Drivers of Rural Income Diversification in Developing Countries: Case Study of Burundi

Abstract

The significance of rural income generation is obvious for rural well-being enhancement and rural development in particular and widely national development. The research carried on income pattern analysis enabling to detect the ways to achieve the rural income generation enhancement and so far, the rural development and rural well-being improvement. The discussions about income diversification aim have mainly been divided on one hand in income maximization household objective by increasing output, on the other hand, risk and seasonality of income management. Nevertheless, in all cases, income diversification has been seen as an income increasing factor of income, poverty reduction, and well-being enhancement. The study findings shows that The income level is quite different by sources of income of household, a high income level is achieved in beekeeping at level of 5134.04 thousand BIF, but only 5% of households are involved in beekeeping, whereas the lowest income average is realized in livestock selling, 12.88 thousand BIF and 83% of households benefit from the income of livestock selling. The income from agriculture is also low, it is 112.1 thousand BIF and 100% of the 2,560 households surveyed are involved in agricultural income generation. It is also shown that there is a high share of agricultural income in the total rural income, 67% of rural income is from agriculture. The income diversification level was calculated by using the Berry index. The average Berry index of 0.06 shows a low-income diversification level in the rural households of Burundi. The analysis of income diversification by considering the household income diversification index has proven a higher income for household that their income sources are diversified. The household average income for the household with sources of income diversified is 2.7 times higher than those with one source. The analysis of determinants of income diversification participation realized using probit model has shown that household income, agricultural household landholding, the age of household head, belonging to agricultural producers’ organization, reading skills at least of the national language, and access to market positively induce the income diversification participation, while female household headed status and the non-governmental organizations interventions negatively impact the income diversification participation. The intensity of income diversification analysis done by Tobit model shows that income diversification intensity is positively influenced by household income level, producers’ organization participation, access to market, age of household head and negatively affected by the female household headed status, and non-governmental organizations interventions. Based on the findings of the study, the following recommendations and policy implications are possible to improve the rural well-being and poverty reduction by increasing rural income through income diversification facilitation. The research findings showed that rural income diversification is positively related to market access. The policy aiming at rural income enhancement by increasing rural income source diversification might take into consideration the increasing availability of the market and linkages of rural households to the market by any means. The increase in the market orientation of the rural household might be achieved by increasing the availability of the market information system. Policy making might focus on increasing factors that increase the market orientation decisions of rural household by the increase of the rural market place, making market information available and enhancing the transport means of rural products. The policy targeting rural income enhancement and sources of diversification should be achieved by reducing the vulnerability of young farmers and households headed by females by supporting rural young farmers and female farmers. The increasing economic empowerment of young farmers and female headed households should be promoted. The policy makers should also focus on increasing education skills at least the reading skills of the national language of rural farmers since reading skills have been proven to have a positive influence on rural income source diversification. The adult literacy programs might continue and try to reach the majority of rural uneducated farmers.