CHAPTER ONE

INTRODUCTION

1.1 Background

The agricultural sector plays a significant role in the economies of developing countries and contributes substantially to their Gross Domestic Product (GDP), while also providing employment opportunities for a considerable proportion of the labour force. Despite its importance, farming has not generated sufficient income to meet the financial needs of many farm households in Nigeria (Babatunde, 2013). This situation is largely associated with the subsistence nature of agricultural production, the reduction in farm sizes, and low levels of agricultural output, which are common characteristics of the agricultural sector in developing countries (Oku, 2011; Asiga, 2013). In response to these challenges, livelihood diversification has become an important strategy through which households seek to improve their economic circumstances and reduce their dependence on a single source of income.

Diversification refers to the process through which individuals voluntarily exchange assets and distribute their available resources among different activities, including on-farm and off-farm enterprises, to achieve an appropriate balance between expected returns and exposure to risk, subject to the constraints they encounter (Dilruba & Roy, 2012). It encompasses two major dimensions: a gradual movement away from exclusive dependence on agricultural activities and the adoption of a wider combination of income-generating activities. The nature of these activities is largely influenced by the livelihood opportunities available within rural communities. Livelihood diversification therefore describes the different ways through which households generate income and minimize environmental risks. It includes both farm-based and non-farm activities undertaken to provide additional revenue and support agricultural production (Sekumade & Osundare, 2014; Babatunde & Saim, 2010). According to Ayantoye et al. (2017), decisions regarding diversification may be understood as coping mechanisms adopted by households rather than merely as attempts to explore alternative income-generating opportunities. Income obtained from non-agricultural sources can supplement declining agricultural earnings and contribute considerably to improving the living conditions of rural residents (Ijaiya et al., 2011).

The combination of activities selected by households in their efforts to achieve sustainable livelihoods is commonly described as a livelihood strategy (Ellis & Allison, 2004). These activities can be classified according to their relationship with the household's principal agricultural enterprise. They may be categorized as on-farm, off-farm, or non-farm activities (OECD, 2011). The specific forms of diversification available to households vary from one location to another and depend on the nature of the activities undertaken. Such activities may involve agricultural production, including crop cultivation and livestock rearing; activities that support agricultural production, such as food processing and the provision of contracting services to other farmers; or participation in other economic sectors to generate income (OECD, 2011). Through these different activities, farming households can broaden their income sources and make more effective use of the resources available to them.

Several approaches can be employed to identify and assess livelihood activities. Nevertheless, the proportion of household income derived from different sectors of the economy is one of the most commonly used measures of livelihood diversification (Brown et al., 2006). For the purpose of this study, on-farm activities comprise crop cultivation and livestock production, while non-farm activities refer to income-generating activities undertaken outside the agricultural sector. Off-farm activities are defined as agricultural activities performed outside the farmer's own farm, following the classification adopted by Yizengaw et al. (2015). These distinctions are important because they provide a basis for examining the different economic activities undertaken by farming households and determining the extent to which such activities contribute to household income and welfare.

According to Maundeni and Mookodi (2004), a considerable proportion of rural households in Nigeria continue to experience poverty because of the limitations associated with an undiversified economy that depends heavily on diamond mining. In response to these challenges, the Government of Nigeria (GoN), through its rural poverty-reduction strategies, identified the off-farm and non-farm sectors as important components of the rural economy (Tlhalefang et al., 2014). The government also revised its national rural development policy in 2002 to strengthen income-generating activities in rural communities (Tlhalefang et al., 2014). This policy direction was further emphasized in the 2016 National Vision, annual budget speeches, and rural development policies. In addition, several policies were developed to encourage Nigerians to diversify their livelihoods. These included the Industrial Development Policy (IDP) of 2014, the Special Economic Zones Policy (SEZP) of 2011, the Trade Policy for Nigeria of 2009, and the Citizen Economic Empowerment Policy (CEEP) (Sentsho, 2014).

