Abstract Recurring droughts have induced many pastoralist groups in Africa to raise more drought-tolerant livestock as a coping strategy. Borana, traditional cattle pastoralists in southern Ethiopia, are one of these groups and have resorted to including more drought-tolerant camels and shoats (sheep and goats) among their livestock. We hypothesised that this livestock diversification would vary according to geographic location (drought severity, proximity to Somalis and to an urban centre) and resources available (wealth, labour) and predicted that: (1) wealthier Borana would be more inclined towards the risky but promising strategy of raising camels, whereas poorer ones would prefer the less prestigious but also less risky shoats; (2) more labour would allow more flexibility in livestock diversification; and (3) the biggest shift in livestock composition would occur in Bulbul, as this kebele (pastoralist association) is the most drought-prone. To test our predictions, we combined qualitative and quantitative methods to examine four kebeles in the Liben wereda (district) of southern Ethiopia. From 2000 to 2011, number of cattle declined by 25.1 and 41.4 head per household (or between 41.9 per cent and 69.0 per cent) in the four kebeles . There was a significant positive relationship between present-day camel numbers and cattle numbers and between the change in camel numbers between 2000 and 2011 and the number of cattle in 2000 in all kebeles . Thus, as predicted, wealthier households - that is, those with the most present day cattle - have the most camels and households that had the most cattle in 2000 were able to add the most camels over the past 11 years. Number of wives had a significant effect on cattle, camels, shoats and total livestock units (TLU) in all kebeles , except Siminto. In Siminto, number of wives affected camels and shoats and number of girls affected cattle and TLU. Siminto, the kebele closest to an urban centre, turned more to land cultivation than the other kebeles , which occupied much of the wives' time. Of the four kebeles , livestock numbers and diversification were lowest in Siminto and, thus, livestock husbandry required the least amount of labour. Girls were able to contribute positively towards this labour. Our prediction that the biggest shift in livestock would occur in Bulbul was not supported. Camels and shoats were most common in Hadhessa and Qorati, which are close to camel-raising Somalis, implying that Borana in these kebeles learnt camel husbandry from the Somalis. Many Borana still preferred cattle to other livestock, but were becoming increasingly aware of the economic value of camels and of the importance of shoats.