Impact of Cooperatives on Poverty Reduction: The Case of Licha Hadiya Farmers’ Cooperative Union in Lemo Woreda; Hadiya Zone, SNNPR, Ethiopia

Abstract

Prevalence of poverty has been a common phenomenon in Ethiopia. The prevailing operation of the conventional financial institutions of Ethiopia is inefficient in providing multi services to the rural household. The challenge facing Ethiopia today is to reduce poverty since its’ multi-dimensional characteristics among rural household. One of the economic policies of the country considers support cooperative societies in order to help rural household within its multi-dimension activities.  Study on poverty reduction impact of Licha Hadiya farmers’ cooperative union on rural household in the cause Lemo district. Primary data in this study was collected through structured questionnaire based on 75 members’ respondents and 95 non-members respondents from purposively selected 4 kebeles in Lemo woreda. Total 170 household were selected by using two stage sampling method. Secondary data were gathered from Licha farmers’ cooperative union, primary cooperative of kebele and from different organization those Hadiya zone cooperative and marketing sectors, Lemo woreda cooperative and marketing sectors. Both are quantitative and qualitative in nature. Data analysis is carried out with the help of various descriptive and econometric techniques i.e logit model. Propensity score matching method was employed to achieve the objective of the study that to assess poverty reduction indicators outcome between cooperative members and non-members. Based on PSM estimation results of study were cooperative have significant impact on rural house hold poverty reduction in most above listed impact indicator outcome variable was significantly different among members and nonmembers of cooperative. In this case cooperative have positive and statistically significant impact on participant households those income from crop sells, durable home assets, saving and house hold food expenditure. In view of such evidences, further promotion, deepening, strengthen and supporting of agricultural cooperative and its service recommended.

Keywords: Cooperative, Impact evaluation, Poverty, propensity score match.