This document summarizes preliminary findings from a study on the effectiveness of rural income diversification program supports in Ethiopia. Key findings from descriptive statistics include: 1) Rural households engage in a variety of on-farm and off-farm income generating activities; 2) Participation in program supports like consultation meetings, business plans and credit access is high, though input market linkage is lower; 3) Participants generally find the supports relevant. Econometric analysis estimates the impact of different supports on performance measures for various income pathways, finding consultation meetings and credit amount significantly impact some outcomes, while results vary across pathways.
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Effectiveness of HABP program supports in Ethiopia: A cross sectional Study
1. IFPRI
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Effectiveness of Rural Income
Diversification Program
Supports in Ethiopia: A Cross
Sectional Study
Preliminary Findings
Dereje Getu and Getaw Tadesse
September 26, 2016
2. Outline
Introduction
Objectives and Research Questions
Data and descriptive statistics
Estimation approach
Estimation results and Discussion
Conclusion
3. Int: Why for Income Diversification
Poverty reduction in Africa is best achieved if
the burden on agriculture is somehow lifted
through diversified employment both in rural
and urban areas.
Generally, diverse livelihoods are less
vulnerable to shocks than undiversified ones
(Ellis, 2000)
Lifting the burden from agriculture
»moving up ??
»moving out ??
4. Opportunities for rural income diversification In Africa
Expansion of rural infrastructure
» Transaction cost
» Business communication
Education
Economic Growth
Agr Productivity Growth
DD for Non agr services
5. Limiting factors for Income diversification in Africa
Limited business literacy
Capital or credit shortage
Cultural resistance
Risk aversion
Asymmetries in output market
Underdeveloped input supply market
Rigid land policy
6. HABP for Income Diversification
Launched in 2010
Rural incomes are less diversified
Self reliance and graduation from PSNP
How RIDS shall be guided and targeted
A series of Supports
Consultation
meeting
Business
Plan
Preparation
Credit
Access
Technical and
Commercial
Support
7. Objectives of the study
G O: to measure the effectiveness of HABP
program support for RIGA’s Success
How diversified are RIG pathways?
To what extent the program supports are
implemented?
How the supports are perceived by the
beneficiaries?
Which supports are effective
Which supports for Which IGA pathways
8. Data and descriptive statistics
Structured questionnaire
» 4 regions
» 8 Woredas
» 40 kebeles
» 600 HHs
» All HABP beneficiaries
Multi stage Sampling
Both descriptive and econometric analysis were
employed
9. Measuring Success / Performance in Rural IGA
• No profit
• No Sales
• Discontinued
Failed HHs
• made profit
• discontinuedRisk coping HHs
• Active
• No sale
• No profit
Struggling HHS
• Have sale
• Active
• No profit
Reviving HHs
• Have no sale
• Active
• Made Profit
Declining HHs
• Made profit
• Current saleSuccessful HHs
• Annual sales
• Profitability and
• Sustainability
10. Table 1. Diversification of RIGAs in rural Ethiopia
Rural business pathways Tigray Amhara Oromiya SNNP Total
Type of IGAs per Kebele 8.5 6.1 5 2.6 5.6
Number households per
Kebele(N)
556.5 263.6 26.4 25.4 218
Beef 0.04 0.12 0.33 0.13 0.08
Dairy 0.15 0.07 0.06 0.16 0.12
Small ruminant 0.38 0.76 0.39 - 0.49
Poultry 0.15 0.01 - - 0.10
Beekeeping 0.03 - - - 0.02
Irrigation/crop 0.11 - 0.08 0.22 0.08
Petty trade 0.12 0.04 0.14 0.12 0.10
Manufacturing 0.01 0.01 - - 0.01
Rural service 0.00 0.01 - 0.37 0.01
Resource extraction/use 0.01 - - - 0.01
On-farm 0.86 0.95 0.86 0.51 0.88
