Livelihood Impacts of Large-Scale Agricultural Investments Using Empirical Evidence from Shashamane Rural District of Oromia Region, Ethiopia

Abstract

The impact of Large Scale Agricultural Investments (LSAI) on local people’s livelihood improvement has received less attention than it deserves in Ethiopia in general, and the Oromia regional states in particular. The main objective of this study was to analyze the impact of LSAI, which began operations in 2008, on 10,000 hectares of fertile land in the Shashamane rural district of Oromia region, Ethiopia to enhance the quality of life of the local people. A quasi-experimental study design strategy was used to achieve this goal. We obtained primary data from 300 households, comprising 134 treatment homes (households in a community with LSAI) from the Shashamane rural district and 166 control households (households in a community without LSAI) from the Shala district using systematic random sampling. Analysis was undertaken using principal component analysis (PCA) and propensity score matching (PSM). The Sustainable Livelihoods Framework (SLF) was used to examine the theoretical concept with empirical findings. According to the Average Treatment Effect on Treated (ATT) results, the treated households’ natural, human, and financial capital were −0.91, −0.81, and −0.15 less than control families, respectively. Loss of household livelihoods has deepened and exacerbated local poverty. Businesses have not mechanized and controlled these sizable portions of the parcel; instead, peasants have worked on them and exploited the idle parcel. The research suggests that the government’s pro-LSAI investment policy is desirable. However, weak institutional frameworks for protecting local people’s livelihoods as well as LSAI malpractice and the lack of continuous follow-up are causing the LSAI policy to fail. To mitigate the negative impact of LSAI on peasants, it is necessary to consider the local people’s livelihoods, responsive institutions, and accountable ventures.