Analysis Of The Determinants And Effects Of Rural PovertyPoverty is a problem for both developing and developed countries and its trends which has to do with its period of occurrence in any society and their various determinants which differs from one rural area .
1.1 Background of the Study
Poverty is a multifaceted concept, which manifests itself in different forms depending on the nature and extent of human deprivation.
In absolute terms, poverty suggests insufficient or the total lack of basic necessities like food, housing and medical cares. It embraces the inadequacy of education and environmental services, consumer goods, recreational opportunities, neighborhood amenities and transport facilities.
In relative term, people are poverty- stricken when their incomes fall radically below the community average. This implies that such people cannot have what the larger society regards as the minimum necessity for decent living (World Bank, 2000).
The significance of rural poverty is underscored by the fact that as much as 45 to 80% of national population reside in the rural areas and are dependent on agriculture in most developing countries (Onyenweaku, 1991; Sabir et al., 2006; Olubanjo et al., 2007; Nwachukwu, 2009).
Poverty can be described as the level of deprivation that encompasses shortfalls or inadequacies in basic human needs, which prevent people from achieving internationally acceptable levels of well-being (Sengul and Tuncer, 2005).
This situation, which has been ascribed in some quarters to production failure owing to a suppression of markets and in some other quarters to institutional and distributional failure (Olubanjo et al., 2007; Swastika et al., 2007), is characterized by disease, low life expectancy and physical and mental retardation.
Poverty has many dimensions, like malnourishment, no shelter, being ill and not having ability to visit a doctor, no facility to go to school, unemployment, uncertainty of tomorrow, surviving only one day at a time.
Poverty is losing a kid to illness due to the infected water. Powerlessness, lack of representation and freedom is another name of poverty.
A poor person is described as who is undernourished and ageing fast, one without self confidence, looking dirty and lives in filthy environment, one who cannot cater for his family (Moser, 1997). Poverty is of many types varying from place to place and time to time, and, has been portrayed in various manners.
Poverty is the “incapability to maintain a minimum living standard anticipated with respect to basic consumption needs or some amount of income required for satisfying them (World Bank, 2006). The bulk of the global poor are rural and will linger on thus for numerous decades.
The major portion of their expenditure is generally on staple food. They have little assets such as land and others, lack of schooling and face lots of interconnecting obstacles to develop. “Globally, about 1.2 billion people are in extreme poverty, living on less than a Dollar per day” (IFAD, 2001).
Majority of these people are in developing countries, 44% in South Asia, 24% each in sub-Saharan Africa and East Asia and 6.5% in Latin America and the Caribbean (IFAD, 2001; Babatunde et al., 2008). Within these regions, poverty is largely a rural phenomenon with an average of between 62 and 72% of the population living on less than a dollar a day (Owuor et al.,2007).
In comparison, rural poverty also tends to be deeper than urban poverty in these regions (Bird et al., 2002; Owuor et al., 2007). In Nigeria rural poverty levels are relatively high.
For example, a national poverty survey carried out in 2003 and 2004 indicates that the urban areas have poverty levels estimated at 43.2% while the rural areas have poverty levels that are as high as 63.8%. The mean national poverty incidence stands at 54.7 (NBS, 2006).
However, evidence indicates that this situation has not improved in the last 15 to 17 years in a majority of sub-Saharan countries of Africa (World Bank, 2006; Owuor et al., 2007).
In Southeastern Nigeria, about 70% of the populations live in the rural sector and are dependent on agriculture as in most developing countries of the world for their livelihood (Onyenweaku, 1991; Nwachukwu, 2009).
The poverty situation in Nigeria is quite disturbing. Both the quantitative and qualitative measurements attest to the growing incidence and depth of poverty in the country (Federal Office of Statistics (FOS), 1999; Okunmadewa et al., 2005).
This situation however, presents a paradox considering the vast human and physical resources that the country is endowed with.
It is even more disturbing that despite the huge human and material resources that have been devoted to poverty reduction by successive governments, no noticeable success has been achieved in this direction.
