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LIVELIHOOD DIVERSIFICATION STRATEGIES AMONG FADAMA AND NON-FADAMA USERS IN IMO STATE, NIGERIA
ABSTRACT
The study examined the livelihood diversification strategies among Fadama and Non Fadama users in Imo State. Nigeria. Data used for the study were collected with the aid of structured questionnaire administered to 150 randomly selected Fadama users and 150 non-Fadama user making it a total of 300 questionnaires. Data were analyzed using descriptive statistics, net farm income model, Gini coefficient model, Ordinary Least Squares (OLS), multiple regression analysis, and logit model. Result of the analysis showed that farming activities is the major source of income generation among Fadama and non Fadama users in the study area, contributing 63.6% and 51.9% of Fadama and non Fadama users’ total household income. Non-farm activities contributed 36.4% of the Fadama users’ total household income. In the same vain, non-farm activities among non Fadama users contributed 48.1% of their total household income. The analysis further showed that Fadama users mean household income was N560, 050 per annum while non Fadama users mean household income was found to be N467, 383 per annum. The Gini coefficient of 0.249 and 0.233 were estimated for Fadama and non-Fadama users in the study area. Livelihood diversification strategies among Fadama users were influenced by household size, age, educational level, extension visit and access to credit. Livelihood diversification strategies among Non Fadama users were influenced by household size, age, educational level and cooperative membership. It was also noted that household size, gender, age, cooperative membership and farm size were among the socio economic factors that affected value addition among Fadama users, while household size, gender, age, educational level, cooperative membership and farm size affected value addition among non Fadama users. In addition, the result showed that there was a significant difference between Fadama and non Fadama users’ income. Also there was a significant difference between the livelihood diversification strategies of Fadama and non Fadama users in the study area. Despite growing concern that farming alone may not provide sufficient income for sustainable livelihood, it still dominates livelihood activities and income generation among Fadama and non Fadama users. It is therefore recommended that Government policies aimed at sustainable livelihood and income generation should focus on both farm and non-farm sectors. Hence farming as a primary source of income may not guarantee sufficient livelihood for most Fadama and non-Fadama users’ households in Imo State.
Key words: livelihood, livelihood diversification strategies, household income, value addition, Fadama users and Non-Fadama users.
TABLE OF CONTENTS
Title page i
Certificate Page ii
List of tables viii
List of figures ix
Abstract x
CHAPTER ONE: INTRODUCTION 1
1.1 Background information 1
1.2 Statement of the problem 7
1.3 Objectives of the Study 10
1.4 Hypotheses tested 11
1.5 Justification for the Study 11
CHAPTER TWO: LITERATURE REVIEW 14
2.1 Conceptual and Theoretical Framework 14
2.1.1 Concept of household income 17
2.1.1.1 Measures of income diversification 24
2.1.2 The concept of value addition 27
2.1.3 The concept of Fadama 28
2.1.3.1 Fadama I 31
2.1.3.2 Fadama II 32
2.1.3.3 Fadama III 34
2.1.3.3.1 Financing plan 39
2.1.3.3.2 Project objectives 39
2.1.3.3.3 Target population 39
2.1.3.3.4 Project strategy 40
2.1.3.3.5 Project components 42
2.1.3.3.5.1 Capacity building 42
2.1.3.3.5.2 Rural infrastructure investments 42
2.1.3.3.5.3 Productive asset acquisition support 43
2.1.3.3.5.4 Demand responsive advisory services 43
2.1.3.3.5.5 Project management monitoring and evaluation 43
2.2 Theoretical literature 44
2.2.1 The sustainable livelihoods framework 44
2.2.2 Components of the livelihood system 48
2.2.3 Livelihood resources 48
2.2.4 Access 49
2.2.5 Livelihood activities 51
2.2.6 Household vulnerability 52
2.2.7 Livelihood asset 53
2.2.7.1 Human assets 55
2.2.7.2 Social assets 55
2.2.7.3 Natural assets 57
2.2.7.4 Physical assets 57
2.2.7.5 Financial assets 58
2.2.8 The role of capital assets in livelihood choices 58
2.2.9 The role of structures and processes in shaping livelihoods 61
2.2.10 Livelihood outcomes 62
2.2.11 Livelihood strategies 63
