40 CHAPTER 5
pay their share. Even the 30 percent contribution might be high for expen- sive productive assets and force FUG members who are unable to pay their contribution to turn to more wealthy individuals for credit support or rental arrangements. Planners for the next phase of the project (Fadama III) need to consider the use of sustainable financing for targeted groups—for example, through microfinancing institutions. Existing local rotating savings and credit schemes, such as esusu, dashi, and adashi, could help to increase credit access (Bascom 1952; Okonjo 1979; Bouman 1995).
Impact of Fadama II on Household Income
Figure 5.3 shows that the average annual household income after Fadama II started (2005–06) for all types of households ranged from 43,298 to 108,625 nairas (real value in 2003). The lower limit is above the average rural house- hold income of 42,644 nairas reported by the 2003–04 living standard survey (FOS 2004) but of the same order of magnitude. On average, the real incomes of Fadama II beneficiaries increased 58.5 percent as a result of participation in the project, based on the PSM and double-difference estimation (ATT); that increase is well above the Fadama II target of 20 percent for half of the beneficiaries after six years of operation.
Results of the unmatched sample showed that the incomes of beneficia- ries increased by 38 percent. In contrast, average real incomes of all non- beneficiaries increased by only 15.5 percent and by even less for nonbeneficia- ries outside Fadama II communities (12.7 percent).4 The mean increase in income for beneficiaries was significantly different from that for nonbenefi- ciaries at p = 0.05. Considering the income of beneficiaries before and after the project (without controlling for other reasons for income to change), about 42 percent of beneficiaries increased their incomes by at least 20 percent in the first year of Fadama II (Table 5.6). In contrast, the share of nonbeneficiaries who increased their incomes by at least 20 percent was only 34 percent. Although this percentage includes the effects of other factors that influence income changes over time, it is clear that Fadama II achieved considerable success in its first year of operation.
It is likely that the impact of the project on incomes will be larger in the future because of the delayed effects of investments in productive assets, infrastructure, and other project investments. Even without longer term lags, the impacts on incomes in 2005–06 could be expected to be less than
4 The percentage changes of the nonbeneficiaries before and after project inception are not reported in the table but are calculated using the following simple formula (symbols are as defined in equation (3)): [(Ynp1 – Ynp0)/Ynp0] × 100.
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