Analysis Of Poverty Status Among Rural Households In Ido Local Government Area In Oyo, State.

Project and Seminar Material for Cooperative Economics and Management CEM

Analysis Of Poverty Status Among Rural Households In Ido Local Government Area In Oyo, State.

Chapter One


1.1 Background of the Study

Nigeria is considered the most populous country in Africa and the 8th in the world with a population of over 140 million people by 2006 census. With a nominal GDP of $207.11 billion and per capita income of $1,401 it has the second largest economy in Africa (Salami, 2011). Rural poverty results from lack of assets, limited economy opportunity and poor education and capabilities, as well as disadvantages rooted in social and political inequalities. Most countries of the world fall under the absolute poverty line. This indicates that they live on less than one U.S Dollar per day. Those that are moderate or relatively poor live on more than one US Dollar but less than two Dollars per day (Buhman et al, 1988). Over one billion people are living in extreme poverty today, who have less than US $ 1 per day to survive on (Addison, 2004). The extent and depth of poverty in the developing world is a disgrace (Pinstrup-Andersen &Pandya-Lorch, 2001). Poverty is a multi-dimensional, socioeconomic and cultural situation that transcends economic description and analysis (Okunmadewa, 2001; Mafimisebi, 2002). Poverty can be absolute or relative. Absolute poverty refers to subsistence poverty, based on assessment of minimum subsistence requirements, involving a judgment on basic human needs and measured in terms of resources required to maintain health and physical efficiency (Foster et al, 2010). The poverty line from this approach has a fixed value of US$1.25/day (Sola, 2007). Relative poverty is defined by reference to the living standards of majority in a given society that separates the poor from the non­­-poor. Households with expenditure greater than two-thirds of the total household per capita expenditure are non-poor whereas those below it are poor. Relative poverty varies with income or economic growth. The poverty line from this approach is commonly expressed as a fixed percentage of the mean or median income or expenditure.

A conclusive definition recognize poverty as a way of life characterized by low calorie intake, inaccessibility to adequate health facilities, low quality education system, low income, unemployment and under employment as well as inaccessibility to various housing and social facilities (Onibokun and Kumuyi, 1996).Poverty is strongly influenced by education and location but in Nigeria, poverty is seen as a rural problem where majority of the inhabitants engage in agricultural production as a means of livelihood (Olorunsanya, 2009; Olorunsanya and Omotesho, 2012). In fact rural poverty is widely regarded as the main constituent of poverty (Patel, 2004; Olorunsanya and Omotesho, 2012). Although the relative importance of rural poverty varies substantially from one country to another, in developing countries as a whole, more than 70 percent of total poverty is found in rural areas; consequently, the evidence is clear that broad-based agricultural development provides an effective means of both reducing poverty and accelerating economic growth (FAO, 2001; Olorunsanya, 2009).

Poverty contributes to poor agricultural productivity, as many farmers in Nigeria cannot afford to purchase necessary input such as fertilizers, pesticides and improved seeds which could bring about increased productivity. Also, the ability of poor consumers to purchase food necessary for maintenance of health and productive life is reduced. The fact that security in Africa has greatly worsened since 1970(Rosegrantet al., 2005) has resulted in decline in per capita consumption of food in some African regions in recent times. Agricultural research, a vital component of integrated strategies for poverty reduction, has a crucial role to play in creating escape from food insecurity and poverty by improving farm income, generating employment for farm workers, reducing food prices and fueling economic growth. Boosting agricultural growth by applying new technologies is one important way to reduce rural poverty.

According to the Federal Office of Statistics, incidence of Poverty in Nigeria increased sharply between 1980 and 1985 and between 1992 and 1996. Critical factors responsible for this are rapid population growth or over population, the use of poor inappropriate technology, low growth rate of economy, prevalence of inappropriate source allocation, particularly in the public sector and low rate of investment. The interaction of this variable places a large sector of the economy in vicious cycle of poverty. The rural areas and vulnerable groups, especially women, were affected more by the worsening poverty situation Nigeria experienced in the 1980s and 1990s.Incidence of poverty rose from 46.3% of the population in 1985 to 65.5% in 1996.

Available data indicate that majority of the poor are located in the rural areas. In 1985, 1992 and 1996 the share of the poor in the rural areas were 49.9%, 46.1% and 67.8%respectively, making poverty largely a rural phenomenon using consumption and income analyses. The situation in the SSA is that rural poverty account for 65.9% of the overall poverty (Aigbokhan, 2000). Of serious concern is the statistic that about 77% of farmers are poor, out of which more than 48% is extremely poor.

Poverty in Nigeria is multi-dimensional in occurrence; it is not region specific, spreading its tentacles across the whole nation. Its reflection was quite noticeable in the lives of rural household as well as urban household. Though a greater population of the Nigeria population resides in the urban areas, poverty has been on an alarming rate of increase in the rural areas. Poverty, in general term means a state of living in which an individual or community suffers from deprivation, these being majority in terms of financial resources. Deprivation is also in terms of access to good nutritional food, portable water, comfortable accommodation and a hygienic environment. It is also characterized by hunger, unemployment, inadequate transport facilities among others.

Rural poverty appears to be endemic in sub-Saharan Africa (SSA), and this situation has attracted much attention. Particularly disheartening is the fact that this problem, rather than abate, is proving intractable, at least in certain regions. One of the serious effects of rural poverty, of course, is food and nutrition insecurity, and its attendant socio-economic and political cost. A food secured household is one that reliable obtain food of adequate quality and quantity to support a healthy and active life for all members of the household (Heidhueset. al, 2004). This study will be use to analyze the poverty profile among the rural households in Ido Local Government area in Oyo State.

