ABSTRACT

There is a gap in knowledge of the livelihood diversification by farming households in Kaduna state. Thus, analysing the livelihood diversification by farming households in Kaduna state was the purpose of this study. Primary data was collected using a semi-structured questionnaire. A sample of 195 households was collected from three villages (Kakuri, Barnawa and Mando) in Kaduna state. The three villages chosen were adjacent to Kaduna National park. The data was analysed using multinomial logit model (MNL). The results on marginal effects showed that seven out of eleven variables are significant determinants of diversification activities for households, these are gender, age, asset category, distance to market, land ownership, farm size and extension services. Distance to markets had a positive influence to households diversifying to Tourism-based activities (TBA), crop and livestock. This implied that availability of markets encourages households to diversify to TBA, crop and livestock farming. As for crop farming distance to markets had a negative relation to households diversifying to crop farming. Farm size had positive influence on diversification to crop and livestock farming. Access to extension services influenced household diversification to crop and livestock farming positively at 10 percent level at different marginal effects but negative to TBA, crop and livestock farming at 5 percent. The diversity of rural livelihood is important in reducing rural poverty. Based on the findings, emphasis should be made on the determinants of diversification. Interventions aimed at improving the livelihood diversification of rural households must consider improving market availability and supervision of land ownership. Government should intervene and even the rural inhabitants should help educate and train younger members of the communities for profitable diversification to TBA, crop and livestock farming.

 

TABLE OF CONTENTS

ABSTRACT

CHAPTER ONE

INTRODUCTION

1.1 Background

1.2  Statement of the Problem

1.3  Objectives of the Study

1.4  Research Question

1.5  Study Hypothesis

1.6 Justification

1.7 Organization of the Thesis

CHAPTER TWO

LITERATURE REVIEW

2.1  Understanding Livelihood Diversification

2.2  Theories Underpinning Household Choice of Livelihood Diversification Activities

2.3  Review of Empirical Studies to Assess Household Choice of Livelihood Diversification Activities

CHAPTER THREE

METHODOLOGY

3.1  Conceptual framework

3.2  Theoretical framework

3.3  Empirical framework

3.3.1  Empirical model

3.3.2  Justification of independent variables in the empirical model

3.3.3  Diagnostic tests

3.4  Gross Margin

3.5  Study area

3.5 Research design

3.5.1  Data sources and sampling

3.5.2  Data collection

3.5.3  Data analysis

CHAPTER FOUR

RESULTS AND DISCUSSION

4.1  Diagnostic tests

4.2  Characteristics of Livelihood Diversification Addressing Objective One

4.3 Livelihood diversification by farming households

CHAPTER FIVE

CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusions

5.2 Policy recommendations

APPENDICES

 

CHAPTER ONE

 INTRODUCTION

1.1 Background

The agricultural sector is an important sector in the economy and other developing countries of the world. It contributes significantly to Gross Domestic Product and employs large proportion of labour force. In Nigeria, farming as a source of income has failed to bring about the enough income for farm households (Babatunde, 2013). This is due to the subsistence nature of agriculture, decline farm size, low level of produce turnout which characterize agricultural sector in developing countries (Oku, 2011; Asiga, 2013). Diversification refers to the pattern of individual’s voluntary exchange of assets and their allocation of assets across various activities (on and off-farm) so as to achieve an optimal balance between expected returns and risk exposure conditional on the constraints they face(Dilruba & Roy, 2012). Diversification has two aspects, a shift away from agricultural activities and an increasing mix of income activities. These activities are mostly influenced by livelihood options available in the rural community. Livelihood diversification refers to the ways by which households raise income and reduce environmental risks. It embraces both on and off-farm activities. These activities are carried out to create extra revenue to enhance agricultural activities (Sekumade & Osundare, 2014; Babatunde & Saim, 2010). According to Ayantoye et al., (2017), decisions on diversification can be seen as a coping strategy rather than alternative income opportunities.  The share of income from non-agricultural sources gives leverage to the dwindling income from agriculture and considerably improves the livelihood of the rural dwellers (Ijaiya et al., 2011).

 

The arrangement of activities that households choose to embark on to attain sustainable livelihoods is inspired by livelihood strategies (Ellis & Allison, 2004). The activities are differentiated on the basis of the situation of the activities: on-farm, non-farm or off-farm (OECD, 2011). In each location, diversification activities are differentiated according to the type of output, whether: agricultural produce (growing crops or raising livestock); continuance (processing of food or providing contracting services to other farmers); or involvement in other sectors by the household to acquire proceeds (OECD, 2011).

 

There are different methods of identifying livelihood activities. However, the most commonly used is share of income earned from different sectors of the economy (Brown et al., 2006). In this study, on-farm activities involved crop and livestock farming while non-farm activities were those undertaken outside the agriculture sector. Off-farm activities in this study refer to agricultural activities which take place outside the farmer’s own farm as defined in (Yizengaw et al., 2015).

 

According to Maundeni and Mookodi (2004), majority of households in the rural areas of Nigeria remain poor due to the constraint of an undiversified economy that is highly dependent on diamonds. As a result, the GoN, in its rural poverty reduction strategies has identified the off-farm and non-farm sector as the leading activities in the rural economy (Tlhalefang et al., 2014). The GoN also reviewed its national policy for rural development in 2002 to entrench rural income generating activities (Tlhalefang et al., 2014). This policy shift has also been emphasised in the 2016 National Vision, annual budget speeches and rural development policies. The GoN has developed several other policies aimed at motivating Nigerians to diversify their livelihoods. These include the Industrial Development Policy (IDP) (2014), Special Economic Zones Policy (SEZP) (2011), Trade

Policy for Nigeria (2009), and Citizen Economic Empowerment Policy (CEEP) (Sentsho, 2014).