For example yam is a major food crop widely grown and massively consumed in Nigeria and is popularly regarded as the “King” of all arable crops in Nigeria because it earns more money per unit weight than other food crops (Orkwor, 1998; Orkwor et al., 1998, National Root Crops Research Institute (NRCRI), 2008).
Yam, cassava, cocoyam and sweet potato are the most common root and tuber crops grown by the yam farm households. Among these crops grown, yam has high social and cultural importance.
It is an important source of carbohydrate in the diet of most Nigerians and contributes about 20 percent of the daily calorie in-take of Nigerians (Onyenweaku and Mbuba, 1991; Ugwu, 1999).
Yam farmers are often regarded as wealthier than other class of farmers due to its prestigious cultural status and amount of yam tubers the farmers have in the storage yam barn, (Orkwor, 1998), but presently the cost of yam production is rising forcing many farmers out of production (NRCRI, 2008).
This could be ascribed to multidimensional poverty. As a result, the gap between yam supply and demand has increased.
Rural yam farm households have to cope with food supply shortages; price fluctuation and pressure to get “more” out of thinned out resources especially land (Akinsanmi and Doppler, 2005).
Empirical evidence on the nature of poverty among rural farmers vis the extent of influence of the source of income on agriculture and inequality in income are necessary for policy choices. Although predicted poverty reduction scenarios vary greatly depending upon the rate and nature of poverty related policies, actual evidence suggests that the depth and severity is still at its worst in sub-Saharan Africa and South Asia (Owuor et al.,2007).
World Bank (1995) report on poverty status in Nigeria showed that poverty incidence was more in rural areas and was characterized by poor basic facilities, food insecurity, obsolete farming practices, poor nutritional values, little access to savings facilities, inability to educate children due to high cost, inadequate diet, poor latrines, bathrooms, kitchens, limited access to good drinking water, poor electric power supply and lack of clothing materials.
These were based on direct access to basic needs of households. Adewusi (2007) conducted a study on rural livelihood and poverty in Oyo State, Nigeria through a field survey of 259 rural households. The author employed logit model for the data analysis. The results of the logit model revealed that seven variables were significant among the variables estimated.
These were gender, years of formal education, access to electricity, access to improved seed, access to veterinary services, distance to the nearest tarred road and access to formal credit facilities.
A Recent study conducted in Pakistan using the logistic model among small farmers found that lower farm productivity, old age of the head, lower prices of the outputs, bigger household size, lack of infrastructure, and high dependency ratio were the major determinants of poverty, while education of the head was the poverty-reducing factor (Sabir et al., 2006).
These variables according to Sabir et al. (2006) were divided into two general areas; the characteristics associated with the income generating potential of individual and the characteristics associated with the geographic context in which the individual lives.
Variables found to have positive and significant association with farmers’ poverty status included lower farm productivity, age of the head, lower prices of the outputs, bigger household size, lack of infrastructure and high dependency ratio while education of the head was negative and highly significantly associated with farmers’ poverty status (Sabir et al., 2006).
Studies conducted in Kenya using probit model among small farmers were of a different dimension. Empirical results was reported that access to micro-credit, education, participation in agricultural seminars, age of the head, livestock assets and location in high potential areas significantly influence the probability of households exiting chronic poverty.
On the other hand, female gender, group membership and distance to the market increase the probability of persistence in chronic poverty. Results revealed that micro-credit access, male gender, age of head, education and market access are key determinants of exit from rural poverty (Owuor et al., 2007).
These variables had the expected signs and were significantly associated with farmers’ poverty status. Studies conducted in Nigeria showed different poverty trends in some variables selected based on aprior expectation. For instance, the work conducted by Nzenwa and Oboh (2005), Olubanjo et al., (2007) and Babatunde et al., (2008).
Olubanjo et al. used ordinary least square regression and poverty index as it dependent variable, and found that farm fragmentation and farming experience showed significant but negative effect with farmers’ poverty level while age, level of education, level of capital borrowing, size of farm lands operated and household size indicated positive effect.
