SOCIAL CAPITAL AND RURAL HOUSEHOLDS’ LIVELIHOOD STRATEGIES IN NORTH SHEWA ZONE OF OROMIA REGIONAL STATE, ETHIOPIA

Abstract

Social capital is one of the most important assets in livelihoods, and the levels of social capital have effects on rural household’s livelihood strategies. The purpose of this study was identifying the determinants of social capital and analyzing the effects of social capital and livelihood diversification strategies on rural households’ income and food security. All the necessary information from primary and secondary data sources were collected. Primary data was collected from 400 sample respondents in the 2022 production year. Multinomial Logit Model (MLM) results indicated that the probability of diversifying the livelihood strategies is significantly influenced by; family size, education level of head of household, gender, farm income, economic active members, cooperative distance, cultivated land area, credit access, livestock holding, access to media information, access to training, agro ecology and all-weather road distance. Similarly, looking into the estimated coefficients, the results indicated that probability of being in the different extents of social organization is significantly influenced by; gender, agro-ecology, farm experience, media, livestock holding, farmer training, farm income, and weather road distance. Generalized ordered logit model result shows that level of community trust is significantly influenced by; media, agro-ecology, adult equivalent, farm size, credit, and farm income. Impact evaluations result indicated that participation of farming with non-farming livelihood diversification strategies increases farm household total income by 44% over that of only farming dependent households. Likewise, participation in farming with off farming and farming with both non-farming and off farming livelihood diversification strategies increases households' total farm income by 76 and 82%, respectively over non-diversified households, and this difference is statistically significant at a 1% probability level. Participation of farming with non-farming livelihood diversification strategies increases farm household food security status by 25% while, participation in farming with off farming and farming with both non-farming and off farming livelihood diversification strategies increases households' food security status by 43 and 37%, respectively over non-diversified households at a 1% probability level. Furthermore, estimated result shows that high and very high level of participation in the social organization of the sample households increases the farm households total farm income by 46 and 65%, respectively over low level of participant households (low level of social capital) at a 1% probability level. Similarly, high and very high-level participation in the local organization of the sample households increases the farm households’ food security status by 33 and 38%, respectively over low-level participant households, and this difference is statistically significant at a 1% probability level. However, having high level of social trust in the community significantly increases households' total farm income by 66% over low trusted farm households at a 1% probability level. Similarly, having medium and high level of social trust in the community significantly increases households' food security status by 23 and 46% over low trusted farm households at a 1% probability level. Lastly, the impact xvi evaluation of mean comparison results shows that, very high level of participation in the local social organization increases the farm household’s livelihood diversification strategies by 40% over that of low participant households and significant at 5% statistical levels. Likewise, having high levels of social trust in the community increases the farm household’s livelihood diversification strategies by 59% over that of low trusted household and significant at 5% statistical levels. Therefore, the result of this study would be expected to significantly contribute as policy and strategic inputs for policymakers in designing rural livelihood improvement policies and to the beneficiary in enhancing their welfare and living standard.