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Farm Households Livelihood Diversification and Poverty Alleviation in Giwa

Local Government Area of Kaduna State, Nigeria

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Consilience: The Journal of Sustainable Development
Vol. 15, Iss. 1 (2016), Pp. 219- 232

Farm Households Livelihood Diversification and Poverty Alleviation in

Giwa Local Government Area of Kaduna State, Nigeria
Oyakhilomen Oyinbo and Kehinde Tobi Olaleye

Department of Agricultural Economics and Rural Sociology,

Ahmadu Bello University, Nigeria.
Email: [email protected]

Abstract
This study was undertaken to determine the effect of livelihood
diversification on poverty alleviation in Giwa Local Government
Area of Kaduna state, Nigeria. The study utilized primary data
collected through a questionnaire administered to 100 respondents
selected using purposive and random sampling procedures. Data
were analyzed using simple descriptive statistics, the FGT poverty
model and Tobit regression model. The result of the FGT poverty
model revealed that the incidence of poverty among the farming
households was 30%, implying that 70% of the farm households
were not poor. The result of the Tobit regression showed that
livelihood diversification was significant at 1% probability level
and was negatively related to the poverty level of the farmers. This
implies that a farming household head who engages in a number of
livelihood activities has a lower likelihood of being poor. The
increase in the number of livelihood activities increases the income
of the farmers and invariably their purchasing power and welfare.
It is therefore recommended that awareness and skills acquisition
training programmes be established at the grass roots level by the
local government authority to ensure that farmers are practising
farming along with a wide range of income generating activities to
improve their wellbeing.
Keywords: Head count, Income, Poverty line, Likelihood.
220 Consilience

1. Introduction
The contribution of non-agricultural activities to household
income in the developing world in general and Sub-Saharan Africa
in particular is substantial. Local non-farming income contributes
between 30 to 40 % of rural household income in the developing
world (Haggblade et al., 2007). Various studies have shown that
while most rural households are involved in agricultural activities
such as livestock, crop, or fish production as their main source of
livelihood, they also engage in other income generating activities
to augment their main source of income (Abimbola and
Oluwakemi, 2013).
Diversification has been defined by Kimenju and Tschirley
(2008) as ‘the number of economic activities an economic unit is
involved in and the dispersion of those activities’ shares in the total
economic activity of the unit. The focus on livelihood is relevant,
in particular with the discussion on rural poverty reduction. With
prevalent poverty in most rural areas, rural development has been
an important policy goal for many developing countries, and large-
scale, structural reform measures have been taken to this end
(Hyewon, 2011). The growing interest in research on rural off-
farm and non-farm income in rural economies shows that rural
people’s livelihoods are derived from diverse sources and are not
as overwhelmingly dependent on agriculture as previously
assumed (Gordon and Craig, 2001). Non-farm local activities
include all economic activities in rural areas except agriculture,
livestock, fishing and hunting. It includes all off-farming activities,
processing, marketing, manufacturing, wage and causal local
employment in the rural villages (Agu, 2013).
Most rural populations in Africa have been suffering from
poverty and environmental degradation. Maintenance of a
diversified resource base is a prerequisite for adaptation to climate
variability as diversified livelihood systems allow indigenous
farming communities to draw on various sources of food and
income. In doing so, they can diffuse the risks of vulnerability to
climate change (Macchi et al., 2008). Poverty is a problem
affecting every nation of the world (Chen and Ravallion, 2010).
The reduction of poverty is the most difficult challenge facing any
country in the developing world where on average, the majority of
the population is considered poor. In Nigeria, the number of those
in poverty has continued to increase (Lawal et al., 2011). Despite
the various efforts of government to reduce the incidence of
poverty through different poverty alleviation programmes and
strategies and the quest to be one of the 20 largest economies by
the year 2020, Nigeria continues to be one of the poorest countries
in the world (Adepoju, 2012). Its incidence rose from 27.2% in
Consilience Oyinbo: Farm Livelihood Diversification