Nzenwa and Oboh (2005) conducted a study on households’ endowments on poverty among farmers in Benue State, Nigeria. They employed logit model to estimate proxy measures of household endowments.
They used the ratio of individual income to the poverty line as dependent variable in the logit. The household endowment variables used in estimating the logit model were age of household head, educational level of household head, household size, and ownership of house. Others include farm income, off farm income, land holding, dwelling type and sex. The results showed that six of the variables were significant in the logit model.
These are age and household size which was positively related while education level, house ownership, farm income and off farm income, were negatively related to poverty status in Benue. Babatunde et al., (2008) on the other hand, conducted a study on rural households’ poverty in South Western Nigeria. They used exponential model and log of per capita expenditure as the dependent variable.
They found that the male gender (dummy), level of education of head of household, farm size, land ownership and membership of farmers’ group were positive and significantly related to household’s per capital expenditure.
According to Babatunde et al., the prevalence of poverty is higher among older (age), small-scale farmers with large household size and household headed by uneducated female (i.e. negative relationship leading to increase in poverty).
In recent years, because of the large prevalence of poverty, reducing it has been of great concern to many developing countries for the past few decades (Babatunde et al., 2008).
This situation has created the quest for poverty reduction strategies which have been at the center stage of development programmes and policies. The progress towards the global target of halving, between 1990 and 2015, the proportion of people living in extreme poverty, has been very slow.
The main problem lies in the fact that despite the high poverty rates in Nigeria little is documented on policy related determinants of rural poverty among farmers especially yam farm households, making it very difficult to effectively set and implement sustainable antipoverty programmes.
1.2 Problem Statement
Poverty is a problem for both developing and developed countries and its trends which has to do with its period of occurrence in any society and their various determinants which differs from one rural area to another, such as lack of education, environmental services, neighborhood amenities, transport facilities etc. these has made poverty a global problem of huge proportion of the worlds 6 billion people, 2.8 billion lives on less than US $2 a day and 1.2 billion on less than US $1 a day.
This could be attributed to the period and the age we are in today, and also the poverty in the rural area is consequently associates with alarming population increase with a corresponding decrease in amenities, resources and other determinants.
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The poverty in Idemili South Local Government Area in Anambra State is associated to the following determinants lack of education, low purchasing power, unemployment’s, lack of improved agricultural facilities, poor road services, lack of social amenities such as power, water, hospital etc. despite many literatures on poverty, there seems to be a bridge in gap of knowledge as concerned to the poverty status of the rural households in Idemili South L.G.A of Anambra State and much effort is needed to make sure that the inhabitants attain good standard of living. In order to address the earlier identified problem, the following research questions were asked and answered;
– What are the socio-economic characteristics of rural households in Idemili South Local Government Area in Anambra state?
– What are the poverty determinants in Idemili South Local Government Area in Anambra State?
– What is the poverty status of rural households in Idemili South Local Government Area in Anambra State?
– What are the effects of poverty on rural dwellers in Idemili south Local Government Area in Anambra state?
1.3 Objectives of the study
The broad objective of this study was to analyze the determinants and effects of rural poverty in Idemili South Local Government Area in Anambra state.
The specific objectives are to
i. describe the socio-economic characteristics of rural households in Idemili South Local Government Area in Anambra state,
ii. analyze poverty determinants in Idemili South Local Government Area in Anambra State,
iii. determine the poverty status of rural households in Idemili South Local Government Area in Anambra State, and
iv. analyze the effects of poverty on rural dwellers in Idemili south Local Government Area in Anambra state.
1.4 Hypothesis Statement
The hypothesis is stated in the null that;
HO1: Socio-economic characteristics of households and other selected factors have no significant effect on the poverty status of the rural households in the study area.
Ho2: Number of poor households in the study area is not siginificant.
1.5 Justification of the Study
This study therefore examines the links between human capital, capabilities, and determinates of rural poverty in the study area.
It is expected to show its effects on the rural dwellers and the effort made to alleviate them.