Off-farm 0.14 0.05 0.14 0.49 0.12
11. Table 2: Participation of HHs to HABP Program Support
Program supports Dairy
Farming
Small
Ruminants
Crop
Production
Beef
fattening
Off farm Total
Proportion
participated in
consultation meeting
91.18 82.11 92.68 88.37 93.02 87.96
Business plan
prepared
94.12 82.63 90.24 94.77 87.21 89.13
Proportion received
training
72.06 63.16 80.49 72.09 77.91 71.24
Proportion received
advice
91.18 85.26 90.24 85.47 86.05 86.79
Proportion took loan 98.53 100.00 100.00 100.00 100.00 99.83
Input market linkage
created by HABP
26.47 17.37 50.00 9.30 2.33 18.39
Average loan taken
(000)
5.704478 4.713889 6.552122 4.45407 5.396326 5.101
Number of HHs 68 190 82 172 86 599
12. Table 3 : Participants perception to the relevance of HABP program supports
Program supports
perception
Dairy
Farming
Small
Ruminant
s
Crop
Productio
n
Beef
fattening
Off farm Total
Proportion responded
the plan as relevant
90.63 94.90 94.59 96.00 95.09 94.56
Percentage responded
training as relevant
100.00 95.83 98.48 95.97 94.03 96.48
Percentage responded
advice as relevant
98.39 96.91 97.30 98.64 98.65 97.88
Proportion responded
the loan as sufficient
58.21 65.26 40.24 29.65 43.02 47.57
Number of HHs 68 190 82 172 86 599
13. Table 4: Performance of IGAs
Income generation
pathways
Average
size of
investment
in 000
Proportion
households
generated
profit
Average
total
profit
Average
rate of
return
Averag
e per
capita
sales
% of
functiona
l IGAs
Dairy 8639 73.53 5097 .732 .672 39.71
Small ruminant 6493 86.84 5376 1.03 .739 40.00
Crop Production 11103 90.24 17639 2.616 2.021 71.95
Beef Fattening 7424 75.58 5180 .930 .889 34.88
Off-farm 8469 89.53 6035 .987 2.171 74.42
Total 7921 82.94 7052 1.178 1.156 47.83
14. Table 5: Over all Performance of IGA
Performing IGA Freq Percent
Successful 262 43.74
Un successful IGAs 337 56.26
15. Estimation approach
We have employed different regression models
» Simple linear regression
» Robust regression (rreg)
» LPM
Functionality, percapita sales, rate of return and
performance of IGA across each IGA
Functionality, per capita sales, rate of return and
performance of IGA for off farm and on farm
comparison
Functionality, percapita sales, rate of return and
performance of IGA of the full model
» Panel Data
16. Cot’d
Program Support Variables
» Participation to Consultation Meeting
» Business Plan preparation
» Access to Credit
» IGA training
» Input market linkage
» IGA advice
Controlled variables
» Social Capital
» Human Capital
» Market and Infrastructure access
25. Estimation Result 9 : Over all performance of IGAs
VARIABLES Probit xtProbit
consmeeting -0.130 -0.236
(0.184) (0.226)
Business_Plan -0.129 -0.0651
(0.202) (0.323)
IGA_training 0.603*** 0.566***
(0.143) (0.148)
IGA_adivice 0.255 0.255*
(0.183) (0.141)
input_marketlinkage 0.164 0.174
(0.149) (0.182)
lnCredit_amout -0.0902 -0.0777
(0.118) (0.166)
Observations 586 586
Number of IGA_5 5
Robust standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
26. Conclusion
The findings of the different regression outputs show that the effectiveness
of program supports varies across type of IGAs,
C-1: Training specific to an IGA is effective program support to both on-
farm and off-farm activities
C-2: while frequent technical advice positively contributes to the success of
on-farm IGAs , it adversely affects success of off-farm IGAs
C-3:Market linkage support significantly increases the probability of
success in rural income diversification specially for on-farm activities
C-4: While credit amount has no relevance for off-farm IGA success, it has
an adverse effect for on-farm IGAs
Business plan has no significant effect on all IGA’s success.
C-4 : Consultation meeting has shown an adverse impact for IGA’s Success
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