Abstract
In Ethiopia, agriculture is the principal source of food and livelihood for many rural households, making it a central component of programs that seek to reduce poverty and achieve food security. Since the sector is faced with many challenges, rural households are compelled to develop strategies through diversification to cope with the increasing vulnerability associated with agricultural production. As a result, the purpose of this research is to assess the impact of livelihood diversification on household poverty in the Jimma zone of Ethiopia's Oromia regional state. A multistage sampling procedure was employed to select 385 sample household heads. The study utilized data obtained from a cross-sectional survey using an interview schedule, focus group discussion, key informant interview, and personal observations. Both descriptive and econometric data analysis techniques were applied. The result of the FGT poverty measure revealed that the incidence of poverty among rural households was 37.14%, implying that 62.86% were non-poor. The descriptive statistics revealed that age of household, dependency ratio, year of schooling, sex of household, livestock ownership, landholding, non-farm income, market distance, and extension contact were found to have a significant influence on the poverty status of a household at different probability levels. Based on the cost of basic needs approach, it was applied to measure poverty status. The results of the logit model indicate that family size, landholding, livestock ownership, year of schooling, access to credit services, and off-farm income of the households were found to have significantly determined livelihood diversification. Moreover, the results of the propensity score matching indicate that household participation in livelihood diversification has a positive and significant impact on household poverty. Accordingly, households with diversified livelihoods were found to be 9% better off than those that were not diversified in terms of poverty. Policies aimed at increasing the income generation ability of the household should be strongly considered. Therefore, to ensure the capacity of rural households to practice farming along with a wide range of income-generating activities to improve the well-being of the rural poor and have a significant impact on poverty reduction, participating in livelihood diversification should be given emphasis in development planning.
Highlights
Sample Households’ Consumption Expenditure and Poverty Status. e quantitative measure of poverty was estimated by using food and non-food expenditure to set the poverty line. e food poverty line was calculated by selecting a basket of foods commonly consumed by households in the study area, such as maize, sorghum, teff, pulses, inset potato, sweet potato vegetables, fruits, oil, milk, meat, and other stimuli such as coffee, tea, and chocolate. e quantity bundle of these meets the predetermined level of minimum calorie requirement and is valued at local prices on average to get a constant poverty line
Of the six significant variables, family size and credit services are highly significant at a 1% probability level. e variables of education level and livestock ownership are strongly significant at the 5% probability level, whereas off-farm income and landholding are at a 10% probability level (Table 3)
Of the total sample households, 62.86% of the households are found to be non-poor, while 37.14% of them are found to be poor. e chi-square result in Table 4 indicates that 2.7840 Pr 0.095. is result shows that the difference between livelihood diversification and poverty status is significant at a 10% probability level. is implies that most of the rural households in the study area diversify their livelihood sources, and this may influence their level of fairly strong linkage between poverty and diversification
Summary
E agricultural sector is the growth, development, and pathway to ensuring food security in sub-Saharan Africa. It is the largest employer of labor, and most poor people depend heavily on it for their livelihood as it is the only way out of poverty and food security [1]. Subsistence producers and small-farm wage laborers in the rural areas of low-income countries constitute over two-thirds of the global poor and food insecure populations, and about 70% of the world’s very poor people live in rural areas [2,3,4]. Stagnant agricultural productivity and low returns from farming have led rural people to look for alternatives to supplement their income. 47.9% of the population in rural Africa lives in extreme poverty [8]. erefore, diversification is highly significant for poor rural households and supports the accumulation of income for farm expansion and engagement in non-farm businesses [9, 10]
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