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EVALUATION OF THE IMPACT OF ECONOMIC EMPOWERMENT AND DEVELOPMENT STRATEGY ON POVERTY ALLEVIATION IN TARABA STATE
ABSTRACT
The study evaluates the impact of Taraba State Economic Empowerment and Development Strategy on poverty alleviation in the state. The study adopted a correlational design method and uses data obtained from secondary sources. It uses longitudinal regression model to examine the impact of investment in agricultural sector, investment in small and medium scale enterprises, and jobs created by the National Directorate of Employment (NDE) on poverty alleviation in Taraba state. The study reveals that investment in agricultural sector is positive and insignificant in alleviating poverty in Taraba state, while jobs created by the NDE reveals a positive and insignificant relationship with poverty alleviation in Taraba state. Only investment in small and medium scale enterprises shows a negative and significant relationship with poverty alleviation in the state. The study concludes that it is only investment in SMEs that majorly explain the variation of poverty alleviation in Taraba state. It is recommended that target segment of the people should be made aware of the benefit of the poverty alleviation schemes and proper monitoring should be put in place, to ensure that fund allocated for investment in major sector of the state’s economy to alleviate poverty are not diverted.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study———————————————————————- 1
1.2 Statement of the Problem——————————————————————— 5
1.3 Research Questions—————————————————————————- 6
1.4 Objectives of the Study———————————————————————– 6
1.5 Statement of Hypotheses——————————————————————— 7
1.6 Scope of the Study—————————————————————————- 7
1.7 Significance of the Study——————————————————————— 8
1.8 Limitation of the Study———————————————————————– 8
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction———————————————————————————– 9
2.2 The Concepts and Definitions of Poverty ———————————————— 9
2.3 Global Poverty Issues———————————————————————– 12
2.4 Poverty Alleviation Programs in Nigeria————————————————–14
2.5 Taraba State in Perspective——————————————————————-32
2.6 Review of Empirical Works—————————————————————- 44
2.7 Theoretical Framework ——————————————————————- -48
2.8 Summary ———————————————————————————— 50
CHAPTER THREE: METHODOLOGY
3.1 Introduction ———————————————————————————— 51
3.2 Research Design——————————————————————————- 51
3.3 Sources and Methods of Data Collection———————————————— –51
3.4 Techniques of Data Analysis ————————————————————— 52
3.5 Definition and Measurement of Variables………………………………………….53
3.6 Summary —————————————————————————————54
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Introduction ————————————————————————————55
4.2 Test of Hypothesis: Unit Root Test———————————————————55
4.3 Test of Hypothesis: Co-Integration Test—————————————————-57
4.4 Presentation and Data analysis—————————————————————58
4.5 Implication of Findings———————————————————————–61
CHAPTER FIVE: SUMMARY, RECOMMENDATION, CONCLUSION
5.1 Summary—————————————————————————————64
5.2 Conclusion————————————————————————————-64
5.3 Recommendation—————————————————————————–65
5.4 Suggestions for further Reading————————————————————66
References………………………………………………………………………………….67
Appendices………………………………………………………………………….…76-90
CHAPTER ONE
INTRODUCTION
1.1.1 Background to the Study
Poverty is a global problem found in different parts of the world albeit with different causes and at various levels; which gives rise to various approaches to poverty alleviation strategies that depend on each country‟s antecedents. Whereas poverty in the United States is seen as a result of failings at the structural, social and economic level (Rank, 2003), it is seen in most African nations as caused by low level of production and production capacity, most especially in the agricultural sector which accounts for most of the employment and a large share of the GDP (Ibrahim, Mahmood and Umar, 2011).
Nigeria is the most populous African country; it has a high poverty rate of 69% in 2013 and rising unemployment rate of 19.7 in 2009, 21.5 in 2010, 23.9% in 2011 and 24.3 in 2014(NBS, 2014). The North East geo-political zone to which Taraba state belongs, has 69% poverty rate as at 2010 (see appendix 4) which makes the zone second only to the north central zone that has 70% rate (Aiyedogbon and Owhofasa, 2012). Nigeria is the 152nd country on the Human Development Index in 2014 and the 22nd in Africa, far below Ghana, Sao Tome and Equatorial Guinea, who are ranked 13th 16th and 17th respectively (HDI, 2014).