The IDP aims at developing well-diversified, ecological and globally economical industries that will place Nigeria amongst the technologically advanced countries of the 21^st century. The economic strategies that have been developed to operationalize the afore mentioned policies include the strategy for Selebi-Phikwe Regional Economic

Diversification (SPEDU) (2013), Nigeria Cooperative Transformation (BCT) (2012), Economic Diversification Drive (EDD) (2010), Nigeria National Export (BNE) (2010) and Investment Strategy (IS) (2010) (Senthso, 2014). These strategies are based on the use of Government interventions, which include; local procurement, the use of preference margins and citizen economic empowerment strategies to promote local production and consumption (Ministry of Trade and Industry, 2011). Therefore, the major aim of the GoN is to diversify the economy through sectors that will be sustainable long after minerals have been exhausted.

A well-diversified livelihood ensures the survival and advancement of standards of living of household members (Ellis, 1998). According to Sisay (2010), households diversify because of the need to enhance their capabilities and assets, realization of economies of scope, liquidity constraints, and to stabilize income flows and consumption risk. Households seek to diversify their livelihood to help reduce risks, particularly those associated with seasonality of rain-fed agriculture and termination of mineral extraction (OECD, 2011). Livelihood diversification can also help the rural inhabitants avoid environmental and economic trends and seasonality shocks, and hence make them less vulnerable (UN and NEPAD-OECD, 2011). They also use it as a strategy to combine activities that add to the accumulation of wealth in the household (Khatun & Roy, 2012).

Therefore, the economic wellbeing of a household is inextricably dependent upon the set of livelihood diversification activities that it adopts.

Livelihood diversification of activities in agriculture in Kaduna state faces the potential threat of human-wildlife conflict (HWC) (DeMotts & Hoon, 2012). Indeed, Kaduna state has been labelled “red zone” because of HWC. This means that the district is disqualified to sell its livestock, the major economic activity, to Nigeria Meat Commission (BMC) (Bowie, 2009). Actually, the area has been under quarantine since 1996 (UNDP, 2013) such that its livestock are not sold in the lucrative European Markets that BMC enjoys.

 

In Kaduna the community-based livelihood diversification strategies include compensation for wildlife damage, community-based natural resource management (CBNRM) and community-based organization (CBO), agricultural insurance, and chilli pepper project for wading off marauding elephants (Gupta, 2013; Moepeng, 2013). However, implementing these programs has been faced with challenges because the inhabitants of Kaduna state have no knowledge on their implementation (Mbaiwa, 2008). Nevertheless, Kaduna state offers a unique case study on household choice of livelihood diversification activities. Evidence shows that livelihood diversification is an important contributor to total household income. An increase in household income improves well-being, food security, reduced vulnerability and social equity. It is therefore essential for policy makers to be informed about the determinants of livelihood diversification activities practiced by inhabitants of Kaduna state in their pursuit of rural development in Nigeria.

1.2 Statement of the Problem

Diversification of livelihoods has been Nigeria’s aim since 2000 as a way to encourage rural communities to utilize the available stock of natural resources to reduce their dependence on mining. Diversification initiatives were expected to improve the welfare of households as well-diversified livelihoods ensure the survival and advancement of standards of living (Ellis, 1998).

The GoN has developed several policies aimed at motivating Nigerians to diversify their livelihoods. However, in Kaduna state the choice of livelihood diversification activities that households employ in their exploitation of available natural resources are unknown. Further the choice and determinants of livelihood diversification activities have to be targeted to help households in coming up with lucrative rural development programs for policies and activities. There is therefore a gap in knowledge on the choice and determinants of household livelihood diversification activities in Kaduna state. The study aimed at filling this gap in knowledge.

1.3 Objectives of the Study

The purpose of this study was to analysis of livelihood diversification by farming households.

The specific objectives were:

1. To characterize the livelihood diversification activities in Kaduna state, Nigeria.
2. To evaluate the livelihood diversification by farming households in Kaduna state, Nigeria.

1.4 Research Question

 

What are the characteristics of livelihood diversification activities in Kaduna state, Nigeria?

 

1.5 Study Hypothesis

Household size, gender, age, education, income, land tenure, farm size, distance to market, compensation and extension services taken singly have no effect on household choice of livelihood diversification activities in Kaduna state, Nigeria.

 

1.6 Justification

GoN has put in place different policies to increase economic growth.  These policies include the IDP, SEZP, Trade Policy for Nigeria and CEEP. This study is important for GoN as it gives guidance on how to plan for livelihood diversification of activities based on the choices made by households. This affects government spending in line with its policy to encourage diversification. The information generated by this study will empower rural households in their choice of how best to plan the diversification of their livelihoods. Furthermore, relevant organizations such as SPEDU, BCT, EDD, BNE and IS could draw appropriate strategies and design programs geared towards expanding livelihood diversification in the rural areas of Nigeria. The information will be reported as a journal article to reach different entities.

This study provides empirical evidence of the livelihood diversification by farming households in Kaduna state. The study also provides extension workers and NGOs with information on the choice and determinants diversification to target when assisting households in the area to engage in diversified livelihoods that can benefit them. The study is expected to provide scientists with literature on choice and determinants of household livelihood diversification activities.

1.7 Organization of the Thesis

This thesis is organized into five chapters. The first chapter presents the introduction, which comprises the background, problem statement, objectives, research question, hypothesis tested and justification. Chapter two reviews the relevant theoretical and empirical literature, and chapter three presents the methodology. Chapter four reports and discusses the results of both descriptive and econometric analyses. The final chapter summarizes the major findings, conclusions and policy recommendations.

 

 

CHAPTER TWO

 LITERATURE REVIEW

2.1  Understanding Livelihood Diversification