The Industrial Development Policy seeks to promote diversified, environmentally sustainable, and globally competitive industries that can position Nigeria among technologically advanced countries in the twenty-first century. To translate these policies into practical outcomes, various economic strategies were developed. These included the Selebi-Phikwe Regional Economic Diversification (SPEDU) strategy of 2013, the Nigeria Cooperative Transformation (BCT) strategy of 2012, the Economic Diversification Drive (EDD) of 2010, the Nigeria National Export (BNE) strategy of 2010, and the Investment Strategy (IS) of 2010 (Senthso, 2014). These strategies rely on government interventions such as local procurement initiatives, preference margins, and citizen economic empowerment programmes to encourage domestic production and consumption (Ministry of Trade and Industry, 2011). The broader objective of these interventions is to establish a diversified economy supported by sustainable sectors that can continue to contribute to economic development even after mineral resources have been exhausted.

A diversified livelihood can improve the capacity of household members to survive, maintain their welfare, and achieve better living standards (Ellis, 1998). Sisay (2010) explains that households diversify their livelihoods for several reasons, including the need to strengthen their capabilities and asset base, benefit from economies of scope, overcome liquidity constraints, stabilize income flows, and reduce the risks associated with consumption. Households may also pursue diversification to minimize the risks arising from seasonal variations in rain-fed agriculture and the eventual termination of mineral extraction activities (OECD, 2011). Furthermore, livelihood diversification enables rural residents to respond more effectively to environmental and economic changes, as well as seasonal shocks, thereby reducing their vulnerability to adverse circumstances (UN and NEPAD-OECD, 2011). It also allows households to combine different economic activities in ways that facilitate wealth accumulation and strengthen their financial position (Khatun & Roy, 2012).

Consequently, the economic well-being of a household is closely associated with the range and nature of livelihood diversification activities it adopts. The ability to combine different sources of income may determine how effectively a household responds to economic uncertainty, meets its basic needs, and sustains its livelihood over time. Examining the activities undertaken by farming households is therefore important for understanding their economic choices and the contribution of diversification to household welfare.

In Kaduna State, agricultural livelihood diversification faces potential challenges arising from human-wildlife conflict (HWC) (DeMotts & Hoon, 2012). The state has been described as a “red zone” in relation to this conflict. According to the source, this designation prevents the district from selling its livestock, which is identified as a major economic activity, to the Nigeria Meat Commission (BMC) (Bowie, 2009). The area has reportedly remained under quarantine since 1996 (UNDP, 2013), limiting the sale of its livestock in the lucrative European markets served by the BMC. Such restrictions can affect the economic opportunities available to households that depend on livestock production and may increase the need to consider alternative livelihood activities.

Community-based livelihood diversification initiatives identified in Kaduna include compensation for wildlife-related damage, community-based natural resource management (CBNRM), community-based organizations (CBOs), agricultural insurance, and a chilli pepper project designed to deter elephants from invading agricultural areas (Gupta, 2013; Moepeng, 2013). However, the implementation of these programmes has encountered difficulties because residents of Kaduna State reportedly lack adequate knowledge of how the initiatives operate (Mbaiwa, 2008). Despite these challenges, Kaduna State provides a useful setting for examining the choices farming households make when diversifying their livelihoods. Available evidence indicates that livelihood diversification makes an important contribution to total household income. Higher household income can, in turn, improve well-being, strengthen food security, reduce vulnerability, and promote social equity.

It is therefore important for policymakers to understand the factors influencing the livelihood diversification activities adopted by residents of Kaduna State. Such knowledge can support the formulation of rural development policies and programmes that respond to the needs and circumstances of farming households. An examination of livelihood diversification among farming households can also provide insight into the economic activities they undertake, the choices available to them, and the ways in which diversified income sources may contribute to improved household welfare and rural development in Nigeria.

1.2 Statement of the Problem

Since 2000, livelihood diversification has been pursued as an approach to encouraging rural communities in Nigeria to make productive use of available natural resources while reducing their dependence on mining. These diversification initiatives were expected to improve household welfare because households with diversified livelihoods are better positioned to maintain their survival and improve their standards of living (Ellis, 1998). The underlying expectation is that access to different income-generating opportunities can reduce dependence on a single economic activity and provide households with alternative means of meeting their financial and material needs.

In furtherance of this objective, the Government of Nigeria (GoN) introduced several policies intended to encourage livelihood diversification. These included the Industrial Development Policy (IDP), the Special Economic Zones Policy (SEZP), the Trade Policy for Nigeria, and the Citizen Economic Empowerment Policy (CEEP). Although these policies were designed to promote economic diversification, the specific livelihood activities selected by households in Kaduna State when utilizing available natural resources remain insufficiently understood within the context presented by the study.