1980 to 42.7% in 1992 and 69% in 2010 (NBS, 2012). Nigeria has
been ranked 153rd with human development index of 0.471 in 2013
UNDP Human Development Index despite moving a step up from
the 2011 rating, portraying the country among the poorest
countries in the world, majority of whom resides in the rural areas
with farming as their primary occupation.
Agriculture is the main source of livelihood in Nigeria,
especially in the rural areas and is plagued with various problems
(Abimbola and Oluwakemi, 2013). As a result, most of the rural
households are poor and are beginning to diversify their
livelihoods into off and non-farm activities as a relevant source of
income. The farm sector employs about two-thirds of the country’s
total labour force and provides a livelihood for about 90% of the
rural population (IFAD, 2009). Despite agriculture being the major
occupation, non-farm sector plays several roles in the development
of the rural sector (Lanjouw, 2001). There is growing literature on
livelihood diversification in Nigeria (Agu, 2013; Awotide,
Kehinde and Agbola, 2010; Okere and Shittu, 2013; Dose, 2007;
Iiyama, 2006). However, empirical information on the effect of
livelihood diversification with particular interest on poverty
reduction is limited, especially in Kaduna State. In view of the
foregoing, this study was carried out to:
I. Determine the poverty status of the farm households in the
study area.
II. Determine the effect of livelihood diversification on the
poverty level of farm households in the study area.

2. Materials and Methods

2.1. Description of the study area
The study was conducted in Giwa Local Government Area
(LGA) of Kaduna State, Nigeria. The LGA lies between latitudes
11.20 and 11.500N and longitudes 7.0 and 7.50E and has a land
area of 3, 350km2. It is located northwest of Zaria in the Northern
Guinea Savannah and about 640m above sea level. The Local
Government Area is bounded in the North by Funtua and
Malumfashi Local Government Areas of Katsina State and on the
West and South by Birnin Gwari and Igabi Local Government
areas of Kaduna State respectively. The Local Government had an
estimated population of about 286, 427 in 2006 (NPC, 2006). It is
estimated that the population will increase to 359,752 by 2014
based on the National Population Commission (NPC) annual
growth rate of 3.2%.
222 Consilience

2.2. Sampling procedure and sample size

A two stage sampling technique was used in the study. The first
stage involved a random sampling of five villages out of the
twenty villages in Giwa Local Government Area. The selected
villages were Shika, Galadimawa, Giwa, Gangara and Guga. The
second stage involved purposive sampling of 20 diversifying
farmers from each of the five selected villages to give a sample
size of 100 diversifying farmers. The use of purposive sampling
technique is justified on the basis that the study is concerned with
only diversifying farmers and since there is no reliable data on the
sample frame of diversifying farmers in the study area, purposive
sampling technique was employed in the selection of the
diversifying farmers.

2.3. Method of data collection

Primary data were used for this study. The data were collected
from the respondents with the aid of a well-structured
questionnaire. The data collected included the socio-economic
characteristics of the farmers such as; age of respondents, farming
experience, educational status of the respondents, household size,
number of livelihood activities engaged in by a given farm
household head, marital status, farm size, access to credit,
membership of cooperative, number of extension contacts, reasons
for diversification, food and non-food expenditure for determining
the poverty status of farmers.

2.4. Analytical technique

Analysis of data collected from the field was done using FGT
poverty model and Tobit regression model.
2.4.1.FGT poverty model (Foster, Greer and Thorbecke model)

This was used to determine the poverty status of the farmers. The
Foster, Greer and Thorbecke (FGT) measures of poverty are
widely used because they are consistent and additively
decomposable (Foster et al., 1984). Poverty head count index,
poverty gap index and squared poverty gap index were computed
to measure the incidence, depth and severity of poverty of the fish
processors. A relative poverty line was constructed based on the
Mean Per Capita Household Expenditure (MPCHE) of the farmers.
The General Foster, Greer and Thorbecke (FGT) poverty index
(Pαi) can be expressed as:
Consilience Oyinbo: Farm Livelihood Diversification

