Abstract:
Income generating activity plays a decisive role for the reduction of poverty, food insecurity and
to improve the welfare of rural communities. However, this study attempts to investigate
determinants of income generating activities of rural households in Ilu Gelan Woreda, west
Shewa, Oromia, Ethiopia. It helps to identify factors which are essential for the design of policies
promoting alternative income generating activity strategies. The study utilized both primary and
secondary data which are qualitative and quantitative in their nature. Through multistage
sampling procedure, a total of 188 households were selected from the randomly selected five
kebeles of Ilu Gelan Woreda. Data were collected using interview schedule, focus group
discussions and field observations. The collected data were analyzed quantitatively and
qualitatively. Descriptive and inferential statistics along with econometric model which is
multinomial logit model have been employed to analyze the data.
The econometric analysis (Multinomial logit model) result revealed that land holding size,
educational status, livestock holding, sex, age, market distance, credit access, annual income,
access to road, family sizes, household status, and etc. were the major determinants of income
generating activities.
Access to physical and human capital has a significant influence on total household income. The
area owned the value of other assets possessed, as well as the number of livestock and family
laborers positively influence household income. The possession of land also has a strong positive
influence on the participation in crop production, whereas the possession of irrigated land
develops to meet the food security enhancement and economic development. Diversification out
of the agricultural sector is positively influenced by the wealth of the household, education,
access to tarmac roads and participation in formal credit markets. The number of livestock
owned and the access to social capital have a positive effect on the overall degree of
diversification. However, poor infrastructural development, lack of working capital, absence of
technical support, inadequate skill training and lack of awareness are constraints to income
generating activities and negatively influenced income diversification of the study area.
The study concludes that agricultural sector alone cannot be relied upon as the core activity for
rural households and as a means of reducing poverty, achieving food security and improving
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income in the study area. Thus, a comprehensive development plan that enhances successful
income growth and diversification is found to be imperative and most urgent. Policies and
actions directed towards improving income of the rural household communities should focus on
expanding rural infrastructures, enhancing awareness creation activities and cooperation of
stakeholders to bring sustainable income generations in the study area.
