The composition and determinants of rural non-farm income diversification in Nigeria
Farming has been considered as main source of income for rural households in Nigeria, despite their involvement in other income generating activities. Focusing on income derivable from farming alone may be partially responsible for the ineffective poverty reduction strategies in Nigeria. Using the National Living Standard Survey data collected by the National Bureau of Statistics, this paper investigated the composition and determinants of non-farm incomes of rural households in Nigeria. The results show that the share of farm, non-farm wage (NFW)- and self-employment (NFS) incomes in total household incomes were 24.3%, 43.0% and 23.7% respectively. Households whose heads are male (0.647), had formal education (0.522), increased the likelihood of households’ participation in NFW activities, while access to credit (-0.307) and having larger farm size (-0.221) decreased it. Access to credit (0.379); community participation (0.103); larger family size (0.193) and possession of capital assets (0.069) increased the likelihood of participation in NFS-employment activities, while having larger farm size (-0.211) decreased it. The study concludes that policy targeting poverty reduction should focus on providing enabling environment for poor households’ access to non-farm activities in the study area.
non-farm income; wage employment; self-employment; Tobit regression; rural Nigeria
Awoyemi, T.T. (2004). “Rural Households Diversification into Secondary Economic Activities: Options for Poverty Alleviation in Oyo State, Nigeria”. Issues in African Rural Development Monograph Series. Monograph 34, ARPAN, Winrock International.
Babatunde, R.O. (2008). Income Portfolios in Rural Nigeria: Composition and Determinants. Trends Agric. Econ., 1(1), 35–41. Retrieved from: https://scialert.net/abstract/?doi=tae.2008.35.41
Babatunde, O. (2009). Rural Non-farm Income and Inequality in Nigeria. IFPRI Discussion Paper 00899, International Food Policy Research Institute, Washington, U.S.A. Retrieved from: http://ebrary.ifpri.org/cdm/ref/collection/p15738coll2/id/28321
Babatunde, R.O., Qaim, M. (2009). Patterns of Income Diversification in Rural Nigeria: Determinants and Impacts. Quart. J. Int. Agric., 28(4), 305–320.
Byerlee, D., De Janvry, A., Sadoulet, E. (2010). Agriculture for Development: Toward a New Paradigm. Ann. Rev. Res. Econ., 1(1), 1–20. DOI: 10.1146/annurev.resource.050708.144239
Davis, B., Giuseppe, S.D., Zezza, A. (2017). Are African households (not) leaving agriculture? Patterns of households’ income sources in rural Sub-Saharan Africa. Food Policy, 67, 153–174. DOI: 10.1016/j.foodpol.2016.09.018
De Janvry, A., Sadoulet, E. (2000). Rural Poverty in Latin America: Determinants and Exit Paths. Food Policy, 25(4), 389–409. DOI: 10.1016/S0306-9192(00)00023-3
De Janvry, A., Sadoulet, E., Zhu, N. (2005). The Role Nonfarm Incomes in Reducing Rural Poverty and Inequality in China. Policy Res. Work. Paper. The World Bank.
Estruch, E., Grandelis, I. (2013). Promoting economic diversification and decent rural employment towards greater resilience to food price volatility. Discussion Paper. Rome, Italy: Food and Agriculture Organization. Retrieved May 6th 2020 from: http://www.fao.org/fileadmin/user_upload/fao_ilo/pdf/Papers/DRE_Food_Price_Volatility.pdf
FAO (Food and Agriculture Organization) (2017). The State of Food and Agriculture: Leveraging Food Systems for Inclusive Rural Transformation. Rome: FAO Publication.
Gordon, A., Craig, C. (2004). Rural Non-Farm Activities and Poverty Alleviation in Sub-Saharan Africa. Policy Series 14. Chatham, United Kingdom: Natural Resources Institute.
Ibekwe, U.C., Eze, C.C., Ohajianya, D.O., Orebiyi, J.S., Onyemauwa, C.S., Korie, O.C. (2010). Determinants of Non Farm Income among Farm Households in South East Nigeria. Researcher, 2(7), 49–52.