In order to alleviate poverty, Nigeria embarked on economic empowerment programs from the 1970‟s. These include the Green Revolution, Operation Feed the Nation (OFN), Nigerian Agricultural, Cooperatives and Rural Development Bank, (NACRDB) (now Bank of Agriculture, BOA), National Directorate for Employment (NDE),
Poverty Alleviation Program (PAP), National Poverty Eradication Program (NAPEP), the Directorate of Food, Roads and Rural Infrastructure (DFRRI), and National Economic Empowerment and Development Strategy (NEEDS), all in an effort to alleviate poverty and its attendant consequences.
Economic empowerment and development program was born out of the dire need to stop the ravages of poverty and enhance the welfare of the people by the government. The global summits of world leaders that have a direct bearing on poverty alleviation was the millennium summit of 2000, it brought together 189 Heads of States who undertook to execute the time bound Millennium Development Goals (MDGs). These nations committed themselves to, among other targets, cut by half the number of people living in hunger and poverty by the year 2015.
Nigeria was among the 189 signatories at the convention; and in order to meet the target; it came up with a milestone in the form of National Economic Empowerment and Development Strategy (NEEDS) which gave rise to the state Economic Empowerment and Development Strategy (SEEDS) at the state level, as well as the Local Economic Empowerment and Development Strategy at the Local Government level. The Local Economic Empowerment and Development Strategy (LEEDS) operate within the framework of NEEDS and SEEDS in all the LGAs in Nigeria. Its aim was to promote poverty alleviation and general development at the grassroots level, involving key stakeholders such as local government officials, civil society groups, private sector participants, community leaders, traditional rulers, women and youths, in the process of development at the local government level (TSEEDS, 2004).
The Taraba State Economic Empowerment and Development Strategy (TSEEDS) is one of the local economic empowerment programs that is an offshoot of the National Economic Empowerment and Development Strategy (NEEDS). The Strategy is intended to fast track the achievement of NEEDS and by extension the realization of the Millennium Development Goals (TSEEDS, 2004). TSEEDS seeks to ensure growth in the internally generated revenue and the Gross Domestic Product of the state by revamping the private sector, taking advantage of vast resources and opportunities abound in the state by exploiting the national and global markets.
Similarly, the strategy seeks to free up resources for investment in infrastructure through investing heavily in electricity, roads, water and transport and as well assist investors in the state to access cheap credit through micro finance institutions. It is also the goal of TSEEDS to coordinate strategies for the key sectors that drive the state economy such as agriculture, solid minerals and Small and Medium Scale Enterprises (TSEEDS, 2004).
Taraba state has a poverty rate of 63% in 2004, 69% in 2013, Gini coefficient of 0.488 in 2005; and unemployment rate of 13.4% in 2004, 23.9 in 2011 (NBS, 2012) and a target of 5% reduction in unemployment annually (TSEEDS 2004). This indicates that state Government and the National Directorate of Employment have a crucial role to play in the fight against poverty. Ogwumike (2001) asserts that the Micro Finance Companies just like the NDE have articulated programs aimed at curbing the nation’s unemployment problems of university and other tertiary institutions graduates, as well as the disguised, unemployed street hawkers in rural and urban centers across the nation.
However due to limited educational skills and paucity of formal employment opportunities in places like Taraba state, most people are forced into self-employment as a means of supporting themselves and their families. These activities may not yield enough to raise them out of poverty as they lack the capital, capacity and management skills as well as access to credit and markets that could aid in expanding and improving their productivity and income (Abimiku, 2006).
Again, the neglect of agriculture which is the main employer of labor has brought about untold hardship and swelled the number of poor in Nigeria (Ferroni and Kanbur 1990; Deng 1994; Abimiku, 2006). This national outlook is not different from the situation in Taraba state. The state has about six million hectares of fertile land with both tropical and semi temperate climate suitable for the commercial production of cereals, tubers, tree crops and vegetables and it is one of the states with the highest heads of cattle in the country. Yet all these potentials have continued to lie fallow over the years for lack of economic empowerment (RMRDC 2002).
The Small and Medium Scale sub sector in Taraba state is acknowledged to have a huge potential for employment generation and wealth creation. The sector has stagnated and remains, small in terms of its contribution to GDP or to gainful employment due to lack of patronage and ineffective linkage between the SME and research institutes; and the lack of political will to implement local content and technical knowhow policies. The sector is dominated by import dependent processes and factors. Ibrahim et al (2011) &Mahmud (2011) recommended the need for the involvement of both government and the organized private sector in the funding of small and medium scale enterprises to enhance sustainable economic development, contribute to employment generation and wealth creation.
