Contribution of non-farm income generating activities to poverty reduction in Kibaha district, Tanzania

Thesis

A study was conducted in Kibaha district to assess the contribution of non-farm income generating activities to total household income. The study idea emanated from the recognition that non-farm income sources form an important domain of the production activities undertaken by not only the majority of peri-urban and urban households but also most rural households in developing countries. Despite their importance, little is known about their contribution to total household income and poverty alleviation. There is limited and highly isolated information on whether non-farm activities arc inequality­ decreasing or inequality increasing sources of income not only in Tanzania but also in other developing countries. Based on this recognition, it was deemed important that a study be conducted to assess the contribution of non-farm income to total household income and inequality as well as poverty reduction. The study commenced by an identification of the main sources of income and common problems facing households in Kibaha district. It was hypothesized that: i) non-farm income generating activities contribute significantly to the total household income, and ii) non-farm income activities are inequality-decreasing sources of income. The study identified the main sources of household income as constituting salary by government and parastatal employees, shop/kiosk ownership and trading of agricultural products. The major problems identified include inadequate initial capital for investment (poor access to credits) and lack of entrepreneurship skills. Analysis by t-test showed that non-farm income sources contributed significantly to the total household income. The decomposition of income by Gini coefficient and Coefficient of variation indicated to constitute inequality-increasing sources of income. Based on the findings, it was recommended that issues related to poor access to credits, lack of entrepreneurship skills and poor marketing need to be addressed. Also, formulation of production groups or associations is necessary for improving the bargaining powers of those engaged in non-farm income generating activities.

The Permanent Secretary of the Ministry of Agriculture Food and Cooperatives