This study at the end is expected to bridge the gap in knowledge for policy makers, NGO’s’ Government agencies, Community development associations (Self help groups) and all lover of knowledge. It’s still calls for more research inputs which will be used to identify the diverse need of people who have been so long deprive of quality of life.
Furthermore many researchers have worked on it yet there is more room to work on poverty. And it’s hoped that this work in studying rural poverty explored Idemili South Local Government Area, will advance the frontiers of the knowledge of poverty at large.
The review of this work was based on the following sub- headings:
– Trends and Determinants of poverty
– Measurement of poverty
– Poverty survey i.e poverty line, poverty gap and poverty gap index
– Causes of rural poverty and its effects on rural dwellers.
– Poverty alleviation measures(rural development approach, economic growth approach)
– Overview of poverty incidence in Nigeria
– Impacts of poverty on Agriculture
Poverty has been defined in the literature from two perspectives; the narrow economic perspective and the expansive cultural perspective.
The economic perspective defined poverty in terms of the external circumstances that influence a person’s behaviour, especially with respect to economic discussions and transactions like the purchase of consumer goods, the acquisition of skills and the provision of productive services. In this regard, poverty is defined as a state of deprivation in terms of both economic and social indicators such as income, education, health care, portable water, access to food, social status, self esteem and self actualization (Okoh 1998).
Poverty connotes many things i.e. lack of material well-being, insecurity, low self confidence, psychological distress, unpredictability, lack of freedom of choice and action and inability to believe in one self (Narayan 2000:18).
Poverty can either be absolute or relative or both (Sanyal, 1991:39 and Schubet 1994:17). Poverty is said to be absolute when people fall below the level of income that is necessary for bare subsistence, while relative poverty relates to the living standards that prevail elsewhere in the community in which they live Put more succinctly, poverty is said to exist when income or disposable resources are inadequate to support a minimum standard of decent living (Nigeria Economic Society, 1975; Ogwumike, 1991:105; Ravallion and Bidani, 1994:75).
Furthermore, limited education and poor health, perpetuate the poverty cycle. In addition, local farmers have little incentive to grow local foods, when cheaper, more palatable foods are imported.
This forces local farmers to cut down prices, which reduces the income generated by the farmers. The consequence is decreased farm production in the following year. Poverty is also described as the level of deprivation that encompasses shortfalls or inadequacies in basic human needs, which prevent people from achieving internationally acceptable levels of well-being (Sengul and Tuncer, 2005).
It connotes the inadequacy of education and environmental services, consumer goods, recreational opportunities, neighborhood amenities and transport facilities etc.
2.1 Poverty in the United States in 2006
In 2006, 12.3 percent of all persons living in the United States were poor by the official poverty measure. If we were to use a more comprehensive measure of resources, including the cash value of food stamps and the Earned Income Tax Credit (EITC) and subtracting an estimate of payroll and state and federal income taxes paid, 11.4 percent of all persons would be below the poverty threshold.
The alternative poverty rate is lower because food stamps and the EITC provide more to the poor than they lose in the taxes they pay. Americans show poverty trends from 1968 to 2006 using the official poverty measure, which is based on cash income, and using an alternative poverty measure, which is based on net income that incorporates taxes paid and food stamps and EITC received, as proposed in 1995 by a National Academy of Sciences panel.
When we compare the official rate to our adapted measure, we find that in 1979 (data limitations preclude starting this series earlier) the rate was 12.0 percent (compared to the official rate of 11.6 percent).
In the next several years, poverty rates under this alternative measure were higher than under the official measure because taxes on low-income families were higher than they now are and EITC payments were lower.
With the expansion of the EITC in 1986, 1990, and 1993, fewer low-income families pay net income taxes, with federal and state EITCs (and food stamps) generally offsetting taxes. Thus, poverty under the alternative income measure fell more than under the official measure, and the two rates were quite similar in the years after 1995.
2.2 Poverty Trends in Nigeria
Poverty, between 1960s and early 1970s, was minimal as few people were below the poverty line in Nigeria. During this period, Nigeria enjoyed steady economic growth and relative stability. The economy and per capita income grew steadily as the agricultural, industrial and even public sector absorbed most of the labour force.