1.2. Statement of the Problem
Taraba state has numerous agricultural and mineral resources which are a great potential for economic development (Bugaje, Hamalai and Indabawa, 2002). The state‟s potentials notwithstanding, it is characterized by a high level of poverty, high unemployment rate (NBS, 2014), weak public sector, over reliance on revenue from the federation account and expanding expenditure (TSEEDS, 2004). The TSEEDS policy describes the state as having “weak and unorganized private sector, low internally generated revenue, weak industrial base, persistent budget deficit, and poor state of social and physical infrastructural facilities, Poor access to finance, and low productivity in the real sector (Agriculture). Other factors are poor access to market for the purchase of raw materials and sale of finished goods and high level of unskilled manpower. To reverse this trend and reduce by half the proportion of its citizens that live in extreme poverty, the Taraba state Economic Empowerment and Development Strategy was introduced.
On the theoretical discourse, several studies have been conducted on economic empowerment programs in Nigeria in general and Taraba state in particular. Orji (2005) found that the non-involvement of the poor in the design and execution of economic empowerment programs in Nigeria is a critical factor in the failure of the programs. This was concurred by Abimiku (2006).
Mahmud (2011) and Ibrahim et al (2011) in separate studies on Taraba state potentials for economic empowerment concluded that there was a direct and inverse relationship between economic empowerment program and poverty reduction in Taraba state. These studies, however, looked at empowerment programs in their totality; but an evaluation of the impact of such an all-encompassing economic empowerment strategy as the Taraba state Economic Empowerment and Development Strategy (TSEEDS) on poverty alleviation is lacking.
Against this backdrop, it is clear that there exist the need to empirically assess the various strategies adopted to combat the menace of poverty in Taraba state. Specifically, this study looks at the impact of TSEEDS on poverty alleviation in Taraba state using the combined variables of investment in agricultural schemes, small and medium enterprises development as well as employment generation.
1.3. Research Questions
This research seeks to answer the following questions:
- Does the investment in the agricultural sector significantly alleviate poverty in Taraba state?
- Does the investment in small and medium scale enterprises significantly alleviate poverty in Taraba state?
- Does the Jobs created by NDE significantly alleviate poverty in Taraba state?
1.4. Objectives of the Study
The main objective of this study is to evaluate the extent to which TSEEDS has impacted on the quest to reduce poverty in Taraba State. The specific objectives are:
- To determine whether investment in the agricultural sector has significantly alleviated poverty in Taraba state.
- To determine whether investments in small and medium scale enterprises have significantly alleviated poverty in Taraba state.
- To determine whether the Jobs created by NDE have significantly alleviated poverty in Taraba state.
1.5 Research Hypotheses
H01. Investment in the agricultural sector does not significantly alleviate poverty in Taraba State
H02. Investment in small and medium scale enterprises do not significantly alleviate poverty in Taraba State
H03. Jobs created by National Directorate of Employment do not significantly alleviate poverty in Taraba State.
1.6 Scope of the Study
The study looks at the impact of the Taraba State Economic Empowerment and Development program on poverty alleviation from 1999 to 2014, using the independent variables of investment in the agricultural sector, investments in small and medium scale enterprises and the jobs created by NDE. The choice of this period is informed by the fact that economic empowerment in Taraba state took center stage only with the introduction of the economic reform of the democratic era from 1999 that introduces NEEDS, TSEEDS and LEEDS.
1.7. Significance of the Study
This research evaluates the impact of the Economic Empowerment and Development strategy on poverty alleviation in Taraba state. The research is useful to the government, entrepreneurs, investors and academics and the prospective investors in the area of decision making for optimal investment.
It will as well guide policy makers in their economic empowerment programs. Non-Governmental Organizations‟ and Donor agencies will also find the research useful by knowing where to commit their resources. The study contributes to the body of literature on both the theoretical and practical discourse on economic empowerment programs; and provides a frontier for further research in the area.
1.8. Limitation of the Study
The study is only limited to Taraba state, it is not applicable to the remaining 35 states in Nigeria and the federal capital territory.
The research is restricted to the variables of: Investment in the agricultural sector for unemployment reduction, Investment in the small and medium scale enterprises, and jobs created by the National Directorate for Employment. Other variables that can also be used in alleviating or reducing poverty are not considered, such as investment in education, health and entrepreneurship.
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