Furthermore, identifying the factors that influence households' choices of livelihood diversification activities is necessary for developing effective rural development programmes, policies, and interventions. Without adequate information about the activities households undertake and the factors shaping their decisions, it may be difficult to design initiatives that respond appropriately to their economic circumstances and livelihood needs. Understanding these choices is particularly important for directing development resources towards activities that can generate income and improve household welfare.

The central problem addressed by this study is therefore the knowledge gap concerning the nature of livelihood diversification activities undertaken by farming households in Kaduna State and the factors that influence their choices. Addressing this gap is necessary to provide evidence that can inform the planning of appropriate rural development programmes and the formulation of policies aimed at improving household livelihoods. Accordingly, the study seeks to contribute to existing knowledge by examining livelihood diversification among farming households in Kaduna State, Nigeria.

1.3 Objectives of the Study

The main objective of this study is to analyse livelihood diversification among farming households.

The specific objectives are:

1. To describe the characteristics of livelihood diversification activities undertaken by farming households in Kaduna State, Nigeria.

2. To assess livelihood diversification among farming households in Kaduna State, Nigeria.

1.4 Research Question

The study is guided by the following research question:

What are the characteristics of livelihood diversification activities undertaken by farming households in Kaduna State, Nigeria?

1.5 Study Hypothesis

The study tests the following null hypothesis:

Household size, gender, age, educational level, income, land tenure, farm size, distance to market, compensation, and access to extension services, when considered individually, have no significant effect on the choice of livelihood diversification activities among farming households in Kaduna State, Nigeria.

1.6 Justification

The Government of Nigeria has introduced various policies intended to stimulate economic growth and encourage diversification. These include the Industrial Development Policy (IDP), the Special Economic Zones Policy (SEZP), the Trade Policy for Nigeria, and the Citizen Economic Empowerment Policy (CEEP). Within this policy context, the present study is important because it provides information that can guide the planning and implementation of livelihood diversification initiatives based on the choices made by farming households. Such information is relevant to government expenditure and resource allocation, particularly in relation to policies designed to encourage economic diversification and improve rural livelihoods.

The findings of the study can also provide farming households with useful information for making decisions about how to organize and diversify their livelihood activities. By identifying the types of activities households undertake and examining the factors associated with their choices, the study can contribute to a better understanding of the opportunities and constraints that influence livelihood decisions. This information may help households evaluate alternative income-generating activities and make more informed choices regarding the allocation of their resources.

Furthermore, relevant organizations and development initiatives, including SPEDU, BCT, EDD, BNE, and IS, may draw on the findings to develop appropriate strategies and design programmes aimed at expanding livelihood diversification in rural communities. The dissemination of the study's findings through a journal article is also expected to make the information accessible to a wider range of stakeholders, including policymakers, researchers, development practitioners, and organizations involved in rural economic development.

In addition, the study provides empirical evidence on livelihood diversification among farming households in Kaduna State. This evidence may assist agricultural extension workers and non-governmental organizations (NGOs) in understanding the livelihood choices made by households and the factors that influence those decisions. Such knowledge can help these stakeholders identify relevant areas of intervention and support households in adopting diversified livelihood activities that may improve their economic circumstances.

Finally, the study is expected to contribute to the existing body of scientific literature on livelihood diversification by providing information about the choices made by farming households and the factors associated with those choices. The findings may serve as a reference for researchers and other scholars interested in household livelihood strategies, rural income generation, agricultural development, and the economic welfare of rural communities. In this way, the study can support further research and contribute to the development of evidence-based approaches to livelihood diversification and rural development.

1.7 Organization of the Thesis

This thesis is divided into five chapters. Chapter One introduces the study and presents the background, statement of the problem, objectives, research question, hypothesis, and justification. Chapter Two examines relevant theoretical and empirical literature relating to the subject of the research. Chapter Three describes the methodology adopted for the study, including the procedures used to collect and analyse the data. Chapter Four presents and discusses the findings obtained from the descriptive and econometric analyses. Finally, Chapter Five summarizes the major findings, draws conclusions from the results, and presents policy recommendations based on the outcome of the study.