In Malawi, tobacco production has been increasing at a decreasing rate coupled with many agroecological and monetary challenges. This trend has negatively affected the country and the farmers who depend on tobacco for the welfare of their citizenry and among themselves, respectively. Specifically, the welfare of the tobacco farmers has been decreasing and the income distribution among and between them has been increasing. Literature on the notion of diversification into other economic activities among the tobacco farmers in Malawi is limited. Thus, this study assessed the effect of diversification into other economic activities on reducing income inequality among tobacco farmers. The study answered the following two questions: (1) What are the determinants of economic diversification among tobacco farmers? (2) Does diversifying into other economic activities reduce income inequality among tobacco farmers? The study used the Simpson Diversity Index (SID) to define the farmers’ diversification and Gini Coefficient to measure income inequality. The results of the study indicate that access to extension, access to credit, soil quality, land ownership, total livestock unit and owning a cell phone significantly influenced the farmers to diversify into other economic activities. Again, the reduction in the Gini coefficient before and after diversification indicates that diversification has an effect on reducing income inequality. The study calls for policy interventions related to increasing farmers’ diversification and reducing income inequality.recommends increased access to credit and extension services to the farmers. Again, the study recommends land reforms where farmers are able to own large shares of land so that they can pool different income-generating activities for the betterment of their welfare.

Keywords: Simpson Diversity Index, diversification, Income inequality, Tobacco