Masters Dissertation 2019Income diversification is becoming the norm in developing countries and is regarded as a key factor in reducing the incidence of poverty especially among rural households. It is on this premise that this study focused on assessing how rural households in Nigeria diversify their income sources in relation to their poverty trajectories, using data from two waves of the Nigeria General Household Survey Panel (GHS- Panel) conducted by the National Bureau of Statistics in 2012/13 (wave 2) and in 2015/16 (wave 3). Specifically, this study identified and classified the various income diversification options of the households into two broad categories; (i) farm income and (ii) off-farm income. Results shows that the rural households earn a higher share of their total income from off-farm sources than from farm sources. The income earned from off-farm was positively and significantly influenced by covariates such as education level of household head, education level of other members of the household, the household size, the household assets and the total livestock units owned by the household. Findings of this study further showed that off- farm income has a positive relationship with agricultural intensification although this relationship is not significant. Also, the nexus between income diversification and poverty reduction in the study area is such that the incidence and depth of poverty (25%) experienced by the undiversified household is relatively higher than the depth of poverty (20%) experienced by the diversified households. The multidimensional poverty index (MPI) is also higher for households without off-farm than the MPI for households with off-farm income. This suggests that income diversification is a key factor in reducing the incidence of poverty among rural households in Nigeria. This study recommend as a policy measure that households should be encouraged to diversify their economy and transmit productivity gains from income diversification into the rural economy for the betterment of agriculture and for sustainable poverty reduction.