DETERMINANTS OF LIVELIHOOD DIVERSIFICATION AFTER OIL SUBSIDY REMOVAL: EVIDENCE FROM SMALLHOLDER FARMERS IN THREE STATES OF SOUTH WEST NIGERIA

Abstract

This study examined the effect of the 2023 removal of oil subsidies in Nigeria on livelihood diversification among smallholder farmers in Southwest Nigeria. Using primary data from 320 rural households across Ekiti, Osun, and Ondo states, the study analyzed socio-economic characteristics, livelihood diversification activities, and factors influencing diversification as coping strategies. Results show extensive diversification into crop and livestock farming, agro-processing, and non-farm activities such as petty trading and paid employment. Key determinants positively influencing diversification include the household head’s age and number of children in school, while larger household and farm sizes reduce diversification likelihood. Findings reveal that larger, less diversified households with limited resources are most vulnerable to subsidy removal’s adverse effects. The study underscores the critical role of livelihood diversification in enhancing rural resilience and recommends that policies prioritize social protection, support for non-farm income opportunities, and improved rural extension services.