Temporal and spatial variation of income diversification strategies among rural households in South Africa

Abstract

Understanding temporal and spatial variations of income diversification is important for developing policies aimed at reducing rural poverty. This study applied Simpson Index of Diversity (SID) to panel data from National Income Dynamics Study from 2008 to 2017 to investigate these variations across four provinces of South Africa. Findings point to the importance of disaggregating when analysing household income diversification. Limpopo, KwaZulu-Natal and North West had higher SID than the aggregated index, while Eastern Cape had lower degree of diversification. Contrary to other studies, this study found provinces with the highest and lowest income not having the highest degree of diversification. Over time, households diversified more, with SID increasing from 0.16–0.23 by 2017. The study recommends supporting households diversify their income. Specifically, the study recommends support for agriculture in KwaZulu-Natal, Eastern Cape and Limpopo, while in North West, provincial government should promote business ventures to improve household resilience.