Impact of Food Security Package Loan on Food Insecure Households’ Income and Asset Creation: The Case of West Belesa District, North Gondar Zone, Ethiopia

Abstract

Food security package loan has been found to be a critical instrument in order to improve the income of food insecure households. The main purpose of the program was to enhance the food insecure livelihood status through accessing of micro credit. Therefore, the objective of this study was to analyze the impact of Food Security Package Loan (FSPL) of micro credit service on the income and livelihood of food insecure households residing in West Belesa District. The study applied an econometric model of propensity score matching (PSM) to analyze the impact of FSPL on the income and livelihood of households based on data collected from a sample of 254 rural households (157 were food insecure and 97 food secure). The results of the econometric analysis display that FSPL participation significantly affects positively household’s on-farm and off-farm income, employment, animal hold, saving and children participation in formal school. However, the food consumption level and types of house owned show no difference. This suggests that the stakeholders (government authorities, NGOs, aid agencies, etc) that deemed micro finance as a means to poverty reduction should take into account the implications of these indicator variables for better promotion of micro finance specifically FSPL and devise an intervention mechanism to further expand its impact towards improving food consumption and household asset building.