ABSTRACT

This study examined the effects of remittances on the livelihood of farm households in Enugu State Nigeria. Multistage random sampling technique was used to select 120 remittance recipient households used for the study. Data were collected by the use of structured questionnaire. Both descriptive and inferential statistical techniques were used in data analysis. The study showed that, households whose heads are within, 51 – 70 year of age and are not highly educated are more likely to produce migrants. Also families with large household size (six and above) migrate more. Households with married status were found to be 65.8%, while 56.7% of the household heads were males. Internal remittances formed the bulk of the receipts of 86.7% of the respondents, while 55% of the respondents received between N1, 000 and N10, 000 remittances 4-6 times a year. The most frequent channel for remittance delivery was hand carriage and both cash and non-cash remittances were received. Remittances received were often used to meet pre

– existing household needs/expenses. Regression result showed that age of household heads as well as their levels of education affected migration. Other factors that affected migration are farm size and household size. The livelihood of farm households was found to be affected by the number of organizations the household heads belonged to, the age and the level of education of household head, farm size and size of remittances that is invested.

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CHAPTER ONE

INTRODUCTION

1.1 Background Information

With an estimated population of 150 million people, Nigeria is the most populous country in Africa. About two-thirds of the population resides in the rural area where they derive livelihood from Agriculture and allied sectors (Oseni & Winter, 2009). Although, agriculture has remained a rural enterprise, it accounted for 41.21 per cent of the GDP and the largest non-oil export earner to the country (National Planning Commission [NPC], 2006).

Agriculture as practiced in Nigeria is predominantly of small farm household (comprising the farmer and his family) which usually cultivates an area of land that ranges from 1.5 to 2.0 hectares in fragmented and scattered small holdings. Although these households are individually insignificant, they collectively form an important foundation upon which the Nigerian agricultural economy rests. This category of farmers are desirable not only because they provide employment and food for the country’s teeming population (Nigerian Institute of Social and Economic Research, 2003), but also because they provide a more equitable distribution of income as well as effective demand structure for other sectors of the economy (Dorner, 1995; Bravo-Ureta & Evenson, 1994).

According to Ashley & Carney, (1999); Chambers & Conway (1992) agricultural production is not the only source of livelihood available for the rural people, farm households constantly adjust their on-farm and off-farm activities (e.g. local craftwork, trade, civil service, hunting for game, brick laying, local services such as traditional healing and repairs) in response to some changes in their environment. The characteristics of livelihood components are determined by the resources and values of specific physical, social and environmental assets. Thus, livelihood can be described as consisting of systematic activities or enterprises undertaken by individual households using their capabilities as well as assets to derive material or financial reward and improved status (Assan, 2006). However, the effort by households to improve their well being through engaging in various livelihood options tend to be distressed by environmental factors, unemployment and poverty which dominate the livelihood patterns of farm households (Barrett et al, 2001; Ellis 1998).

Despite the reported decrease in poverty in the last decade (NBS, 2005), it is generally believed that poverty rate is still unexpectedly high in Nigeria with the rural areas more affected

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(Babatunde & Martinetti, 2010). Moreover, World Development Indicator (2007) and Happe (2003) stated that poverty is disproportionately concentrated among households whose primary livelihood depends on agricultural activities.

Livelihood of the farm households is bedeviled by missing market, lack of fundamental assets, production services and inputs (such as land, water, credit, extension, market information and technical innovation), high unemployment rate, recurring crop failures, precarious labour conditions and low salaries (International Fund for Agricultural Development, (IFAD) 2007; World Bank, 2007). Nwaru (2004) noted that inappropriate policies and programme for Agriculture, pervasive corruption manifesting in misappropriation of resources and embezzlement, ethnic and religious conflicts has resulted to a high sense of insecurity and inefficiency in production.

Owing to the inability of government to meet the needs and interests of the farmers, rural sector within this context, offer inadequate and limited options to satisfy the needs of the rural farm households and provide them with little opportunities to improve their lives (IFAD and FAO, 2008). To guarantee survival, migration as a supplementary source of livelihood and household diversification strategies has assumed importance (FAO, 2007; Samal, 2006).

