Variability in agricultural productivity and rural household consumption inequality: Evidence from Nigeria and Uganda
Amare, Mulubrhan; Shiferaw, Bekele; Takeshima, Hiroyuki; Mavrotas, George. Washington, DC 2021
Amare, Mulubrhan; Shiferaw, Bekele; Takeshima, Hiroyuki; Mavrotas, George. Washington, DC 2021
DOI : 10.2499/p15738coll2.134237
Abstract | PDF (673.1 KB)
This paper uses multiple rounds of household survey panel data to assess the distributional implications of variability in agricultural productivity in Nigeria and Uganda. It uses both a conventional decomposition and a regression-based inequality decomposition to estimate the impact of climate-induced variability in agricultural productivity. To mitigate the endogeneity associated with unobserved time-invariant and time-variant household fixed effects, we use rainfall shocks as a proxy for estimating the exogenous variability in agricultural productivity that affects consumption. Results suggest that a 10 percent increase in the variability of agricultural productivity tends to decrease household consumption by 38 and 52 percent on average for Nigeria and Uganda, respectively. Controlling for other factors, variability in agricultural productivity contributed to between 25 and 43 percent of consumption inequality between 2010 and 2015 for Nigeria; and 16 and 31 percent of consumption inequality between 2009 and 2011 for Uganda. We also show that variability in agricultural productivity increases changes in consumption inequality over time.
Subnational public expenditures, short-term household-level welfare, and economic resilience: Evidence from Nigeria
Takeshima, Hiroyuki; Balana, Bedru; Smart, Jenny; Edeh, Hyacinth; Oyeyemi, Motunrayo Ayowumi; Andam, Kwaw S.. Washington, DC 2021
Takeshima, Hiroyuki; Balana, Bedru; Smart, Jenny; Edeh, Hyacinth; Oyeyemi, Motunrayo Ayowumi; Andam, Kwaw S.. Washington, DC 2021
DOI : 10.2499/p15738coll2.134672
Abstract | PDF (880.3 KB)
Public expenditures (PE) are critical for key public sector functions that contribute to development and welfare improvements, including the provisions of necessary public goods and the mitigation of market failures. PE in social sectors, such as health, education, and social welfare, and in agriculture have been increasingly recognized as potentially important for income growth, poverty reduction, fostering increased private investment, improved nutritional outcomes, and greater economic resilience. Furthermore, the importance of the impact of subnational PE on these outcomes has also been recognized, as appropriately decentralized PE systems can potentially achieve greater effectiveness by enabling public sector support that is tailored more to local needs. However, direct evidence of these developmental effects of decentralized PE in developing countries like Nigeria has been relatively limited. This study attempts to fill this knowledge gap by estimating the effects of shares of total subnational PE for agriculture, health, education, and social welfare, as well as PE size, on household-level outcomes using nationally-representative panel household data and both local government area and higher state-level PE data for Nigeria. We find that greater shares of total PE for agriculture, health, and social welfare, conditional on PE size, generally have positive effects on consumption, poverty reduction, and non-farm business capital investments. A greater share of total PE for agriculture benefits a broader range of outcomes than do greater shares of total PE for health and social welfare. These include improving certain nutritional outcomes, like household dietary diversity across seasons, and economic flexibility between farm and non-farm activities, which may be particularly important for building resilience in today’s rapidly changing socioeconomic environment due to shocks, including COVID19. Such multi-dimensional benefits of greater PE for agriculture are particularly worthy of attention in countries like Nigeria, which have historically allocated a lower share of total PE to agriculture than to health and other social welfare sectors and a lower share of total PE to agriculture compared to that allocated to agriculture in similar countries in Africa and elsewhere.
