CHAPTER ONE

BACKGROUND TO THE STUDY

1.1       INTRODUCTION

The population of rural areas of developing countries is now approximately three billion, and these persons make up a large portion of the world’s poor ( UNDP, 2009). In an attempt to alleviate poverty in the developing countries of the world, efforts should be directed towards the promotion rural well-being and this requires an integrated plan that goes beyond mere agricultural development (Barret and Reardon, 2001). The statistics show that as much as 1.4 billion people, out of 6.5 billion around the world in 2005 lived on less than US$1.25 a day and were thus classified as extremely poor with over 850 million people going to bed without sufficient food (UNDP, 2008).

In Nigeria, the incidence of poverty has been on the increase, rising from 28.1% in 1980 to 44.0% in 1992, and 65.6% in 1996 (NBS, 2006).  Despite poverty-reduction strategies adopted in Nigeria, the incidence of poverty in rural areas still remains high (UNDP, 2008). The reason might be attributed to the wrong approach to rural poverty reduction which is centered on production of crops and livestock without consideration for a holistic approach which embraces not only agriculture but also infrastructural facilities.

In recent times, there has been an increasing recognition that the rural economy is not confined to the agricultural sector alone (Csaki and Lerman, 2000). This is because the number of poor people in rural areas exceeds the capacity of agriculture to provide sustainable livelihood opportunities in many parts of the world (Davis and Bezemer, 2004).  In Ghana, the capacity of the agriculture sector alone to continue to sustain the livelihoods of farm households in some parts of the rural north is very much in doubt (Bacho, 2004). The concomitant effects of environmental degradation, rapid population growth, slow spread of technology and low public investment in agriculture account for the increasing inability of the farm sector to sustain rural livelihoods (Government of Ghana, 1997).  Therefore dependence upon subsistence farming confronts households with a precarious living, exposing them to adverse contingencies which makes them ‘risk-managers’. Consequently, the economic activity of poorer people seeks to spread risk among many sources of income and sustenance rather than depending upon a single occupation (Laird, 2006).

For most rural people in developing and transitional economies therefore, non-farm economic activities (NFEAs) are part of a diversified livelihood portfolio (Davis and Bedemer, 2004).

Especially, finding part-time or part-year local non-farm employment (NFE) is vital for people living on small farms in zones with single agricultural seasons and relatively low agricultural productivity. Such employment provides vital income diversification and access to cash at key moments especially in West Africa, where the risks of farming are high and rural savings, credit  and  insurance  mechanisms  are  poorly  developed  or  not  available  (Reardon,  1997).    Rural  non-farm economic activities may among other things; absorb surplus labour in rural areas, help farm-based households spread risks,  offer more remunerative activities to supplement  or replace agricultural income,  offer income potential during the agricultural off-season, and provide a means to cope or survive when farming fails (Gordon and Graig, 2001). In terms of employment, Islam (1997) reports that the share of the non-farm sector in rural employment in developing countries varies from 20% to 50%. In term of income, Reardon (1997) finds rural non- farm income shares in Africa to be ranging from 22% to 93% and Ellis (2000) states that 30–50% is common in sub-Saharan Africa.

1.2       STATEMENT OF PROBLEMS

The traditional development approach of providing technology and infrastructure to increase agricultural production has not succeeded in curbing the trend of increasing rural poverty, and alternative sources of productive employment must be sought in order to support additional workforce created by population explosion in developing countries like Nigeria. Moreover, the dual economic model looked at traditional sector, including the rural non-Farm sector, as static and isolated; its contribution to the development of modern economy was considered as inconsequential (Smith, 2000). 

Even in high economic growth regions, the potential development in agriculture seems to be tapering off. Indeed the relatively rapid growth in agriculture in some countries is unlikely to employ the entire rural labour force in such places at reasonable levels of productivity and incomes (Papola, 1984). Also, even in a situation of bringing appropriate technological advancement in agricultural sector, the rural labour force cannot be employed fully in agricultural activities in land-scarce countries (Islam, 1987).

In previous studies, Haggblade, Hazell and Reardon, (2002) examined issues related to the structure and growth of non-farm employment. Reardon, et al, (2000) examined the risk and vulnerability in the agricultural sector finding that wage employment is much more important than self- employment in Africa, the latter being more risky and capital intensive. Haggblade, et al. (2007) examined the transformation of the rural economy in Africa concentrating on sectorial growth linkages between agriculture and rural non-farm economy saying a sound agricultural base forms a good foundation for a sustainable rural non-farm economy, while Lanjouw and Shariff (2001) focused on economic analysis and policy implications of farm and non-farm employments. However, relatively little attention has been given to finding the types, mode of operation, contributions to general household income and limitations to the non-farm sector.

This research therefore seeks to fill this gap.

Based on the research problem, this study tends to provide answers to the following questions:

i. What categories of rural non-farm economic activities are being undertaken in Lere LGA?
ii. What categories of these non-farm economic activities increase employment generation in the study area’?
iii. To what extent do rural non-farm livelihoods offer more income to supplement or replace income from agriculture and help farm-based households spread risk?
iv. What challenges is rural non-farm activities faced with in the study area?

1.3       AIM AND OBJECTIVES OF THE STUDY
The aim of this study is to examine the contributions of rural non-farm economic activities to household income in Lere Local Government Area of Kaduna State. The specific objectives are

 i. To identify the types of rural non-farm economic activities in the study area.

ii. Examine the trend of unemployment linked to non-farm economic activities in the study area

iii. Establish the contribution of rural non-farm economic activities to household income in the study area,
iv. Examine the challenges to rural non-farm activities in the study area.

1.4       HYPOTHESIS

The following research hypothesis has been formulated to provide a focus for the study:
H0. There is no significant difference between the incomes of households that engage in farm and non-farm economic activities and incomes of households that engage in agricultural farming only in the study area. -
H1 There is a significant difference between the incomes of households that engage in both farm non-farm economic activities and incomes of households that engage in agricultural farming only in the study area.

I .5       JUSTIFICATION OF THE STUDY.

This study is relevant in many ways. In poor agrarian countries struggling with growing numbers of marginal farmers and lack-luster agricultural performance like Nigeria, the importance of the rural non-farm economy cannot be over emphasized.

The study shall draw the attention of policy makers to view rural non-farm economic activities as a potential alternative to agriculture for stimulating rural economic growth and development and also generate data that is lacking on rural non-farm economic activities in the study for the local authorities, state and for future reference for those that would embark on similar studies.

The study would serve as an essential tool to individuals as well as the communities to raise awareness on their plight and perhaps change their attitude towards engaging in more rewarding rural non-farm economic activities that could ameliorate their livelihood conditions for the better. In this context, the challenges for policy makers is how to ensure that the growth of rural non-farm economic activities can be harnessed to the advantage of the poor households and how to identify mechanisms to best exploit synergies across agricultural and non-agricultural sectors.

1.6       SCOPE OF THE STUDY

The study area is the entire Lere Local Government Area. The focus of the study is on households that fully participate in agriculture as their only source of income and those households that adopt both agriculture and other non-farm economic activities as their sources of livelihood.

Lere LGA was purposively selected for this research because it is predominantly noted as the food basket of Kaduna State. Moreover, there are wide spread of and diverse rural income generating activities in the study area.

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