The Issue and Determinants of Rural Poverty in Ethiopia

Abstract

Poverty reduction is the primary goal of the governments, nongovernmental organizations and donors operating in Ethiopia; it is an essential first step to determine the true extent of poverty and where it is most severe. Toward this effort and provide statistical basis, a national HICE has been conducted by Ethiopian CSA since 1995/6. This study uses the 2010/11 HICE data with the aim identifying poor and assessing the determinants of rural households. Rather than looking at the association between poverty and various household characteristics on a one-to-one basis, which often oversimplifies complex relationships and can lead to erroneous conclusions, this study uses binary logit regression model to analyze the determinants of rural poverty econometrically. Based on the 2010/11 national poverty, it appears that 30.7% of the rural population at the time of the survey lived in a state of absolute poverty with 0.11 and 0.111 poverty depth and severity respectively. In terms of regional disparity, the incidence of poverty is the highest in SNNP with 38% and the lowest (26%) poverty incidence in Tigray. The second highest rural poverty is in Amhara region with 33%, 0.22 and 0.11 poverty incidence, depth and severity respectively. The econometric model revealed household size, heads age, sex, literacy status, dependency ratio, low-land agro-ecology, engagement in productive activities and involvement in income sources other than agriculture as the determinants of poverty in rural Ethiopia. Moreover, the model demonstrated the variation of statistical significance of various parameter estimates both across variables within a region and across regions. The policy implication of this study therefore, focusing not only on important rural dimensions of poverty but also the need to extend and refine into a more disaggregated regional level for the alleviation of rural poverty in Ethiopia.