Polygynous family structure and child undernutrition in Nigeria
Amare, Mulubrhan; Arndt, Channing; Mahrt, Kristi; Mavrotas, George. Washington, DC 2020
Amare, Mulubrhan; Arndt, Channing; Mahrt, Kristi; Mavrotas, George. Washington, DC 2020
DOI : 10.2499/p15738coll2.133706
Abstract | PDF (516.8 KB)
There is a growing interest in the research literature in exploring how child nutrition is affected by sociocultural practices, such as polygyny. However, evaluation of the effect of polygyny on child nutrition has been hindered by the complexity of the relationship. This paper investigates the effect of polygyny on anthropometric outcomes while recognizing that unobservable household characteristics may simultaneously influence both the decision to form a polygynous union and the ability of the household to adequately nourish children. Polygyny can affect children’s nutrition through increased family size, early marriage, and the level of household investment in child health. In this paper, we apply an instrumental variable approach based on the occurrence of same sex siblings in a woman’s first two births to generate exogenous variation in polygyny. Using data from the 2008 and 2013 Nigeria Demographic and Health Surveys, we find a detrimental effect of polygyny on child undernutrition, with a greater effect in poorer households and those resident in more urban locations.
The role of agriculture in reducing child undernutrition in Nigeria
Amare, Mulubrhan; Balana, Bedru; Ogunniyi, Adebayo. Washington, DC 2020
Amare, Mulubrhan; Balana, Bedru; Ogunniyi, Adebayo. Washington, DC 2020
DOI : 10.2499/p15738coll2.133740
Abstract | PDF (499.6 KB)
This study examines the effect of agricultural productivity change on child nutritional outcomes in Nigeria. Using several waves of micro-level panel data from Nigeria, we first show that high temperature (heat stress) reduces agricultural productivity change. A one percent increase in high temperatures during the crop growth period result in a 4 percent decrease in agricultural productivity. More importantly, our analysis provides several important insights on the implications of agricultural productivity change for reducing child undernutrition. The results show that agricultural productivity growth has a positive effect on child nutritional outcomes, measured by child height-for-age and weight-for-age. The main channel through which agricultural productivity growth affects child nutritional outcomes is by increasing food production for own household consumption. This suggests that productivity-enhancing investments in the agricultural sector could have a direct impact on child nutritional outcomes among smallholder households in Nigeria. The results also show that agricultural productivity change has higher impact for households who have better access to markets and a higher educational level. Interventions and policies geared towards intensification of agricultural production need to be complemented with strategies for widening educational programs and improving farmers’ access to markets. to induce incentives for increased production.
Estimating the economic costs of COVID-19 in Nigeria
Andam, Kwaw S.; Edeh, Hyacinth; Oboh, Victor; Pauw, Karl; Thurlow, James. Washington, DC 2020
Andam, Kwaw S.; Edeh, Hyacinth; Oboh, Victor; Pauw, Karl; Thurlow, James. Washington, DC 2020
DOI : 10.2499/p15738coll2.133846
Abstract | PDF (507.7 KB)
In this paper we analyze the economic impacts of the COVID-19 pandemic and the policies adopted to curtail the spread of the disease in Nigeria. We carry out simulations using a multiplier model based on the 2018 Social Accounting Matrix (SAM) for Nigeria, which includes supply-use tables for 284 goods and services. The pandemic’s global reach and impact on the global economy combined with the response policies in Nigeria represent a large, sudden shock to the country’s economy. The SAM multiplier model is well-suited for measuring the short-term direct and indirect results of this type of shock because the SAM represents both the structure of the economy and the interactions among economic actors via commodity and factor markets. Our analysis focuses on the five-week lockdown implemented by the federal government across the Federal Capital Territory of Abuja and Lagos and Ogun states from late March to early May 2020, the federal lockdown for Kano from mid-April, and the state-level lockdowns that were implemented from mid-April for around seven weeks in Akwa Ibom, Borno, Ekiti, Kwara, Osun, Rivers, and Taraba states.