Poverty is a global phenomenon which threatens the survival of mankind. It cuts across creed, race, and space. Poverty is a multifaceted event in nature with physical, economic, social and psychological dimensions (Narayan and Chambers, 2000). This informed the United Nations declaration of 1996 as the “International Year for the Eradication of Poverty” and October17 of every year designated as the “International Day for the Eradication of Poverty” worldwide. Similarly, the decade 1997 – 2006 has been declared United Nations Decade of Eradication of Poverty (Usman, 2001). Poverty is now acknowledged as the main goal of international development, for instance the millennium declaration of the United nations signed by 189countries commits the global community to reduce by half the proportion of the world’s poor and hungry by 2015 (IFPRI, 2001).

Most previous analysis follows the conventional view of poverty as insufficiency in securing basic goods and services (Olayemi, 1995; Ravallion, 2004). Others view poverty, in part, as a function of education, health, life expectancy, child mortality, housing, sanitation, potable water supply and adequate nutrition(Obadan, 1997; Englena and Bamidele, 1997).By and large, the poor have been described as those who cannot satisfy their basic needs of food, clothing and shelter, unable to meet social and economic obligations, lack gainful employment, are deprived of access to basic facilities and human well-being and unable to attain minimum standard of living (Aigbokhan,2000; World Bank, 2001).

The poor in most developing countries are found among five identifiable economic groups the urban underdeveloped, the rural landless, the resource poor farmers, the urban underemployed and the unemployed (World Bank, 1997). Generally, the poor are disproportionately located in the rural areas and the urban slums. Poverty has the consequences of breeding social disillusion with respect to what the societal objectives are and members’ responsibilities towards attainment of these objectives. A society where the majorities spend 90% of their income on consumption with little or nothing for saving and eventual plough back into the economy would be impeded by slow growth. This means that the affected group would not be able to participate effectively in national development. Poverty in this sense would result in a vicious cycle reproducing itself in perpetuity. In the light of this, this study will presents the analysis of poverty profile among of rural households in Ido Local Government area in Oyo State.

1.2 Problem Statement

The problem of poverty has been a long standing issue in Nigeria. This is indicated by the low social status and poor living conditions of the inhabitants. The problem has been made worse over the years by the development pattern which has favored the urban modern sectors to the detriment of the traditional rural sectors (World Bank, 1997).

A recent poverty assessment survey has shown that over 70% of the populations are living on less than a dollar per day and over 50% are living below the national poverty line. The survey also revealed that poverty is especially higher in rural areas where majority of the population are resident and derive their livelihoods from agriculture (FAO, 2006). The World Bank poverty assessment on Nigeria has shown that the nature of those in poverty can be distinguished by some characteristics such as education, age, gender, employment status of the head of household, household size and the share of food in total expenditure. Table1 presents the percentage of persons and households below the poverty line in 1996/97 by some of these characteristics. The table shows that 67.1 million Nigerians were in poverty in 1996/97, out of which 23.3 million and 43.8 million were located in urban and rural areas, respectively [Federal Office of Statistics FOS (1999)]. Thus about 65% of the poor live in the rural areas, indicating that poverty in Nigeria is largely a rural phenomenon. For example, in 1992, 46.4 million Nigerians were said to be living in absolute poverty, out of which 80.2% or 37.7 million are in the rural areas (Ogwumike, 1996).

Nigeria is rated as the eighth largest oil producing country in the world, yet it harbors the largest population of poor people in sub-Saharan Africa and is ranked 158th on the human development index. There is also pervasive high-income inequality, which has perpetuated the concentration of wealth in the hands of a few individuals (Action Aid Nigeria, 2009). The per capita income of $290 in Nigeria when compared to the world’s per capita income of $7,140 as at 2003 further shows the state of poverty among households (Garba, 2006).

Oladunni (1999) further pointed out that incidence of poverty in Nigeria has been increasing. This is as a result of overall dependency ratio in Nigeria which is put at 234 dependents per 100 gainfully employed people. In the rural areas, it is 286 dependents per 100 workers and 219 dependents per 100 workers in the urban areas. The above scenario further reinforced the poverty syndrome of the average Nigerian employee whether involved in farming or non-farming activities. In 2004 the urban population with access to water was 67 percent, while it was 31 percent in the rural areas. In terms of sanitation services, 53 percent of the urban population had access to sanitation services and 36 percent in the rural areas (World Bank, 2008). This explains why there is prevalence of diseases among the rural poor in the country.

1.3 Research Questions

  1. What are the socio economic characteristics of the respondents in the study area?
  2. What are poverty statuses of the respondents in the study area?
  3. What are the factors influencing the welfare of the rural households?
  4. What are the determinants of poverty among the rural households?

1.4 Objectives of the Study

The broad objective of this study is to analyze the poverty profile among rural households in Ido Local Government area in Oyo State.

The Specific objectives are to:

  1. Describe the socio-economic characteristics of respondents in the study area;
  2. Assess the poverty status of the respondents in the study area;
  3. Examine the determinants of rural household’s poverty profile; and
  4. Examine the factors influencing household per capita expenditure

1.5 Justification of the Study

Poverty is a global issue of concern affecting both the developed and developing worlds (in either relative or absolute terms), but felt most in the developing world because it presents itself in absolute terms as a vicious circle very difficult to break.

This study is aimed at the following

  1. To the Federal Government, they can use this work to know the kind of programmes to initiate so as to drastically reduce poverty striking the rural masses.
  2. To the Researchers, this study will be very significant because it will add to the existing literatures or research of work relating to poverty profile among the rural households.

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