Cash Income Diversification in Rural Small Holder Cassava Producing Households of Nigeria

Abstract

"The issue of poverty alleviation for the people of less developed nations of the world has currently assumed the status of a recurring decimal. This is particularly critical for sub-Saharan Africa, because, the region contains a growing share of the world’s absolute poor, with most of these found among rural farm households. High variability in crop yield and thus income variability arising from the vagaries of weather makes income diversification important for these households in order to improve their economic status. This paper, based on primary data collected as part of the Collaborative Study of Cassava in Africa, identified factors that drive cash income diversification decisions among rural farm households of Nigeria. Using Heckman’s two-stage model, it separates the first discrete decision of whether or not to engage in non-crop income activities from the continuous decision of how much non-crop income is needed by the household. While the level of formal education of the household head, good market access conditions and availability of initial liquidity stimulate the first decision to start non-crop income activities, only household characteristics (also including the level of formal education of the household head) drive the extent of non-crop cash income earned by the household. These observations further underscore the need for investing in people – education, and in infrastructure – improving market access, as potent tools for economic empowerment."