2.2.12 Classification of livelihood strategies 66
2.2.13 Livelihood diversification 68
2.2.14 Determinants of livelihood diversification 82
2.2.14.1 Access to markets 82
2.2.14.2 Climate variability 84
2.2.14.3 Available assets portfolios 85
2.2.14.4 Education and skills 87
2.2.14.5 Access to credit markets 88
2.2.14.6 Gender relationships 89
2.2.14.7 Seasonality 91
2.2.14.8 Adaptation to risk 92
2.2.14.9 Local economic boom opportunities 93
2.2.15 Livelihood diversification approaches 94
2.3 Empirical literature 96
2.4 Analytical frame work 103
2.4.1 Logit model 103
2.4.2 Measuring income inequality 104
2.4.2.1 Gini coefficient as a measure of income inequality 105
2.4.2.2 Lorenz curve as a measure of income inequality 106
2.4.2.3 Quintile method as a measure of income inequality 107
2.4.3 Aggregate household income model 108
2.4.3.1 Calculating household income from farm activities 113
2.4.3.2 Calculating the household income from off-farm activities 115
CHAPTER THREE: METHODOLOGY 117
3.1 Study Area 117
3.2 Sample Selection 119
3.3 Data Collection 120
3.4 Data Analysis 121
3.5 Empirical model to ascertain the extent of value addition 129
3.6 Hypotheses Testing 132
CHAPTER FOUR: RESULTS AND DISCUSSION
4.1 Socio-Economic Characteristics of Fadama and Non Fadama Users 137
4.1.1 Educational attainment of respondents 137
4.1.2 Household Size 139
4.1.3 Extension visits 140
4.1.4: Farming Experience 142
4.1.5 Gender 143
- 6: Age 144
4.1.7 Farm size 145
- Income Generating Activities (Farm and Non-Farm) among Fadama
and Non Fadama Users 147
- Farm Activities and Nonfarm Activities of Fadama users 147
- Farm Activities and Nonfarm Activities of Non Fadama users 149
- Household Income, Determinants of Income and Size Distribution
among Fadama and non Fadama users 151
- Household Income 151
- Determinants of income among Fadama and non Fadama Users 152
- Analysis of income distribution of Fadama and non Fadama Users 159
- Forms of Value Addition and Associated Income among Fadama
| and Non Fadama Users | 164 | |
| 4.5 Areas of Value Addition on Fadama Activities in Imo State | 167 | |
| 4.6. Determine the Extent of Value Added in Fadama Activities | 168 |
4.8 Determinants of Household Livelihood Diversification Strategies among Fadama and Non- Fadama Users 171
4.9: Determine the Effects of Household Socioeconomic Characteristics on Value Addition of Fadama and Non- Fadama Users 176
4.10 Hypotheses testing 181
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary 186
5.2 Conclusions 190
5.3 Recommendations 191
5.4 Contribution to knowledge 192
References 194
Appendix 216
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Agriculture is the major sector upon which the majority of Nigeria’s rural poor depend on for their livelihood. It provides employment for over 60% of the population (Oseni & Winter, 2009; Liverpool-Taise, et al. 2011; Oladimeji, et al. 2014). However, it has been established that Farming as a primary source of income has failed to guarantee sufficient livelihood for most farming households in developing countries (Babatunde, 2012), hence diversification into non-farm activities is seen as a form of selfinsurance. This is because diversification offers people options for coping with crisis. The resultant effect of this is that, rural households diversify their income sources by combining two or more jobs (multiple job holding) to enhance consumption smoothing and acquire other basic needs, (Oluwatayo, 2009). This goes to prove that one of the most established characteristics of rural households in developing countries is that they obtain their incomes from many different sources (Davis, et al. 2010).
Presently the concept of livelihood diversification is emerging as a survival strategy of rural households in developing countries (Ellis, 2000; Bryceson, 2000). The rural people are looking for diverse opportunities to increase and stabilize their incomes, which are determined by their portfolio of assets, social, human, financial, natural and physical capital (Sudan, 2007). There has been an increased recognition among researchers especially in the past one or two decades that Africans diversify their livelihood strategies, including on-farm (crop, livestock, fisheries and off-farm activities or market and non-market activities to mitigate risks inherent in unpredictable agro-climatic and politico-economic circumstances (Ellis, 2000;
Bryceson, 2002).
