Incidence of Poverty in Rural Areas of Uganda: Do Livelihood Strategies Matter?

Abstract

This study adopts an asset based approach to conceptualize the livelihood strategies pursued in rural Uganda in particular, Masindi and Masaka districts respectively. The study uses household survey data from 2005 and 2008 surveys to compare the incidence, inequality and intensity of poverty among different livelihood strategy groups.  A cluster analysis technique is used to classify household livelihood activities into distinct livelihood strategies and the Three I’s of Poverty (TIP) curves are used to investigate the incidence, inequality and intensity dimensions of poverty across different livelihood strategy groups and check for poverty dominance. A random effect multinomial logit model is used to establish which factors constrain rural households from participating in high return livelihood strategies. The results indicate that there are five distinct livelihood strategies that are pursued in the study area which vary significantly in terms of their returns and the welfare rankings. The findings further reveal that household’s participation in low return strategies is a result of not only the fewer assets at their disposal but also household’s restricted capacity to use its available assets due to limited or lack of incentives in the economic system.

Keywords: Livelihood strategy; welfare ranking; poverty; cluster analysis