Investigation of Role of Microcredit in Enhancing Food Security of Rural Households in Ethiopia: The Case of Eastern Zone of Tigray

The aim of this paper is to investigate the role of micro credit services, particularly DECSIs, in enhancing income diversification and food security of rural households in Ethiopia in the case of Eastern Zone of Tigray. Three woredas (kilitawulalo, Saesi Tsadamba and Atsbi Wonberta) are taken as a target area and a sample of 80, 81 and 76 clients of DECSI, from the respective woredas, were taken randomly as a representative units. Tobit and Logit regression models were employed to estimate income diversification and food security models, respectively. The result shows that age of the household is non-linearly related with income diversification and food security. The additional household labor, number of livestock and size of farm land does matter to diversify the household sources of income and to enhance food security. However, educational status and marital condition of household head have no any contribution for diversifying income sources as well as insignificant to affect food security. Micro credit services have a significant positive impact on the diversification of income. It is also evidenced that microcredit is more powerful in enhancing food security of households through diversification of income sources. The current emphasis on micro credit is not misplaced and a continued innovation and improvement of rural micro credit schemes help to promote diversified income sources and hence reduce poverty.