Nigeria has the largest population of about 130 million in Sub-Saharan Africa. It has a complex social and political history that has, for the most part, impacted adversely on the population and has worsened income distribution. The exploitation of the nation's oil resources, and the management of oil windfalls, have dominated the progress and decline of Nigeria's economy over the past two decades, and have significantly influenced the evolution and perception of poverty. Within the non-oil sector, agriculture and the service sector are dominant compared to the industrial sector whose share of GDP is about 5%.

Nigeria has the third highest number of poor people in the world, after China and India. Around 70 million Nigerians are living on less than one US Dollar per day. Poverty remains pervasive and it is estimated that 70 percent of Nigeria's poor live in rural areas and are primarily engaged in smallholder agriculture. The UN Human Development Index 2004 ranks Nigeria 151 out of 177 countries and 22 out of 45 African countries. The last assessment of progress towards the MDGs of 2004 found that 6 out of the 8 MDGs are unlikely or at risk to be attained if current trends continue.

Since 1999, the Nigerian government has undertaken a wide range of macroeconomic and structural reforms and continues to face significant challenges in accelerating growth, reducing poverty and meeting the Millennium Development Goals (MDGs). In May 2004, the Government finalized the National Economic Empowerment and Development Strategy (NEEDS), which together with State level SEEDS form Nigeria's strategy for growth and poverty reduction.

The implications of current government's envisaged cut in public spending for its anti-poverty strategy needs careful attention. At the same time, any government plan to reform the tax system needs to take into account the distributional and poverty impacts of such changes. MSMNG, is a micro-simulation model of the household sector in Nigeria that has been built to evaluate the budgetary, poverty and income distribution implications of the current and alternative value-added tax (VAT) policies for Nigeria. Other policy modules that can help design effective anti poverty policies will be added to the site in future.