The Impact of RuralLivelihood Diversification on Household’s PovertyStatus in Jimma Zone, Oromia National Regional State, Southwest Ethiopia

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 attain food security. Since the sector is facing many challenges, rural households are compelled to develop livelihood diversification strategies.The aim of this research is to assess the determinant of rural livelihood diversification and itsimpact on household poverty inJimma ZoneOromia regional stateEthiopia.A multistage sampling procedure was employed to select 385 sample household heads.Primary and secondary data were collected from two purposively selected woredasby usinginterview schdualed, key informant interview,focus group discussion and personal observation.Both descriptive and inferential data analysis methods were applied.Cost of basic need approachwere applied to measure poverty status. The result of the study indicated that 37.14% and 62.86% werefound to be poor and non poor respectively.The results of descriptive statistics also indicated as age of household, dependency ratio, year of schooling, sex of household, livestock ownership, land holding, nonfarm income,market distance and extension contact were found to have significant influence of household on poverty status atthe different probability level.Similarly, the descriptive statisticsshows thatage of household, family size,year of schooling ,sex ofhousehold, credit services,off and nonfarm income, land holding andlivestock wnershipwere found to have significant influence the status diversified sample household .The result of binary logistic regression model indicated as family size, land holding, livestock ownership, year of schooling, access to credit services and off farm income of the households were found to have significantly determining livelihood diversification.Moreover, over the resultof propensity score matching indicate as household participation on livelihood diversification has a positive and significant impact on the household poverty. Accordingly,households with diversified livelihood were found to be 9% better than those non diversified in terms of poverty.In general householdswho diversified their activities were found to be able to build better asset than the non diversified.Therefore,government attention should be given forsupporting the livelihood diversification effort through creating enabling environment for farmer especially for the poor.