ABSTRACT
The study was conducted to
analyze the impact of physical and social capital asset holdings on poverty
among farm households in Nigeria as a contribution towards finding a panacea to
the poverty plague in the agricultural sector. The study used secondary data
obtained from the Nigeria living Standard Survey data conducted in 2003/2004.
Data were analyzed using descriptive statistics, Forster-Greer-Thorbeck poverty
measures and Propensity score matching. Results showed that 90% of the
households were headed by males, 54% had household sizes of 1-4 and 79% were
within the active productive age of less than 60 years while 62% had no formal
education. About 96% were married whereas only 18.83% of the married household
heads engaged in polygamous marriage. About 92% owned land. Specifically, 16.4%
owned less than 1 hectare of land, 64.3% owned between 1-4.999 hectares while 19.3%
owned 5 hectares and above. The incidence, gap and
severity of poverty decreased with larger
areas of land. Only 47% had agricultural
equipment. Shockingly, about 95% of this group had equipment worth less than ₦20,000. The incidence, gap and severity of poverty decreased with higher
naira values of agricultural equipment. As
high as 95.6% of the respondents had less than ₦99,999 in livestock value. 1.5% owned between
₦100,000-₦199,999 while 2.9% owned ₦200,000 and above worth in value. The incidence, gap and severity of poverty were least
among respondents
with between ₦100,000 and ₦200,000 worth of livestock. Social capital indicators
selected included community participation,
trust and density of membership of local level associations. Respondents who
participated in community programmes had lower incidence, gap and severity of
poverty. Respondents who do not trust people had higher incidence, gap and
severity of poverty. Those that did not
belong to any association had the highest incidence of poverty.The impact of
owning agricultural equipment, land and livestock increased incomes of such
households by ₦16,969.35, ₦9, 607.74 and ₦3, 677.44, respectively. Hence, the
impact of owning agricultural equipment, land and livestock reduced poverty
incidence by 65%, 58% and 33%, respectively. Also the impact of participating
in community programmes, trusting group members and belonging to associations
increased incomes of such households by ₦11, 793.49, ₦4, 015.82 and ₦12,415.75,
respectively. Hence, the impact of participating in community programmes,
trusting other people and being members of local level associations, reduced
poverty incidence by 42%, 100% and 58%, respectively. The study recommends opening up virile credit lines and
procurement modalities that can empower the households to acquire agricultural equipment;
to revisit the controversial land use act of 1978 with a view to eliminating
all bottle necks that impede land acquisition by the farm households. The study
also recommends strong reawakening of the farmers’ cooperative movement as well
as the encouragement of farmers to join other local level associations.
CHAPTER
ONE
1.0 Introduction
1.1 Background
Information
The rate of poverty incidence
in Nigeria in the past three decades has been a major concern for policy
makers. National Bureau of Statistics, NBS (2005) recorded that the incidence
of poverty in Nigeria increased sharply between 1980 (28.1%) and 1985 (46.3%)
and although there was a slight decrease in poverty between 1985 and 1992
(42.7%), poverty incidence increased to 65.6% in 1996.Poverty incidence in
Nigeria stood at 70%; 2007 estimate according to CIA (2011). Unfortunately,
these numbers are getting worse. Between 1993 and 2003, the share of the
population living in extreme poverty (US$1/day income) rose from 59 percent to
71 percent, and the share living in moderate poverty (US$2/day income) rose
from 85 percent to 92 percent (WDI 2007). A worrisome dimension is the fact
that poverty is disproportionately concentrated among households whose primary
livelihood depends on agricultural activities. Besides the fact that there have
been some level of agricultural growth of 6.5% between 2002-2006 in Nigeria and
then 40.84% of GDP in 2010(NBS, 2011), the problem of poverty among farm
families still persists (WDI, 2007).
World Bank (2008) recorded that
Nigeria`s rural space is home to 53% of the nation’s population and also home
to more than 70% of the nation`s poor. Notwithstanding the increasing rate of
poverty among farm households, the Nigeria agricultural policy focus of food
self-sufficiency is still couched mainly in terms of increasing physical output
of domestically produced commodities, neglecting the issue of income of farm
households, thus
One of the effective ways
through which agricultural income of farm households can be improved is by
broadening their household physical asset base. Chaudhry, Malik and Hassan
(2009) had posited that physical assets contribute significantly to per capita
income.Escobal and Torero (2005) observed that complementarities between social
and physical assets and between private and public assets may be responsible
for different patterns of income growth. Physical assets are commonly portrayed
as the most important determinant of income and investment strategies, and it
has been argued that a more equitable distribution of assets could contribute
to poverty alleviation (Rahman and Westley 2001). Physical assets help to
increase opportunities to be more productive or to obtain credit facilities and
even to serve as safety nets. Diversity in asset choice is important in order
to allow households to manage risks in any one period. In fact any household
that lacks access to physical assets and other productive resources is unlikely
to survive any negative shock and as a survival strategy will adapt risk averse
production strategies (Aryeetey, 2004). Moreover, the distribution of assets
will also affect the rate of returns to investments, thus reinforcing the
tendency towards income inequality (Walle and Gunewardena, 2001). Unequal
distribution of assets affects the equal distribution of opportunities for
building both physical and human capital in the future (Deininger and Squire,
1998; Deininger and Olinto, 2000).
In general, the distribution of
assets is the key determinant of income distribution (Alesina and Rodrik,
1994). For example, Finan, Sadoulet and de-Janvry, (2002) found out that for
small landholders, an additional hectare of land increases welfare on average
by 1.3 times the earnings of an agricultural worker. In fact the failure of
many poverty reduction interventions has been because they ignored the great
diversity and heterogeneity of asset portfolio across households (Finan,
Sadoulet and de-Janvry, 2002).
Farm householdsown anduse a
variety of assets for their various agricultural production activities. The
asset portfolio of the farmer may include livestock, farm equipment, buildings,
farm lands (hectares of cropped land), net savings, net remittances, consumer
durables, non-real estate assets and social capital. Aryeetey and Udry (1998)
constructed four simple asset categories: house (which is the value of the house
plus consumer durables), farm (the value of livestock, farm equipment, and
other lands), non-farm (the value of assets of the non-farm enterprise), and
finance (the value of cash balances, financial savings, shares, net remittance
assets). Moser (2007) defined physical assets as the
Social capital represents the
ability of households to secure benefits by virtue of membership of social
networks or other social structures (Portes, 1998). The social capital of a
society includes the institutions, the relationships, the attitudes and values
that govern interactions among people and contribute to economic and social
development (Grootaert and Bastelear, 2002). Social capital as an asset has
gained significant recognition in determining economic and welfare outcomes at
the household level which cannot be explained by differences in traditional
production inputs such as labour, land, human and physical capital (Grootaert,
1999). Furthermore, Narayan and Pritchett, 1997; Grootaert, 1999 showed that
social capital had greater influence on economic outcome compared with human
capital and other forms of capital.
Social capital complements human
and physical capital in order to realize the full benefits of any development
programme (Okunmadewa et al, 2005). Studies in Nigeria have shown that
the poor derive more benefits from their membership of local associations
compared with publicly instituted organizations (World Bank, 1996; Olayemi et
al, 1999; Okunmadewa, 1998; and World Bank/DFID, 2000). World Bank (1999)
found out that the poor in Nigeria turn to local community based organizations
(CBOs) as the main safety net for their well being. Prominent among these
social safety nets are religious groups, traditional leadership, educational
institutions, women's group and traditional financial institutions among
others.
Poverty in this study was based on household per
capita expenditure instead on income. The purpose of doing this is because of
some reasons. First respondents may find it.....
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