In different areas of the world impact of livelihoods diversification is different and varies from negative to positive effects like- the withdrawal of critical labour from the family farm for the alleviation of credit constraints and a reduction in the risk of innovation. The contribution made by livelihood diversification to rural income sources is a significant one which has often been ignored by policy makers who chose to focus their activities on agriculture (Sudan, 2007). Scholarly, literature on rural livelihoods diversification portrays it as a continuously occurring phenomenon that results from the increased importance of off-farm wage labour in the household livelihood portfolio or through the development of new forms of on-farm commodities. Consistent with this observation, Warren (2002) argued that in either case diversification can be both temporary (occasional diversification) or can be a deliberate attempt to optimize household capacity of the ever changing opportunities (strategic diversification). Livelihoods diversification is important because it can lead to some form of household specialization and also increase the household’s ability to cope with risk. Diversified households are said to be more likely to enjoy higher flexibility and resilience capacity than households that are completely dependent on agriculture, (Simtowe, 2010). Furthermore, the perceived advantage of livelihoods diversification are increasingly becoming important in the light of reiterated environmental, economic and political shocks affecting the rural areas of developing countries, (Simtowe, 2010).
Livelihood literature suggests that though exogenous trends and shocks play a significant role in approaching rural people towards a diversified livelihood strategy, diversification choices are also confidently embedded in the micro-economic reason of farming households (Ellis, 2000). The availability of key-assets (such as savings, land, labour, education and/or access to market or employment opportunities, access to Common Property Resources (CPRs) and other public goods is an evident requisite in making rural households and individuals more or less capable to diversify ( Abdulai & Crole, 2001; Sudan, 2007). Diversification may also develop as a coping response to the loss of capital assets needed for undertaking conventional non-farm land, increased producer/consumer ratio, credit delinquency, and environmental deterioration can be indeed important drivers towards diversification (Sudan, 2007; Herani, et al, 2007).
In Nigeria, majority of the farm household populace either depend entirely on farming for survival and generation of income, or depend on farming to supplement their main sources of income (World-Bank, 2010). Sample studies of rural income portfolios derived from both large-scale, national representative sample surveys and purpose households studies converge on the once starting figure that on average, roughly 50 percent of rural households income in sub-Saharan African are generated from engagement in non-farm activities and transfer from urban areas or abroad, with remittance and pension payments being the chief categories of such transfer, (Ellis 2000; Ellis and Freeman, 2004). Evidence from a sample of rural villages in Tanzania,(Chapmen & Tripp 2004; Ellis & Madox, 2003) shows that an average half of the household income came from crops and livestock and the other half from nonfarm wage employment, self employment and remittance. The proportion of non-farm income was higher for the upper income groups than for the lowest income groups. Therefore, the poorest households were more reliant on agriculture, and the reliance on agriculture decreased with increased diversification into non-farm activities.
However, one important means of income generation that rural farmers have not paid much attention to is the value addition. Value addition is any act that takes a (raw) product a step closer to the form in which it can conveniently meet the need(s) of the user(s) or any improvement made to agricultural produce to bring it to a form in which the consumer wants it (Ngore,2010).
In recent years, the pro-poor growth approach has become one of the key concerns of developmental organizations. The focus of the approval lies in the promotion of economic potentials of the poor and disadvantaged groups of people (OECD, 2006). The main aim is to enable them to react and take advantage of new opportunities arising as a result of economic growth, and thereby overcome poverty (Berg & Kumbi, 2006). Value addition is useful as a poverty-reduction tool if it leads to increase on and off-farm rural employment and income. Increased agricultural productivity alone is not a sufficient route out of poverty within a context of globalization and increasing natural resource degradation. A focus on post-harvest activities, differential value added products and increasing livelihood with access to market for goods produced by low-income producers would appear to be the strategy open to smallholders (Lundy, et al. 2002).The poverty reducing potential of value addition is not only in generating rural income and employment but also complemented by improvements in processing that reduce traditional food preparation times.
In recognition of the importance of the agricultural sector in Nigeria, the government has initiated and endorsed many national and international projects, programs and policies aimed at increasing farmers’ income, supporting livelihood activities and thereby reducing poverty. Laudable among these programs is the National Fadama development programme. Fadama is a Hausa word for an irrigable land usually flood plains with shallow aquifers found along Nigeria major river system. Such lands are especially suitable for irrigated production, fish farming, traditional fish feed and water for livestock. (Ingawa, et al.2004; Nwachukwu & Onyenweaku, 2007). The Fadama I project focused basically on crop production through supplementary water supply which resulted in conflict amongst common resource users.Fadama II project was implemented to address the problems identified in Fadama I by involving all the stakeholders in the common resource utilization and some downstream activities such as value addition and marketing were equally implemented. Fadama III project is a follow up to the Fadama II which is now implemented in 36 states and Federal capital territory (FCT). The National Fadama Development project is a major instrument for achieving Government’s poverty reduction objective in the rural areas of Nigeria. Its beneficiaries are the private economic agents who achieve their livelihood directly or indirectly from the exploitation of the natural resources in a given Fadama area. The project empowers Fadama Community Associations (FCAs) with the resources and the needed training cum technical assistance and support to properly manage and control these resources for development. Fadama adopts a community demand-driven (CDD), socially inclusive and participatory process whereby users of the Fadama collectively identify their development priorities and agree on their intervention activities outlined in Local Development Plans (LDPs) (National Fadama Development office, 2010).
