Income Diversification and its Determinants among Households in Eastern Cape Province, South Africa

Income diversification has been globally identified as a channel for household in reducing vulnerability to shocks, improve standard of living and reduce government fiscal burden. In poverty stricken Eastern Cape Province, the pattern and potential of income diversification for welfare improvement have not been explored. This study aims to examine the pattern of income diversification and investigate the factors that influence income diversification among households in the province. Utilizing the General Household Survey 2014, having 3033 households sampled from the province, the study employed descriptive statistics and Poisson regression model to examine determinants of income diversification. The result revealed that households in the Province are not diversified. It revealed that apart from transfers’, majority (51.5 percent) of households in the province obtain income from only one source. Male headed households tend to have more income sources than the female headed households. Regression result indicates age of household head, population group of the head, education attainment of the head, engagement in agriculture, recipient of remittance and number of economic active member of the household were found to be statistically significant in influencing livelihood diversification. Strategies that can help household in the province diversify their income base need to be promoted, continual engagement in agriculture need to be further encouraged, and individuals and households need to be more informed on government entrepreneurship initiatives like the Broad Black Base Economic Empowerment.