We estimate that during the lockdown periods Nigeria’s GDP suffered a 34.1 percent loss due to COVID-19, amounting to USD 16 billion, with two-thirds of the losses coming from the services sector. The agriculture sector, which serves as the primary means of livelihood for most Nigerians, suffered a 13.1 percent loss in output (USD 1.2 billion). Although primary agricultural activities were excluded from the direct restrictions on economic activities imposed in the lockdown zones, the broader agri-food system was affected indirectly because of its linkages with the rest of the economy. We estimate that households lost on average 33 percent of their incomes during the period, with the heaviest losses occurring for rural non-farm and for urban households. The economic impacts of COVID-19 include a 14-percentage point temporary increase in the poverty headcount rate for Nigeria, implying that 27 million additional people fell below the poverty line during lockdown. Lastly, we consider economic recovery scenarios as the COVID-19 policies are being relaxed during the latter part of 2020. Our findings have implications for understanding the direct and indirect impacts of COVID-19, for policy design during the recovery period, and for planning future disease prevention measures while protecting livelihoods and maintaining economic growth.
We estimate that during the lockdown periods Nigeria’s GDP suffered a 34.1 percent loss due to COVID-19, amounting to USD 16 billion, with two-thirds of the losses coming from the services sector. The agriculture sector, which serves as the primary means of livelihood for most Nigerians, suffered a 13.1 percent loss in output (USD 1.2 billion). Although primary agricultural activities were excluded from the direct restrictions on economic activities imposed in the lockdown zones, the broader agri-food system was affected indirectly because of its linkages with the rest of the economy. We estimate that households lost on average 33 percent of their incomes during the period, with the heaviest losses occurring for rural non-farm and for urban households. The economic impacts of COVID-19 include a 14-percentage point temporary increase in the poverty headcount rate for Nigeria, implying that 27 million additional people fell below the poverty line during lockdown. Lastly, we consider economic recovery scenarios as the COVID-19 policies are being relaxed during the latter part of 2020. Our findings have implications for understanding the direct and indirect impacts of COVID-19, for policy design during the recovery period, and for planning future disease prevention measures while protecting livelihoods and maintaining economic growth.
Credit constraints and agricultural technology adoption: Evidence from Nigeria
Balana, Bedru; Oyeyemi, Motunrayo. Washington, DC 2020
Balana, Bedru; Oyeyemi, Motunrayo. Washington, DC 2020
DOI : 10.2499/p15738coll2.133937
Abstract | PDF (591.9 KB)
The agricultural sector in Nigeria is characterized by low productivity that is driven by low use of modern agricultural technologies, such as improved seed, chemical fertilizer, agrochemicals, and agricultural machinery. Poor access to credit is claimed to be one of the key barriers to adoption of these technologies. This study examines the nature of credit constraints among smallholder farmers – whether smallholders are credit constrained or not and the extent to which credit constraints emanate from supply-side or demand-side factors. Using multinomial probit and seeming unrelated simultaneous equations econometric models with data from the 2018/19 Living Standards Measurement Study-Integrated Surveys on Agriculture (LSMS-ISA) for Nigeria, the study investigates the factors affecting credit access and the effects of these credit constraints on adoption of four agricultural technologies – inorganic fertilizer, improved seed, agrochemicals, and mechanization.
The results show that about 27 percent of survey households were found to be credit constrained – 12.8 percent due to supply-side factors and 14.2 percent due to demand-side factors. Lack of access to information and communication technology, extension services, and insurance coverage are the major demand-side factors negatively affecting smallholder’s access to credit. Registered land tiles and livestock ownership enhance credit access. Credit constraints manifests themselves differentially on the adoption of different agricultural technologies. While adoption of inorganic fertilizer and improved seed are significantly affected by credit constraints from both the supply and the demand-sides; use of agricultural machinery is affected only by demand-side factors, while use of agrochemicals is not affected from either supply or demand-side credit factors. From a policy perspective, our findings indicate that improving credit access via supply-side interventions alone may not necessarily boost use of modern agricultural technologies by smallholder farmers in Nigeria. Demand-side factors, such as access to information, extension services, and insurance cover, should equally be addressed to mitigate the credit constraints faced by smallholders and increase their adoption of modern agricultural technologies and improve their productivity.