Imo State is among the states that benefited in both Fadama I and II and presently in Fadama III whose development objective is to increase the incomes of users of land and water resources on a sustainable basis. It also seeks to reduce conflict among users and aims to address some factors that militate against the full realization of the potential benefits of agricultural production activities- poor development of infrastructure, storage, processing and marketing facilities (National Fadama Development Office; NFDO, 2010). Consequent upon the lessons learnt from NFDPI, the Fadama II and III project injected a lot of innovations, which includes that participation was not limited to Fadama crop farmers, but extended to all the users of Fadama resources-pastoralist, hunters, fisher-folks, vulnerable and marginalized groups among others. Fadama I was implemented in three local government areas of the State, while Fadama II was implemented in eleven local government areas, and presently Fadama III is being implemented in twenty local government areas out of twenty seven local government areas of the state. Local Fadama desks were established and operational in these participating LGAs in the State.
1.2 Statement of the problem
In Sub-Saharan Africa, reliance on agriculture tends to diminish continuously as income level rises, i.e. the more diverse the income portfolio the better-off is the rural households. Elsewhere, a common pattern is for the very poor and the comparatively well off to have the most diverse livelihoods, while the middle ranges of income display less diversity (Ellis, 2000). It is widely agreed that a capability to diversify is beneficial for households at or below the poverty line. Having alternatives for income generation can make the difference between minimally viable livelihoods and destitution. However, diversification does not have an equalizing effect on rural incomes overall. Better-off households are typically able to diversify in more favourable labour markets than poor rural households. The tendency for rural households to engage in multiple occupations is often remarked, but few attempts have been made to link this behavior in a systematic way to household income generation. In the past it has often been assumed that farm output growth would create plentiful non-farm income earning opportunities in the rural economy via linkage effects. However, this assumption is no longer tenable; for many poor rural families, farming on their own are unable to provide sufficient means of survival, and the yield gains of new technology displays signs of leveling off, particularly in those regions where they were most dramatic in the past.
Nigeria, with a population of over 140 million, is Africa’s most populous country and the continents fourth largest economy (NPC, 2006). The economy is still basically agrarian, but since the advent of petroleum in the mid-1970s the relative share of agriculture which was 65.5 percent in 1960/61 (with the agriculture subsector accounting for 56.6 percent), has declined with the agricultural subsector accounting for only 32 percent per annum in the 1990s, (Oluwatayo, 2009). However, the sector still constitutes the source of employment and livelihood for about three quarters of the population and it is also the dominant activity in terms of linkages with the rest of the economy. The patterns of diversification and changing income levels indicate that agriculture is not a path out of poverty in many areas.
In a case study of a Cocoa production area in Nigeria, for example, household Rural Non-farm Income (RNFI) rose on average from 33% in the mid-80s to 57% in 1997, with the poorest households showing the strongest move towards RNFI over the period (Mustapha, 1999). Livelihood strategies are therefore likely to be influenced by relative income levels and in particular the number of options that become available to different income classes (Ellis, 1999). While recognizing the urgent need to maintain a robust agricultural sector, it is increasingly becoming clear that the agricultural sector alone cannot be relied upon as the core activity for rural households as a means of improving livelihood and reducing poverty. One phenomenon that is gaining prominence in the rural development literature is the promotion and support for nonfarm diversification opportunities (Stifel, 2010).
Despite the plethora of poverty reduction strategies adopted in Nigeria like National Fadama Development Program, the poverty incidence in the rural areas of the country still remain high (HDR, 2006, 2007 (2008). The reason for this may not be farfetched. It may be because the common view on rural poverty reduction in Nigeria has been that of a sector driven almost entirely by production of crops and livestock; hence there is need to reconsider the potentials of livelihood diversification within the Nigeria rural economy. Several studies (Marter, 2002; Matshe & Young 2004; Serra, et al. 2005; Kijima, et al, 2006; Haggbade, et al. 2007; Jan, et al, 2009) reported that livelihood concept and diversification of income help in minimizing household income variability, providing an additional source of income and even employment which have implications for rural poverty reduction and contribute substantially towards improving households’ welfare. Inspite of the existence of projects like National Fadama Project that support value addition,farm households in the state carry out limited value addition and hence lose margins and jobs that could be created if they added value to their products.
