Beside its greatest contribution to Ethiopian economy, agricultural sector has been highly affected by climate change. Consequently, masses of people have been left food insecure every year. As an option, rural households have been participating in diversifying their livelihood sources. The present study aims to identify the major factors affecting rural household’s participation in livelihood diversification activities in Didessa and Bedele woredas. Multinomial Logit model was employed to analyse the data collected through structured questionnaires from 186 sample households of 6 randomly selected rural kebeles. The model result confirms that factors such as marital status, level of education, land owned, livestock holding and access to credit have significant and positive influence on the probability of participating in non-agricultural activities while age of household head and family size have significant and negative influences. The findings imply that rural development policies should consider off-farm and non-farm livelihood sources, in addition to agriculture, so as to boost the income of farming households which in turn will assist them to improve their livelihood.
Key word: Livelihood, diversification, determinants, Multinomial Logit, Southwest Ethiopia.
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