The results show that about 27 percent of survey households were found to be credit constrained – 12.8 percent due to supply-side factors and 14.2 percent due to demand-side factors. Lack of access to information and communication technology, extension services, and insurance coverage are the major demand-side factors negatively affecting smallholder’s access to credit. Registered land tiles and livestock ownership enhance credit access. Credit constraints manifests themselves differentially on the adoption of different agricultural technologies. While adoption of inorganic fertilizer and improved seed are significantly affected by credit constraints from both the supply and the demand-sides; use of agricultural machinery is affected only by demand-side factors, while use of agrochemicals is not affected from either supply or demand-side credit factors. From a policy perspective, our findings indicate that improving credit access via supply-side interventions alone may not necessarily boost use of modern agricultural technologies by smallholder farmers in Nigeria. Demand-side factors, such as access to information, extension services, and insurance cover, should equally be addressed to mitigate the credit constraints faced by smallholders and increase their adoption of modern agricultural technologies and improve their productivity.
Postharvest losses and the impact of reusable plastic container technology on profitability: Evidence from tomato traders in Nigeria
Aghadi, Crystal N.; Balana, Bedru; Ogunniyi, Adebayo. Washington, DC 2020
Aghadi, Crystal N.; Balana, Bedru; Ogunniyi, Adebayo. Washington, DC 2020
DOI : 10.2499/p15738coll2.134041
Abstract | PDF (446.6 KB)
Postharvest loss is a major challenge in food production and supply chains in developing countries. Using primary data from fresh tomato traders in Lagos, Nigeria, and endogenous switching econometric modelling, this study investigates the effects of reusable plastic containers (RPC) technology on traders’ net profits and the factors determining the adoption of the technology. Results indicate that the trader’s position along the supply chain, income level, seasonality, sales frequency, and technology affordability positively influence their adoption decision. We found that the use of RPC technology significantly increases traders’ net profits. The counterfactual impact analysis indicates that traders who adopted RPC would have earned 7 percent lower net profits had they not used RPC. Conversely, non-adopters would have increased their net profit by 5 percent had they adopted the technology. However, heterogenous treatment effects were observed due to heterogeneities among the adopters.
The relative commercial orientation of smallholder farmers in Nigeria: Household and crop value-chain analyses
Benson, Todd; Amare, Mulubrhan; Ogunniyi, Adebayo. Washington, DC 2020
Benson, Todd; Amare, Mulubrhan; Ogunniyi, Adebayo. Washington, DC 2020
DOI : 10.2499/p15738coll2.134163
Abstract | PDF (1.1 MB)
Increasing the productivity of commercially oriented smallholder farming households in Nigeria results in greater incomes for their households, which, in turn, can drive an expansion in local nonfarm employment opportunities and raise incomes across rural communities. Appropriately targeting agricultural development efforts towards commercially oriented farming households has important second-round development benefits for rural economies. We use nationally representative data from the Nigeria General Household Survey Panel to examine the characteristics of households and their context that determine their level of commercial orientation in 2015/16. We then use the same dataset for crop-specific analyses of the factors associated with a household choosing to produce a specific crop, to sell any of their harvest of that crop, and, if they sold any of the crop, whether they sold more than half of their harvest. Twelve crops are examined.
We find that the commercial orientation of most smallholder farming households in Nigeria is not strong. One-third reported not making any crop sales, relying instead on household enterprises or wage employment to meet their cash needs. Another one-third reported selling less than one-third of the crops they harvested by value. For these households, any crop sales made seem to reflect the limited other options they have to obtain cash, rather than being part of a strategy of commercial production. A subsistence orientation still drives most crop production by smallholder farming households in Nigeria. The crop-specific analyses confirm that crop sales for many households are driven to an important degree by their lack of other income sources, rather than by actively seeking to produce significant commercial surpluses of a crop.