+
1 𝑧 − 𝑦# "
𝑃"# = … … … … … … … … … … … … … … … … … … … … … … … … … (1)
𝑛 𝑧
#,-

When:
+
@
1 𝑧 − 𝑦𝑖 𝑞
𝑎 = 0, 𝑖. 𝑒 𝑝𝑜𝑣𝑒𝑟𝑡𝑦 𝑖𝑛𝑐𝑖𝑑𝑒𝑛𝑐𝑒 𝑜𝑟 ℎ𝑒𝑎𝑑 𝑐𝑜𝑢𝑛𝑡 𝑃@ = = … … . (2)
𝑛 𝑧 𝑛
#,-

+
-
1 𝑧 − 𝑦𝑖
𝑎 = 1, 𝑝𝑜𝑣𝑒𝑟𝑡𝑦 𝑔𝑎𝑝 𝑜𝑟 𝑑𝑒𝑝𝑡ℎ 𝑃- = … … … … … … … … … … … . (3)
𝑛 𝑧
#,-

+
F
1 𝑧 − 𝑦𝑖
𝑎 = 2, 𝑝𝑜𝑣𝑒𝑟𝑡𝑦 𝑠𝑒𝑣𝑒𝑟𝑖𝑡𝑦 𝑃F = …………………………... 4
𝑛 𝑧
#,-

α = degree of poverty aversion (0, 1 and 2)

n = number of farmers in a group

q = the number of poor farmers

z = poverty line (two-third of Mean Per Capita Household Expenditure (MPCHE) of the farmers)

2.4.2 Tobit regression model

The Tobit model is an extension of Probit model and it is one of

the approaches dealing with the problem of censored data
(Johnston and Dandiro, 1997). This is a hybrid of the discrete and
continuous models. The use of Tobit model is conceptually
preferable to conventional linear regression models because
parameter estimates from the former overcome most weaknesses of
linear probability models namely: providing estimates which are
asymptotically consistent and efficient (Mcdonald and Moffit,
1980).
Tobit analysis was employed in the analysis of the data
collected to achieve objective ii of the study. The Tobit model is
expressed based on Tobin (1958):
𝑦# = 𝑦#∗ = 𝑋# 𝛽 + 𝑒# … … … … … … … … … … … … … … … … … . … . (5)

𝑦# = 0 𝑖𝑓 𝑦#∗ ≤ 0 … … … … … … … … … … … … … … … … … … . … . (6)

𝑦# = 𝑦#∗ 𝑖𝑓 𝑦#∗ > 0 … … … … … … … … … … … … … … … … . . … … … (7)

224 Consilience

𝑖 = 1, 2, 3 … … … … . 𝑛

Where,

𝑦# = observable but censored variable measuring both the probability of being poor and intensity

of poverty

𝑦#∗ = latent variable indicating that adoption may or may not be directly observable. Hence,

poverty is observed if 𝑦#∗ > 0 and unobservable if 𝑦#∗ ≤ 0

𝑋# = set of explanatory variables

The independent variables were specified as follows:

X1= age of the respondents (years)

X2 = farming experience (years)

X3 = educational status of the respondents (years of formal education)

X4 = household size (number of individuals in a given household)

X5 = livelihood diversification (number of livelihood activities engaged in by a given

farm household head) which is the variable of interest in this study

X6 = marital status (Married =1, Single =0)

X7 = farm size (ha)

X8 = access to credit (amount of credit obtained)

X9 = membership of cooperative (years of membership of cooperative)

X10 = extension (number of extension contacts)

𝛽 = vector of Tobit maximum likelihood estimates

𝑒# = independently distributed error term

NB: Ceteris paribus, a higher value of explanatory variable with positive coefficient is expected
to increase the probability of being poor and, for the poor farmers, the extent to which they are
poor and vice versa.
 Consilience Oyinbo: Farm Livelihood Diversification

