Rural Household Vulnerability to Poverty in South West Ethiopia: The Case of Gilgel Gibe Hydraulic Dam area of Sokoru and Tiro Afeta Woreda

Abstract

This study is proposed to measure the extent of vulnerability to poverty in line with current poverty status among rural households in Sokoru and Tiro Afeta woreda of south west Ethiopia. The study also examines the effect of socio-economic characteristics and idiosyncratic shocks on household susceptibility to poverty. This paper used rural household cross sectional data from the study area. A representative total of sample of 266 households were drawn via systematic random sampling technique and data were collected through structured questionnaires. The study applied a three step Feasible Generalized Least Squares (FGLS) estimation procedure to estimate the extent of rural household’s vulnerability to poverty. It as well employed Ordinary Least Square (OLS) estimation method to inspect the effects of household socio-economic characteristics and idiosyncratic shocks on rural household’s vulnerability to poverty standing. The results reveal that, about 52% of rural households in the study area are vulnerable to poverty and this is higher than observed poverty level of about 48 percent. Sizable fractions of non-poor households (51.3%) are vulnerable to poverty and 53.2 % of the sampled poor households have a probability of 50 percent and above to fall in to poverty in the near future again. Household head age, household head education level and household’s access to credit and their exposure to idiosyncratic shocks significantly influence vulnerability to poverty. Moreover, household livestock holding and crop diversification are found to be important variables in examining the determinants of rural household vulnerability to poverty. The results suggest that since poverty and vulnerability to poverty are different signs of the same coin, policies directed towards poverty reduction need to take into account not only the current poor but also the vulnerability of current non-poor households.