That this is the case reflects a range of deficiencies in the production and marketing of many of the crops. Improved crop production technologies are not commonly used, may not be readily available, or, if available, may prove challenging to employ profitably. Nigerian crop markets remain risky with no assurances that farmers will find buyers offering remunerative prices when they bring their produce to the market to sell. Continued investments to increase crop productivity and to improve the performance and reliability of crop value chains are needed if commercial considerations are increasingly to drive the crop choices of smallholder farming households, to provide incentives for higher crop productivity, and, through the increased crop income of commercially oriented farming households, to motivate expansion in local non-farm sectors and to raise incomes for all households in rural Nigerian communities.
We find that the commercial orientation of most smallholder farming households in Nigeria is not strong. One-third reported not making any crop sales, relying instead on household enterprises or wage employment to meet their cash needs. Another one-third reported selling less than one-third of the crops they harvested by value. For these households, any crop sales made seem to reflect the limited other options they have to obtain cash, rather than being part of a strategy of commercial production. A subsistence orientation still drives most crop production by smallholder farming households in Nigeria. The crop-specific analyses confirm that crop sales for many households are driven to an important degree by their lack of other income sources, rather than by actively seeking to produce significant commercial surpluses of a crop.
That this is the case reflects a range of deficiencies in the production and marketing of many of the crops. Improved crop production technologies are not commonly used, may not be readily available, or, if available, may prove challenging to employ profitably. Nigerian crop markets remain risky with no assurances that farmers will find buyers offering remunerative prices when they bring their produce to the market to sell. Continued investments to increase crop productivity and to improve the performance and reliability of crop value chains are needed if commercial considerations are increasingly to drive the crop choices of smallholder farming households, to provide incentives for higher crop productivity, and, through the increased crop income of commercially oriented farming households, to motivate expansion in local non-farm sectors and to raise incomes for all households in rural Nigerian communities.
Grain price seasonality in Kebbi state, Nigeria
Hatzenbuehler, Patrick L.; Mavrotas, George; Maikasuwa, Mohammed Abubakar; Aliyu, Abdulrahaman. Washington, DC 2018
Hatzenbuehler, Patrick L.; Mavrotas, George; Maikasuwa, Mohammed Abubakar; Aliyu, Abdulrahaman. Washington, DC 2018
DOI : 10.2499/1041943689
Abstract | PDF (456.1 KB)
Recent studies on food prices in sub-Saharan Africa (SSA) found that food price seasonality in SSA remains an issue. In addition to it causing price risk, and, hence, limiting market participation among farmers and traders, the continued existence of substantial price seasonality implies that interventions that improve food market development are needed. Using a dataset that is unique for Nigeria, we contribute to this literature through measurement of the extent of seasonality in grain prices in a set of markets in Kebbi state. We believe that our focus on seasonality at the state, rather than country or continental, level can provide needed insights that are useful for identification of areas deserving stakeholder focus for rural development related initiatives. A main contribution is that we find that there are large enough differences in price behavior across the assessed markets to justify this more localized analysis.
Nigeria’s macroeconomic crisis explained
Arndt, Channing; Chuku, Chuku; Adeniran, Adedeji; Adetutu, Morakinyo; Ajayl, Victor; Mavrotas, George; Onyekwena, Chukwuka . Washington, DC 2018
Arndt, Channing; Chuku, Chuku; Adeniran, Adedeji; Adetutu, Morakinyo; Ajayl, Victor; Mavrotas, George; Onyekwena, Chukwuka . Washington, DC 2018
Abstract | PDF (364.2 KB)
Nigeria confronts a prolonged period of adjustment. For more than a generation, the oil sector generated large volumes of foreign exchange. However, with the recent bust in global oil prices and the resumed restiveness in the oil rich Niger-Delta region since 2014, Nigeria was thrust into macroeconomic crisis. Four years on, we argue that policymakers effectively responded to the dual shocks mainly through import compression. However, the scope for continued import compression is now distinctly limited. For Nigeria to grow and prosper, the long-discussed diversification of the export base must occur via rapid expansion of non-oil exports.
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