3. Results and Discussion

3.1. Poverty status of the farmers in the study area
3.1.1. Determination of poverty line
The result in Table 1 gives a clear presentation of the estimation of
the poverty line that was used to determine the poverty status of
the farmers in the study area. The poverty line formed the basis for
further analysis. The Foster-Greer-Thorbecke (FGT) class of
poverty measures was employed to estimate the poverty status of
the farmers in the study area. Following the adoption of Foster,
Greer and Thorbecke measures, households’ total expenditure was
used to determine households’ poverty status. The result presented
in Table 1 shows the households food and non-food expenditure,
total expenditure, Per capita and mean per capita household
expenditure and the poverty line. The poverty line was constructed
as two-thirds of the mean per capita household expenditure
(MPCHE) of all households. This approach has been used by
several researchers and institutions (NBS, 2005; Oni and Yusuf,
2008) as a measure of welfare. Households were then classified
into their poverty status based on the poverty line.
Hence, non-poor households were those whose per capita
expenditure was above or was equal to two-third of the mean per
capita expenditure of all households while those whose per capita
expenditure was below two-third of the mean per capita
expenditure were classified as poor. Based on this, the poverty line
constructed as two-third of the mean per-capita expenditure of all
the households was ₦13039.1. This implies that households whose
monthly per capita expenditure fell below ₦13039.1 were
classified as poor while households whose per capita expenditure
equaled or was above the poverty line were classified as non- poor.
Table 1: Determination of poverty line
Items Amount (N/month)
Household food expenditure 1680500

Household non-food expenditure 15493100

Household total expenditure 17173600

Per capita household expenditure (PCHE) 1955859.82

Mean Per capita household expenditure (MPCHE) 19558.6

2/3 MPCHE (Poverty line) 13039.1

 226 Consilience

3.1.2. Poverty indices of the farm households

The result presented in Table 2 shows the values for the poverty
measures, (poverty headcount (H), poverty gap and severity of
poverty). Based on the poverty line, households were classified
into their poverty status as either non-poor or poor as presented in
Table 2. The headcount index (incidence of poverty) computed for
the study area was 0.30 implying that the proportion of the farming
households whose per capita expenditures fell below the poverty
line was 30%. The Table shows that 30% of the farm households
in the study area are poor while 70% are non-poor. The result is in
line with the findings of Adepoju and Obayelu (2013) on
livelihood diversification and welfare of rural households in Ondo
state, they reported that the poverty line was at ₦2,752.03
(monthly), 42.7% of households were poor and 57.3% were non-
poor. Poverty gap (depth) represents the depth of poverty, it is the
mean distance that separates the population from the poverty line.
Poverty gap was 0.27, and this implies that the poor rural
households require 27 % of the poverty line to escape from poverty
group. It is a measure of the poverty deficit of the entire
population. Poverty severity value was 0.11, this implies that the
severity of poverty among the poor households in the study area
was 11%. The poverty severity takes into account not only the
distance separating the poor from the poverty line, but also the
inequality among the poor. The result conforms with the findings
of Asogwa et al. (2012) who reported a poverty gap of 0.27 and
poverty severity of 0.15 in a study on poverty and efficiency
among farming households in Nigeria.
Table 2: Poverty measures for the farm households
Items Results
Poverty line (N) 13039.1

