Examining the Impact of Relative Poverty and Income Inequality on Sustainable Development in Nigeria: A Kuznets Hypothesis Perspective

Abstract

This study examined the impact of relative poverty and income inequality on sustainable development in Nigeria, drawing upon the Kuznets hypothesis as a guiding theoretical framework. Utilising annual secondary data spanning 1999 to 2024 from the World Bank, National Bureau of Statistics (NBS), and Central Bank of Nigeria (CBN), the study employed the Fully Modified Ordinary Least Squares (FMOLS) technique to investigate the longrun determinants of the Sustainable Development Index (SDI). The findings revealed that poverty exerted a positive and statistically significant effect on sustainable development, suggesting that targeted poverty alleviation measures—particularly those enhancing access to services and economic participation—contributed to inclusive development outcomes. Inflation was found to have a negative and significant impact on SDI, underscoring its destabilising effects on economic stability and long-term development prospects. Furthermore, the Human Capital Index and education variables both had positive and statistically significant influences on SDI, reaffirming the critical role of investments in health, skills acquisition, and innovation for sustainable progress. Income inequality demonstrated a negative but statistically insignificant relationship with SDI, offering limited empirical support for the Kuznets hypothesis within the Nigerian context. Unexpectedly, GDP growth was negatively associated with sustainable development, indicating that economic growth in Nigeria during the study period may have lacked inclusivity and environmental sustainability. Based on these findings, the study recommended comprehensive policy interventions, including inclusive poverty reduction strategies, inflation control measures, expanded human capital investment, equitable fiscal redistribution, and a structural reorientation of economic growth toward green and inclusive sectors, with enhanced public support for education and innovation.