IMPACT OF BUSINESS DEVELOPMENT AND DEMAND DRIVEN EXTENSION SERVICES ON HOUSEHOLD INCOME AND FOOD SECURITY: THE CASE OF MESKAN DISTRICT, SOUTHERN ETHIOPIA

Abstract

The aim of the study is to assess the impact of the Business Development Support (BDS) and Demand Driven Extension Services (DDES) on the chronically food insecure households income and food security. These services are run by the Household Asset building Program (HABP), which is the new component of the National Food Security Program being implemented by the Government of Ethiopia. The study was undertaken in Meskan District, Southern Ethiopia in four selected Kebeles within the same pilot district having similar socioeconomic and agro-ecological conditions. The study has adopted purposive sampling procedure for the selection of the sample households and a total of 180 sample households were selected based on probability proportionate to sample size. Accordingly, both primary and secondary data were collected and analyzed using various data analysis statistical and econometric tools i.e. descriptive and multiple regression models. However, to estimate the causal treatment effects, the study has used the most popular method of causal inference known as Propensity Score Matching (PSM). Finally, the regression analysis results indicate that the independent variables business advisory services, development agent close coaching, savings, size of loan, and number of times loan availed have significant effect on household income increase. The study result has also indicated that households’ consumption expenditure per adult equivalent and productive assets value were found to be generally positive and statistically significant, implying that the program has improved household incomes and food security. However, as evidenced from the statistical analysis study result, the impact of the program services on income sources diversification are found to be generally insignificant and the main reasons for the low rural income source diversification in to off farm and new rural business are reported to be: poor demand creation and input facilitation services of the program which in turn is believed to be resulted from the lack of institutionalized off farm and new business development support services at a grass root level. Thus, in view of the prevailing land degradation and arable land scarcity challenges of the chronically food insecure areas, it seems vital for policy makers to focus on the potential contribution of the rural off farm businesses and address the grass root level institutional and private sector service providers support gaps of the non farm sector.