A Case Study of Non - Farm Rural Livelihood Diversification in Lume Woreda, Oromiya Regional State.

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Addis Ababa University


The objective of this thesis was to examine, on a case study basis, dominant patterns of non-farm rural di versifi cation and identify and analyze the key constraints and opportuniti es as well as the determinants and principal motivations behind non-farm di versi fication. A blend of qualitative and quantitative methods was used where structured household questionnaire survey, quali tative investigation and part icipatory assessment was combined with a review of previous researches on the subj ect at local and developing countries level. Generally, the study showed that rural households in the study Kebeles have divers ified Jl1comes, engage in diversified activities, and non-farm li vel ihood diversification is important. The results indicated that diversification into 10w-entry-batTi er, low-retum actIVItIes predominate. Diversification into high value, high return activities are virtually absent. Micro-enterprise based di versification, while generally limited, is dominated by pettytrade and household-level small-scale activities. Manufacturing comprises a negli gib le part of all non-farm activities. Lack of access to su ffi cient fixed and working capital is a maj or constraint to undertake high-return non-farm activities. Poor infrastructure, especially lack of electricity, is also found to constrain diversification. Diversification among the ' farm-ri ch' was found to be very uncommon. The greatest extent of diversification was amongst the ' poor' and 'medium ' inhabitants. Although tenural security is hard ly a problem, diversification in the study sites is to a great ex tent associated with negative circumstances related to landl essness, especially among the youth. The results also indicated that diversification is significantly influenced by household head education and age. Other household characteristics, though positively or negatively associated with diversification, are not found to sign ificantly influence diversification. This study has also confil1l1ed the empirical findings of many other studies that an increase in income diversification leads to a rise in total income. The impact of proximity to urban center on diversification is fou nd to be negative. lnstitutional ownership of the non-fatm economy lacks wh ile proclamations and regulations on land use and investment gloss over non-faml activities. Di versification among the poor is enhanced by access to natural reso urces as evidenced by sign ificant participation of unemployed and landless persons in river sand and stone quatrying as well as pottery in the study sites.



Farm Rural Livelihood