Nexus between Household Asset Base and Agrarian Livelihood Strategies’ Diversification: Using Multidimensional Approach

Diversification of livelihoods is a commonly applied strategy for coping with economic and environmental shocks and instrumental in poverty reduction. The purpose of this study was to identify farm household’s livelihood asset base and its effect on the extent of livelihood diversification among smallholder farmers of Kembata Tembaro zone, southern Ethiopia. The study employed a cross-sectional survey design where the mixes of qualitative and quantitative data were gathered using participatory rural appraisal and questionnaire as the main data collection tools. Employing the data produced from household surveys, we developed a composite household livelihood asset index incorporating five components and 17 indicators and measured the effect of asset dimensions on livelihood diversification status. The multivariate analysis showed that four out of the five household asset latent dimensions: social capital, human capital, physical facilities, and agricultural resource endowments were significantly predicting the farmers’ livelihood diversification status. Thus, to enhance and contribute to the overall agrarian welfare, livelihood diversification strategies have to be supported by the appropriate household asset inputs.