Social capital, shocks and livestock investments: evidence from Masaka District, Uganda

Purpose - – The purpose of this paper is to examine the determinants of a household's social capital in the form of community group participation and empirically analyses the roles that social capital plays in helping rural households rebuild productive assets after shocks. Design/methodology/approach - – In this paper, social capital is modelled as a household's intensity of group participation measured by the density and active participation in group activities as well as their multiplicative and additive indices. Instrumental variable methods were used to address the problem of endogeneity associated with social capital. Findings - – The results indicate that household characteristics such as age, education level, dependence ratio and years of village residence as well as village-level characteristics such as the village population density are critical determinants of social capital. In addition, social capital measured in form of density of participation in group activities and attendance score as well as multiplicative and additive indices of these have significant positive effects on the household ability to rebuild livestock assets. Research limitations/implications - – The authors realize that several weakness in the approach could compromise the validity of the findings. These weaknesses include: the cross-sectional nature of the data, the omitted variable bias, the endogeneity concerns of social capital and the identification strategy, sample size and the dimensions the authors chose to measure social capital. Future research should explore the factors that can help households to engage more in-group activities. Practical implications - – The findings have important implications for government policy especially in areas of agricultural development and poverty reduction. Specifically, governments should pay close attention to the various social groups as they can serve as important channels to achieve better social economic outcomes, including the accumulation of rural assets, as is the case with livestock assets in rural Uganda. Social implications - – Many governments in Sub-Saharan Africa are constrained to provide basic public goods to the people. This is due to a combination of limited budgets and lack of good leadership. In such circumstances, the people have to rely on their collective/social effort to take advantage of market opportunities. Such opportunities can be accessed using the existing social structures whose norms and the trust between members permit cooperation. Originality/value - – The study contributes to a small but growing empirical literature on social groups and how they can mediate social economic outcomes especially for rural households. The empirical estimations take into consideration the endogeneity concerns associated with social network capital. The paper will be useful for policy makers and researchers who may have a keen interest in the roles that group activities play in agricultural development and poverty reduction.