Iliya, M.A. (1999). Income Diversification in the Semi-arid Zone of Nigeria: a study of Gigane, Sokoto North-West Nigeria. De-Agrarianisation and Rural Employment Network. Working Paper 39. Leiden: African Studies Center. Retrieved from: http://hdl.handle.net/1887/415
Karttunen, K. (2009). Rural Income Generation and Diversification – A Case Study in Eastern Zambia. Agric. Policy, No. 47. University of Helsinki Department of Economics and Management.
Lanjouw, P. (1998). Ecuador’s Rural Nonfarm Sector as a Route Out of Poverty. Policy Research Working Paper No. 1094. Washington, D.C.: Development Research Group, World Bank.
Maddala, G.S. (1987). Econometrics. McGraw-Hill Book Company, USA.
Malek, M., Koichi, U. (2009). Determinants of Non-farm Income Diversification in Developed Villages of Bangladesh. Am. J. Econ. Bus. Admin., 1(2), 41–149.
Minot, N., Epprecht, M.T., Trung, Q.L. (2006). Income Diversification and Poverty in the Northern Uplands of Vietnam. Research Report No. 145. Washington, D.C.: International Food Policy Research Institute.
NBS (Nigerian Bureau of Statistics). (2004). Poverty Profile for Nigeria. Abuja, Nigeria: NBS.
NBS (Nigerian Bureau of Statistics). (2010). National Poverty Rates for Nigeria, 2003–2004 and 2009–2010. Abuja, Nigeria: NBS.
NISER (2004). “Understanding Poverty in Nigeria: NISER Review of Nigerian Development, 2001/2002”. Ibadan, Nigeria: Nigerian Institute of Social and Economic Research.
Odoh, N.E., Nwibo, S.U., Eze, A.V., Igberi, C.O. (2019). Farm and Non-Farm Income Diversification Activities among Rural Households in Southeast, Nigeria. J. Agric. Ext., 23 (2), 113–121. Retrieved from http://aesonnigeria.org/ajm/index.php/jae/article/view/1688
Olowa, O.W. (2012). Concept, Measurement and Causes of Poverty: Nigeria in Perspective. Am. J. Econ., 2(1), 25–36. DOI:10.5923/j.economics.20120201.04
Pham, T.H. (2007). Is Nonfarm Diversification a Way out of Poverty for Rural Households? Evidence from Vietnam in 1993-2004”. A paper presented at the 6th PEP Research Network General Meeting, Lima, Peru. DOI: 10.2139/ssrn.1715603
Reardon, T., Berdegúe, J., Escobar, G. (2001). Rural Nonfarm Employment and Incomes in Latin America: Overview and Policy Implications. World Dev., 29(3), 395–409.
Schwarze, S. (2004). Determinants of Income Generating Activities of Rural Households: A quantitative study in the vicinity of Love-Lindu National Park in Central Sulawesi, Indonesia”. Goettingen: Institute of Rural Development, University of Goettingen.
Williams, E. (2016). Alternatives Approaches to Reducing Poverty and Inequality: Existing Evidence and Evidence Needs. Proceedings of PPIW Evidence Workshop. Retrieved from http://ppiw.org.uk/files/2016/11/Alternative-approaches-to-poverty-reduction.pdf
World Bank (1990). World Development Report 1990: Poverty. Washington, D.C.: World Bank.
World Bank (1999). World Development Indicators 1999. Washington, D.C.: World Bank.
World Bank (2001). World Development Report 2000/2001: Attacking Poverty. Washington, D.C.: World Bank.
World Bank (2018). Poverty and Shared Prosperity 2018: Piecing Together the Poverty Puzzle. Washington, D.C.: World Bank.
World Bank (2020). Poverty and Equity Brief Nigeria Sub-Saharan Africa April 2020. Washington, D.C.: World Bank.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
This journal permits and encourages authors to post items submitted to the journal on personal websites or institutional repositories both prior to and after publication, while providing bibliographic details that credit, if applicable, its publication in this journal.