The poverty incidence started rising in the late 1970s and early 1980s when the economy experienced difficulties as a result of oil shock, deteriorating terms of trade, debt overhang and macroeconomic instability. In the mid 80s the poverty rate in Nigeria started rising. For instance about 43% of the Nigeria’s population was living below poverty line between 1985 and 1986. It rose to 53% and 61% in 1996 and 1997 respectively. By 1999, about 66% lived below poverty line, making Nigeria the 54th in the Human Poverty Index (HPI) and among the twenty poorest nations in the world (CBN Bullion 2003).
2.3 Poverty trends for subgroups, using the official measure
This shows poverty rates under the official measure in 1968, 1990, and 2000 in America. Several important policy changes occurred over this 1968–2006 period.
Spending on social insurance programs increased much faster than spending on means-tested programs (except for Medicaid), and spending on in-kind programs increased more rapidly than cash programs. New programs included SSI, the EITC, child care subsidy programs, and TANF; all except SSI, a newly federalized program for people with disabilities, were focused on encouraging or helping people to work.
The policy changes that provide additional in-kind benefits, benefits through the tax system, or other work supports do not directly affect the official poverty rate, because these sources are not counted in gross cash income.
Poverty rates for people of color were substantially higher than for non-Hispanic whites throughout this period, and show contrasting patterns.
Poverty rates for non-Hispanic blacks improved slightly between 1970 and 1990 and more substantially between 1990 and 2006.
The rates for Hispanics increased during the first period before showing substantial reductions in the second. Poverty declines for Hispanics during the second period are particularly remarkable given the increase in immigration. For both groups, poverty rates in 2006 were less than in 1970, especially so for African Americans.
2.3.1 Trends in income sources for the poor
In 1968 and 2006, use the official measure of poverty, and consider cash income sources. For both elderly and nonelderly poor families, the significance of earnings as an income source has declined over time.
This change, consistent with other research that shows that the pre-transfer poverty gap is growing, and means that governmental transfers would have had to become more generous over time to bring families above poverty.
Cash transfers have become substantially less important for nonelderly families as we have moved more toward a policy system that requires and supports work.
2.3.2 Determinants of rural poverty
Available evidence on determinants of poverty focus largely on household characteristics: age, sex, education, .in other words to capture the human and physical capital that determines how vulnerable a typical household could be.
The National Economic Council (2001) in a study on Malawi found that the age of the household, educational attainment, size of cultivable land and cropping pattern were major determinants of rural poverty.
Further, households headed by older individuals in rural areas, tended to be poorer than those headed by younger ones.
The coefficient for level of education of any adult in the household was consistently positive, significant and provided higher levels of welfare for the household. Olaniyan (2000) in a study on Nigeria found that human capital endowments were significant determinants of the probability of a rural household being poor.
Specifically, the education level of the head of the household was a significant influence on the probability of that household being poor. The impact of regional variables on rural poverty indicated that there were also significant geographic differences in the probability of a household falling into poverty.
In a similar study on the effects of human capital and capabilities on rural poverty in Nigeria, Olaniyan and Bankole (2005) found that the educational level of the household head was statistically significant as it reduced the probability of the household being poor.
Also, human capital has a decreasing effect on the probability of being poor among all rural households, whether they are engaged in farm activities or non-farm activities. In addition, households whose heads are engaged in farming activity have a higher probability of being poor.
Aigbokhan (2008) studied growth, inequality and poverty in Nigeria and examined the effects of age and education of household head, household size, and sector of residence on poverty.
The results showed that welfare increases with the level of education. The coefficient is positively signed and statistically significant, thus implying that the less educated the head, the more likely that the household will be poor. Oni and Yusuf (2007) examined the determinants of expected poverty among rural households in Nigeria. The data for the study were analysed using three stage feasible generalized least squares (FGLS).
The study found that farming households have lower mean per capita consumption compared with their non-farming households.