Determinants of Poverty and their Policy Implications in Rural Areas of Jimma Zone: The Case of Woredas Around Gilgel Gibe Hydroelectric Dam

Abstract

The study analyzes the determinants of poverty and their implications in rural areas of Ethiopia. A survey of three hundred forty eight (348) household heads was undertaken in four woredas around Gilgel Gibe Hydroelectric Dam, Ethiopia, in the year 2015. Binary Logistic regression is applied to find out the main factors responsible for poverty in the study area. The result from regression shows that distance from local market is positively and significantly related to the probability of being in poverty. On the other hand, work experience of household head, livestock possession, and access to market information considerably decrease households’ chance of being in poverty. The study finally suggests that in order to alleviate the prevailing poverty situation due attention should be given to the improvement and strengthening of access to information and market to rural residents. Consideration should also be given to improve the ownership of productive resources. In this regard, the role of microcredit and finance institutions is pivotal.

Keywords: Poverty, Determinants, Binary Logistic Regression.