Migration – (whether Domestic or international) is generally a household decision and a strategy to diversify income, minimize risk, cope with economic crisis and improve livelihood and welfare (Kiiru, 2010; Assan, 2006; Pott, 2006; Samal, 2006; Young, 2006). Evidence has shown that, although the poor have higher migration propensities, the poorest people cannot afford the material cost and risks associated with international migration and are linked more to internal migration (Hatton & Williamson, 2004; Waddington & Sabates-wheeler, 2003). IFAD and FAO (2008) noted that, though internal and international migration have differing characteristics, the motive for displacement is similar – the search for new options to improve the quality of life – and is thus an indication of limited opportunities.

According to Asa (2007) and Samal (2006) remittances are positive outcomes of migration and are the portion of migrant workers’ earnings or available income sent to their families back home (Khoudour-Casteras, 2007). Ratha (2003) stated that private inward remittances are often affected by unanticipated economic shock such as fuel price increase or elimination of agricultural subsidies which leads to income shortfall. However, unlike internal remittances, international remittances have proven surprisingly resilient in economic down turns

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(World Bank 2006). For instance, remittance flows to the developing countries total US$221 billion in 2006 – an amount that was twice the official development assistance to developing countries in that year (Gupta, Pattillo & Wagh, 2009). IFAD (2007) indicate that the volume of remittances to developing countries increased by 10.7 per cent between 2002 and 2007, thus they predicted that over the next five years, cumulative remittances to developing countries will exceed US $ 1.5 trillion.

Statistics has shown that, Nigeria was the highest receiver of remittances in Africa and thirteenth in the world. With US $ 3.329 billion remittance in 2007, Nigeria alone accounted for about 31 per cent of the total remittances flows to Sub-Saharan Africa (as presented in Table 1) and are the largest share of African migrant population in USA and Europe (SAMP, 2006). However, there are evidences that remittance flows are underreported, so that the actual amount could more than double the official formal transfer (Gupta et al, 2009). According to Pendleton (2006) this is because, migrants predominantly remit through informal money transfer; the formal options are not readily available to undocumented migrants and low income clients wishing to send money across border.

Remittances are believed to have huge impact on the socio economic conditions of families left behind in place of origin (Babatunde & Martinetti 2010). This is because it provides migrant households with funds that are uncorrelated with agricultural income (World Bank, 2006). Furthermore, remittances are overtaking income from agriculture in sheer size and importance, as persistent socio-economic and structural problems continue to depress the level of rural wages and availability of work (Deshingkar & Anderson 2004; Van Der Geest, 2003).

Many researchers have postulated that remittances represent a stable flow that frequently arrive in depressed localities, unbound by the conditionality and dependence of foreign direct investment (Inter-American Development Bank, 2008). Unlike foreign aid, remittances goes directly to intended families in places that are often difficult to reach with official development assistance and it could be used by household according to their own priorities (Kiiru, 2010; Samal, 2006; Stein, 2003). It is also evident that remittances have shown not to be sensitive to market cycles, economic downturn and crisis. Instead, they have even increased during economic recessions (World Bank, 2006).

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Table 1: Estimated remittances to selected sub-Saharan Africa countries and other regions, 2010

Countries and regions

Nigeria

Sudan

Senegal

Uganda

South Africa

Kenya

Lesotho

Mauritius

Mali

Togo

Cote d’Ivoire

Ethiopia

Cape Verde

Sub-Saharan Africa

Middle East and North Africa South Asia

East Asia and Pacific

Latin America and the Caribbean Europe and Central Asia

Source: World Bank, 2011

Remittances amount (US $ billions)

10.0

3.2

1.2

0.8

1.0

1.8

0.5

0.2

0.4

0.3

0.2

0.4

0.1

21.5

35.4

82.6

91.2

58.1

36.7