Social capital networks, microcredit and poverty status of rural households in Nigeria

Abstract

This study examined how social capital networks contribute to rural households’ poverty status in Southwestern Nigeria. A multistage sampling procedure was used to select a total of 300 households for this study. A structured questionnaire was used to obtain information and data were analyzed using descriptive statistics, Foster, Greer and Thorbecke (FGT) poverty measure and Two-Stage Least Square model (2SLS). Results showed that poverty incidence, depth and severity were 60%, 46.70% and 20.10% respectively among the sampled households. The results indicated that forms of social capital networks in the study area include cooperative societies, family and friends, farmers’, professional career, religious, and microfinance groups. The results further showed that 66.00% of the households in the study area sourced microcredit from cooperative societies. The 2SLS estimate showed that the coefficient of the aggregate social capital index (β =730.83, p < 0.05) also showed a positive, significant relationship with household per capital expenditure. The result indicated that a unit increase in social capital network index of the household would increase household per capita expenditure in the study area by N730.83. The study concluded that membership of social capital networks positive influence households’ access to access to microcredit and poverty reduction.