Determinants of Livelihood Diversification: The Case of Kembata Tambaro Zone, Southern Ethiopia

Population density has led to land scarcity in the rural farm households. This has adversely affected livelihood activities in agriculture leading to low income. For survival and sustenance, people tend to rely on multiple choices of non-farm activities to improve household’s income and intensify their agricultural production on small land. However, livelihood diversification is determined by different factors in the study area. Thus, the aim of this study is to identify the determinants of livelihood diversification strategies at household level. The data used for this study were collected from nine villages of Kembata Tambaro Zone through personal interview using structured questionnaire. The data were obtained from 252 sample households who were selected by the purposive and stratified random sampling techniques. The finding of the survey result indicates that ninety seven percent of the respondents in the study area diversified in to non-farm activities. The Composite Entropy Index has been used for measuring livelihood diversification. The livelihood diversification index of 0.260 showed that majority of the household heads undertook one form of livelihood diversification strategies or another. Multiple regression model was applied to investigate the determinant factors influencing the households’ level of livelihood diversification. In this regard, the econometric analysis demonstrated that out of the total 15 variables included in the model, only 7 variables including age, education, number of non-farm activities, market distance, number of livestock, credit cost and farm size are found to be the significant determinants. The results of this study suggested that there is a need to develop a number of strategies for the smallholders to facilitate successful livelihood diversification. This includes the development of rural infrastructure in terms of road connectivity, market and credit facility. Hence, a comprehensive development plan including both agricultural intensification and non/off-farm diversification should be strengthened. Keywords: Livelihood diversification, Composite Entropy Index, multiple regression model, determinants of livelihood diversification, rural farm households, land scarcity, Ethiopia