Effects of capital assets on livelihood diversification of rural households in Oyo State Nigeria

Abstract

combine their capital endowments in order to make a living, thus, it is possible that the more capital assets households are endowed with, the more they diversify into different livelihood activities. Capital assetshave been classified into natural, social, human, physical and financial. This study determined the effects of capital assets on livelihood diversification of rural households in Oyo State, Nigeria. One hundred andeighty respondents were sampled through multistage sampling technique. Test re-test method of reliability was used with a reliability coefficient of 0.88. Interview Schedule was used to obtain data for the study.Both descriptive and inferential statistics were used in analyzing the data collected. Majority (72.5%) of respondents were within the age bracket of 41-60, 84.9% were males, 80.0% of the respondents were married, 73.9% had household sizes between 4-6, 41.1% were Christians, 48.3% were Muslims, 8.3% were traditional worshippers, 2.2% were atheists, 72.2% were educated, and 85.0% were primarily farmers. The average monthly income of respondents was N9,895, with more than half (58.9%) of them having a monthly income range of N5,000 – N15,000. Sixty one point one percent (61.1%) and 75.6% were averagely endowed with natural capital and social capital respectively. Fourty seven point two (47.2%),41.1% and 52.8% had low level of physical capital, financial capital and human capital respectively. However, 45.7% had low level of capital assets and 68.3% diversified into two or more livelihood activities. At a significance level of 0.05, levels of natural capital (p=0.015), social capital (p=0.022), human capital (p=0.000), physical capital (p=-0.032), and capital assets (p=0.007) had significant relationship with livelihood diversification. On the other hand, there was no significant relationshipbetween level of financial capital (p=0.065) and livelihood diversification. It is therefore concluded that capital assets determine the number of rural activities rural household diversify into and the level of diversification. Government, development agencies and communities need to concertedly work to increase the capital endowments of rural households in order to achieve sustainable rural development.