Government through her agricultural transformation agenda has continued to emphasize the need for farm households to add value to their farm produce inorder to enhance their income generation, yet most farmers have continued to sale their produce without adding value. Also other factors that hinder value addition to farm produce need to be determined inorder to comprehensively address constraints to value addition and hence spur rural development.Besides, an understanding of the significance and nature of farm and off-farm activities (especially its contribution to rural household income) is of utmost importance for policy makers in the design of potent agricultural and rural development policies. Further, the rising incidence of low level of welfare of farm households in Nigeria and Imo State in particular, that remains unabated despite various policy reforms undertaken in the country, requires a deeper understanding of the problem and the need to proffer solutions to the problem through approaches that place priority on the poor and ways on which farm households through diversification can maintain their livelihood.
This study therefore seeks to provide an in-depth understanding of the different livelihood activities that Fadama and non-Fadama households in Imo State engage in to generate incomes and also examine the contribution of livelihood diversification and value addition to household income of Fadama and non-Fadama users.
1.3 Objectives of the Study
The broad objective of the study is to analyze livelihood diversification strategies among Fadama and non Fadama users in Imo State, Nigeria
The specific objectives are to:
- examine the socio-economic characteristics of Fadama and Non-Fadama users, ii. identify the income generating activities and their income share (farm and non- farm) engaged by Fadama and non-Fadama users in the study area, iii. determine the household income, its determinants and distribution among Fadama and non-Fadama users in the study area, iv. determine the forms of value addition and associated income among Fadama and non Fadama users,
- identify the areas of value addition on fadama activities in Imo State,
- determine the extent of value added in fadama activities in Imo state,
- analyse the determinants of household livelihood diversification strategies among fadama and non- fadama users, and
- determine the effects of household socioeconomic characteristics on value addition of Fadama and non- Fadama users.
1.4 Hypotheses of the study:
The following hypotheses are tested in this study; i there is no significant difference between Household income of Fadama and non-Fadama users in Imo state.
- socio-economic factors (household size,gender, age, educational level, extension visit, cooperative memebership and farm size) of Fadama and non Fadama users have no significant influence on their household income.
- there is no significant difference in the livelihood diversification strategies of fadama and non fadama users in the study area.
- socio-economic characteristics (household size,gender, age, educational level, extension visit, cooperative memebership and farm size ) of Fadama and Non
Fadama users have no significant influence on their value addition.
1.5 Justification for the Study
This study will yield information on the income generating activities. Practically this information would be vital in identifying appropriate intervention, which can enhance the capacity of farm households and make them more secure. Indirectly this will contribute to the attainment of one of the Millennium Development Goals (MDG)eradication of extreme poverty.
The result of this study will also help in understanding the household income and the factors affecting such income. Since one of the project development objectives (PDOs) of Fadama Project is to sustainably increase the income of users, this finding would help to ascertain the contribution of Fadama in income generation among users and when compared to non-users would guide donor agencies, Government and nonGovernment organization to form opinion.
Data that would be generated by this study will be a valuable tool to advance the role of donor assisted projects in sustainable livelihoods in Nigeria. It would also be expected to be of help to development institutions and development workers to review their development strategies, so that they can address the needs and problems of farming households. The identified diversity of livelihood strategies will increase our understanding to how farm households survive.
The information will also help to build a balanced picture of farm households as they struggle to adjust to the livelihood challenges they face. Information generated by this study would indicate the extent to which livelihood diversification strategies affect farm and off-farm income. These findings will guide policy makers and development planners who are concerned with poverty alleviation while designing agricultural projects within the zone and elsewhere in the country.
This study will also generate information that would expose the constraints that need to be addressed to facilitate value addition in order to help farm households enhance their income generation as well as creating employment opportunities. The result of this study will also help to focus efforts to promote value addition to areas that farm households consider to be important.
The result will be expected to lay a benchmark for study on the situation of participation in Fadama projects. It will also serve as a source of information for assessing the performance and impact of the project in the state and equally stand as a reference cum useful guide for the next phase of this programme. The study will further generate data and information that would encourage participation and also expose linkage opportunities to potential partners, credit agencies, and nongovernment organizations etc. of the projects.
The result of this research is expected to achieve similar outcomes in the long run when adopted by policy makers, sectoral planners and the government at various
levels.
LIVELIHOOD DIVERSIFICATION STRATEGIES AMONG FADAMA AND NON-FADAMA USERS IN IMO STATE, NIGERIA
