Non-farm Income Diversification in Rural Ghana: Patterns and Determinants

Abstract

Evidence abounds in the rural livelihoods literature that rural households do not only receive a significant proportion of their incomes from non-farm sources, but also it is a significant source of employment for rural folks. This paper examines the pattern and determinants of non-farm income diversification in rural Ghana. Results show that off-farm income constituted 43 percent of rural household income in 2005/06. Female-headed households tend to have larger off-farm income shares compared to male-headed households. Non-farm income shares followed the same gender pattern albeit less pronounced. Unlike in Latin America and Asia, in rural Ghana, non-farm self-employment income is more important than non-farm wage-employment income. Regression results show that the gender composition of households, age, education, and access to credit, electricity and markets are important determinants of multiple non-farm activities and non-farm income. The findings call for strategies that can help rural households maximize the benefits from income diversification.