Poverty headcount 0.30

Poverty gap 0.27

Poverty severity 0.11

Poor (%) 30

Non-poor (%) 70
Consilience Oyinbo: Farm Livelihood Diversification

3.2. Effect of livelihood diversification on the poverty

level of farm households
The Tobit regression model was used to estimate the
determinants of poverty level of the farm households with
particular interest on the influence of livelihood diversification on
their poverty level. The result presented in Table 3 shows that
Sigma was significant at the 1% level of probability, which means
the model is a good fit. Household size, livelihood diversification
and access to credit were the only significant variables out of all
the independent variables. The coefficient of household size was
significant at 1% level and shows positive relationship with the
risk of being poor. The size of the farming households increases
the probability of a household being poor. This implies that
poverty is increased by higher household size and this could be
attributed to increase in the needs of the household as their
household size increases. The result is in line with the findings of
Awotide et al. (2010) on poverty and rural livelihood
diversification among farming households in southwest, they
reported that the increase in size of the farming households
increases the probability of a household being poor. This also
agrees with the study of Adepoju and Obayelu (2013) who
reported that household size was found to be significant at 1%
probability level and was positive. It also conforms with the study
of Oluwatayo (2009) on poverty and income diversification among
households in rural Nigeria, he reported that the coefficient of
household size was positive and significant at 5% probability level.
The number of livelihood activities engaged in by the farmers in
the study area was significant at 1% probability level and
negatively related to the poverty status of the farmers. This implies
that a farming household head who engages in a number of
activities in the study area has a lower likelihood of being poor.
This is on the premise that increase in the number of livelihood
activities increases the income of the farmers arising from the
different income generating activities and also, increase in the
number of livelihood activities reduces the risk of low income
generation associated with single investment on the event of
adverse weather condition such as drought of flood thereby
affecting yield and price fluctuation. In other words, livelihood
diversification safe guards the farmers against the danger of single
investment in a worst case scenario of having total crop failure. In
essence, livelihood diversification increases the income sources of
the farmers and invariably their purchasing power and thereby
making it possible for the farming households to meet their basic
needs in terms of food, shelter, clothing, education, health care
 228 Consilience

e.t.c. This result is also in line with the findings of Adepoju and
Obayelu (2013) that the livelihood activities engaged by the
household head was found to be significant at 5% level and was
negative. The coefficient of access to credit was significant at 5%
level and negatively related to the poverty status of the farm
households. This implies that access to credit in the study area
reduces the likelihood of a household being poor and this is
because access to credit gives the farmers the opportunity of
enhancing their production capacity through purchase inputs such
as improved seeds and fertilizer. This is not surprising, as credit
can reduce liquidity constraints and increase the capacity of
households to start off-farm businesses. This is in line with the
findings of Babatunde and Qaim (2009) who reported that access
to credit has a positive influence on income diversification.
Surprisingly, land area (farm size) owned by household heads was
not significant.
Table 3: Tobit model estimates of the determinants of poverty level of the farm households
Variable Coefficient Standard error t-value

Constant -6.360 1.331 -4.778

Age 8.381 5.982 1.401

Education -2.157 3.969 -0.543

Household size 5.200* 0874 5.951

Farming experience 6.848 5.276 1.298

Livelihood diversification -0.014* 0.005 -2.845

Association 5.577 6.159 0.906

Extension -4.703 11.013 -0.427

Farm size 7.992 6.120 1.306

Credit -7.583** 3.439 -2.205

Sigma 1.252*** 1.117 10.700

*Significant at 1% level
**Significant at 5% level
***Significant at 10% level.
Consilience Oyinbo: Farm Livelihood Diversification

4. Conclusion
Based on the findings of this study, it can be concluded that
30% of the farm households were poor, implying that 70% of the
farmers were non-poor. Household size, livelihood diversification
and access to credit significantly determined the poverty status of
farming households in the study area. Livelihood diversification by
the farm households decreased the farm households’ probability of
being poor implying that livelihood diversification offers an
opportunity for alleviating poverty among the farm households in
the study area through multiple streams of income as a result of
diversification. Therefore, it is recommended that awareness and
skills acquisition training programmes especially for women and
youths should be established at the grass roots level by the local
government authority to ensure that farmers are practicing farming
along with a wide range of income generating activities to improve
their well being. The acquisition of skills by women and youths in
the study area will be instrumental in the alleviation of poverty in
the study area because these are the most vulnerable groups given
that most women are resource poor and most youths are
unemployed. The training programme can include activities such
as the processing of agricultural products, extraction of oil from
groundnuts, production of detergents, weaving, baking amongst
others for women and poultry farming, fish farming, ram fattening,
GSM repairs, upholstery production, shoe production and so on for
youths in the study area.
230 Consilience

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