Determinants of household activity choice, rural income strategies and diversification - Institutional Constraints to Small Farmer Development in Southern Africa - page 55

3. Determinants of household activity choice, rural income
strategies and diversification
Simbarashe Ndhleve and Ajuruchukwu Obi
Abstract
South Africa's post-apartheid economy continues to invest in agricultural development
but poverty remains endemic among households with agriculture as their main source
of livelihood. There are now doubts that agriculture is the dominant income-generating
activity. This chapter analyses the potential livelihoods in rural areas of South Africa.
Using household and community level data, the chapter develops simultaneous equations
to estimate the determinants of both poverty and income from activities practised in the
study area. It is expected that these would enable policymakers to identify the weak links
in rural poverty reduction efforts and determine whether agriculture should remain a
priority for government investment. Despite low returns per capita, own agriculture and
wage employment were shown to be the main sources of income and strongly influenced
by level of education, labour availability, social capital, physical capital and geographical
location. To improve rural income and reduce poverty, urgent improvements in education,
capital resources, infrastructure and communication are necessary.
3.1 Introduction and problem context
Development strategies articulated by the South African government in the democratic era
have been oriented towards improving the lot of the historically disadvantaged majority
of the black population through the development of agriculture. The post-apartheid
economy continues to invest in agricultural development but poverty remains high
among households with agriculture as their main source of livelihood. About 72% of the
population of South Africa is poor, with the bulk of these persons residing in the Eastern
Cape Province which ranks as the second poorest province in the country, harbouring some
6.2 million inhabitants out of whom 70.7% were classified as poor (Perret, 2002). With
such disturbing numbers, the country's ability to meet the Millennium Development Goal
(MDG) of halving poverty by 2015 is in serious doubt (World Bank, 2006). Reducing
poverty by promoting small scale agriculture is seemingly hard in rural South Africa. The
most disappointing aspect of post-apartheid economic performance is the widespread
poverty and the widening of inequalities.
Agriculture must be the key driver of rural income growth but this is not the case in rural
South Africa. According to 1995 and 2000 income and expenditure surveys' figures, South
Africa's rural share of income poverty declined by approximately 5% but this decline was