Abstract

Households in Sub-Saharan Africa, particularly Nigeria, face multiple economic shocks—climate change, price volatility, unemployment, health problems, and market disruptions that threaten their livelihoods (Dercon, 2002). Such shocks undermine food security, income, health, and education (Gertler & Gruber, 2002; Di Falco, 2021). Households often reduce essential consumption (Genoni, 2012), creating short and long-term welfare losses (Arndt et al., 2008). Globally, natural disasters and economic shocks generate losses exceeding $250 billion annually (UN, 2017).

Empirical studies show that price shocks, pandemics, and health risks worsen household vulnerability. Amolegbe et al. (2021) found food price shocks harm Nigerian household food security, while Ibukun and Adebayo (2021) showed that two-thirds of households experienced food insecurity during COVID-19, with education, income, and wealth status as key determinants. Similar results were reported in other African countries: in Tanzania, food price hikes hurt poor consumers (Mbegalo & Yu, 2016), in Kenya weather shocks altered income and calorie intake (Wineman et al., 2017), and in Zambia health shocks raised financial risks (Hangoma et al., 2018). Evidence suggests that wealthier households can insure against shocks, while poorer ones remain vulnerable (Shehu & Sidique, 2015).
Coping strategies vary but are often insufficient. Households sell assets, borrow, or reduce consumption (Carter et al., 2007), which may erode long-term productivity. In low-income settings, reliance on informal networks and self-insurance rarely provides adequate protection (Dabla-Norris & Gündüz, 2014). Importantly, the COVID-19 pandemic, with lockdowns and movement restrictions, intensified household fragility, highlighting the need to examine rural–urban differences in shock exposure and coping.

This study used Nigeria’s Longitudinal High Frequency Phone Survey (LSMS-HFPS, 2020–2024), covering 43,400 households across farming and non-farming sectors. Data captured economic shocks, coping strategies, and livelihood outcomes. Shocks were classified as Financial shocks: job loss, business closure, price changes in food, fuel, or inputs.Health shocks: death of income earners or remitters, COVID-related fatalities.Social shocks: theft, robbery, loss of property, or kidnapping.Coping strategies were grouped into:Personal-sourced (asset sales, extra work, reduced consumption, savings use).Interpersonal-sourced (borrowing, credit purchases, family support).Institutional-sourced (loans, government/NGO aid, insurance).

Household livelihoods (farm vs. non-farm work) were modeled as outcome variables, with shocks and coping strategies as explanatory factors. Socioeconomic controls included household size, age/sex of head, dependency ratio, and adult equivalents. Panel regression (fixed and random effects) assessed the relationships, while inverse probability weighting corrected attrition bias (Wooldridge, 2010).The results revealed that Rural households averaged 7 members compared to 5 in urban areas, with higher dependency ratios (44% vs. 38%), indicating greater financial strain. Male-headed households were more common in rural areas, often reliant on agriculture and thus more shock-prone. No significant urban–rural age difference was found, but rural areas had more adult equivalents, potentially cushioning shocks. Shock prevalence revealed that financial shocks affected 45% of rural vs. 39% of urban households; social shocks 7% vs. 4%; and health shocks 3.2% vs. 2.3%. This reflects rural households’ greater exposure to volatility, theft, and limited healthcare access.It was also reveale that coping strategies also differed in which 27.6% of rural households used personal measures, 16.6% relied on interpersonal networks, and 4.8% accessed institutional support. Urban households had slightly lower reliance on these strategies, but the differences were significant for interpersonal and institutional coping. Also, the regression results revealed that financial shocks significantly reduced non-farm household livelihoods, with a 17% likelihood of occurrence. Personal coping reduced vulnerability by 5%, while interpersonal coping increased exposure by 1%. Institutional coping had no significant effect.Health shocks negatively affected farming households, but personal and institutional coping slightly mitigated impacts (2% and 1% reductions).Combining all shocks, adoption of multiple coping strategies reduced the probability of livelihood disruption by 7%, confirming the protective role of diversified coping (Rashid et al., 2006).The Hausman test confirmed fixed-effects models as more appropriate, controlling for unobserved household heterogeneity.

The findings concludes that economic shocks significantly shape household livelihoods in Nigeria, with rural households bearing disproportionate burdens due to larger household sizes, high dependency, and agricultural reliance. Coping strategies differ in effectiveness: personal measures mitigate impacts, interpersonal reliance worsens vulnerability, and institutional support remains limited. Strengthening formal safety nets and promoting resilient livelihood strategies are crucial for reducing household vulnerability and ensuring sustainable welfare outcomes.

Policy recommendations include enhancing financial resources for rural households through improved access to credit and insurance, improving healthcare infrastructure, and encouraging advanced agricultural practices to stabilise market conditions. Strengthening social safety nets and leveraging digital platforms for market access are vital for building resilience. The study emphasised the need for targeted interventions that are tailored to the distinct vulnerabilities of Nigeria’s rural and urban populations.