Breaking Nigeria's Vicious Cycle of Poverty: Building Effective and Efficient Institutional Capacity for Better Outcomes

Abstract:

Nigeria combines substantial natural and human resources with persistently high poverty. The 2022 Multidimensional Poverty Index shows that 133 million people (63 per cent of the population) are multidimensionally poor. Recent World Bank and IMF assessments confirm that monetary poverty and food insecurity remain elevated despite post-2023 macroeconomic reforms. This paper argues that weak institutional capacity is the critical missing link between reform and household welfare. Drawing on institutional economics, state-capacity theory and the capability approach, it conceptualises institutional capacity in five dimensions: administrative, technical, political, fiscal and coordination capacity. Using a structured integrative review of official statistics, multilateral reports, governance indicators and peer-reviewed studies, the analysis shows how capacity shortfalls sustain the poverty trap through implementation failures, leakages, weak service delivery and low public trust. Stronger capacity can convert stabilisation gains into improved human capabilities, productivity and resilience. The paper contributes an institutional-capacity transmission framework and concludes that macroeconomic stabilisation is necessary but insufficient. Sustained poverty reduction requires professional public administration, institutionalised social protection, stronger fiscal institutions and sequenced reforms that protect sub-national delivery capacity.