Effect of Income Diversification Financial Resilience among Pastoralists in Borana Community, Southern Ethiopia

Abstract

Purpose: To assess the Effect of Income Diversification Financial Resilience among Pastoralists in Borana Community, Southern Ethiopia Methodology: Using a descriptive research design, a sample of 394 respondents was selected via simple random sampling, based on Yamane’s formula. Data were collected through structured questionnaires and validated with a pilot study (Cronbach’s alpha ≥ 0.7). SPSS Version 25 facilitated analysis through descriptive statistics and multiple regression, assessing the effects of risk management, income diversification, asset preservation, and economic empowerment on financial resilience. Results were clearly presented in tables. Results: The study found a moderate positive relationship (R = 0.432) between income diversification and financial resilience among Borana pastoralists in Southern Ethiopia. Income diversification explained 18.7% of the variance in financial resilience (R2 = 0.187; adjusted R2 = 0.183). A one-unit increase in diversification led to a 0.507-unit rise in resilience (B = 0.507), with strong statistical significance (t = 4.671, p = 0.000; F = 25.874, p < 0.05). These results confirm income diversification as a key predictor of financial resilience, aligning with prior research highlighting its importance in enhancing pastoralists' adaptive capacity against climate risks. Unique contribution to theory, policy, and practice: This study highlights how income diversification strengthens financial resilience among pastoralist communities in Ethiopia's Borana Zone. Engaging in trade, crop farming, wage labor, and small enterprises enhances adaptive capacity to climatic and economic shocks. It advances resilience theory by showing that diversified income streams are vital for sustainable livelihoods in vulnerable ecosystems. The research urges policymakers and development actors to prioritize livelihood diversification through vocational training, financial literacy, microfinance, and improved market access. Promoting alternative income sources reduces overreliance on livestock, mitigating the impacts of drought and market instability while fostering secure, adaptive rural livelihoods.