Effect of livelihood diversification on rural households’ poverty reduction in Central Zone of Tigray regional state, Ethiopia

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Abstract Rural livelihood diversification studies previously conducted in Ethiopia lack linkages with poverty. This study was aimed at investigating the effect of livelihood diversification on rural households’ poverty reduction. The result of this study revealed that 49.80%, 40.41% and 9.80% of the rural households’ income was generated from: agriculture, both agricultural & non-agricultural and non-agricultural income sources respectively. The mean rural livelihood diversification index (SDI) was 0.38. This low diversification index was a source of vulnerability to the adverse effects of climate changes. The absolute poverty line was calculated 6067.75 Birr/year per adult equivalents. Hence, 39.58% of female-headed households, 30.96% male-headed households and 32.65% of the population were poor. The logistic marginal effect analysis indicated that as the households’ SDI increased by one unit, the probability of being poor was reduced by 0.282 (p<0.01%). To reduce rural households' poverty, diversification of rural livelihood beyond agricultural income sources should be promoted through skill training, saving mobilization, improving access to credit, market information, and rural transport facility. Moreover, an appropriate institutional arrangement should be made for promoting a rural non-farm economy that can be possible by capacitating and extending of the small and micro-enterprises development agency into rural areas.

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