. The analysis is based on the National Living
Standard Survey (NLSS) data of 2004 and 2009/2010 sourced from the National Bureau of Statistics (NBS). The study reveals
that the extent of poverty in the rural sector declined slightly during the second period of study (2010). Decomposition of
changes in poverty into growth and redistribution components indicate that both the growth and the redistribution component
were poverty reducing but at different magnitudes indicating that the deterioration of income inequality contributes to the
worsening of poverty in Nigeria. Equitable distribution of income and pro-poor growth is thus essential for growth to translate
into meaningful and rapid poverty reduction.