ST.

MARY’S UNIVERSITY

SCHOOL OF GRADUATE STUDIES

ALOE SOAP VALUE CHAIN INTIATIVE AND ITS EFFECT ON

LIVELIHOOD DIVERSIFICATION STRATEGY: THE CASE OF
PASTORALISTS AND AGROPASTORALISTS OF BORANA,
SOUTHERN ETHIOPIA

BY

TESHOME DEGA DIRBABA

JUNE 2014

ADDIS ABABA, ETHIOPIA

 ALOE SOAP VALUE CHAIN INTIATIVE AND ITS EFFECT ON
LIVELIHOOD DIVERSIFICATION STRATEGY: THE CASE OF
PASTORALISTS AND AGROPASTORALISTS OF BORANA,
SOUTHERN ETHIOPIA

BY
TESHOME DEGA DIRBABA

A THESIS SUBMITTED TO ST. MARY’S UNIVERSITY, SCHOOL

OF GRADUATE STUDIES, INSTITUTE OF AGRICULTURE AND
DEVELOPMENT STUDIES, IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE OF MASTERS OF
AGRICULTURAL ECONOMICS

JUNE 2014
ADDIS ABABA, ETHIOPIA

ii
 BOARD OF EXAMINERS

As member of Board of Examiners of Master’s Thesis Open Defense Examination, we certify

that we have read, evaluated the Thesis prepared by Teshome Dega Dirbaba and examined the
candidate. We recommended that the Thesis be accepted as fulfilling the Thesis requirement
for Degree of Masters in Agricultural Economics.

________________________ __________________
Dean, Graduate Studies Signature

______________________________ _____________________
Advisor Signature

______________________________ _____________________
External Examiner Signature

______________________________ _____________________
Internal Examiner Signature

iii
 DECLARATION

I, the undersigned, declare that this thesis is my original work, prepared under

the guidance of Dr Wondimagenye Chekol. All sources of materials used for

the thesis have been duly acknowledged. I further confirm that the thesis has

not been submitted either in part or in full to any other higher learning institution

for the purpose of earning any degree.

_________________________ ______________________

Name Signature

St. Mary’s University, Addis Ababa June 2014

iv
 ENDORSEMENT

This thesis has been submitted to St. Mary’s University, School of Graduate

Studies for examination with my approval as a University Advisor.

_________________________ ______________________

Advisor Signature

St. Mary’s University, Addis Ababa June 2014

v
 DEDICATION

I dedicated this Thesis manuscript to my sweetest wife Aynalem Amensisa for taking care of
my lovely kids Mirkana, Boka, and Siriyan/Jalane/ during my absence, shouldering all the
responsibilities, for her unreserved love and encouragement.

vi
 ACKNOWLEDGMENT

First and foremost, I express my great thanks to Dr Bekabil Fufa for his unlimited support in
Thesis Research Title formulation and research proposal development. I also would like to
express my deepest thanks to my advisor Dr Wondimagenye Chekol for his unreserved
efforts and academic stimulation for the successful accomplishment of my Thesis Research
Report writing.

My special thanks also go to SOS Sahel Ethiopia country office staff members of all program
and support staffs in general. I am grateful to the Yabello Field Office SOS Sahel Ethiopia
staff members for helping me during my research work. Moreover, I also would like to extend
my special thanks to Borana Zone and Yabello District relevant line departments.

I am particularly grateful to my wife, Aynalem Amensisa; and my kids Mirkana, Boka and
Siriyan for their unreserved moral support, patience, encouragement and responsibility they
took in taking care of me and themselves during my leave of absence.

vii
 LIST OF ABBREVIATIONS

AFD Action for Development

ATT Average Treatment Effect
ASALs Arid and Semi-Arid Lands
BZFED Borana Zone Finance and Economic Development
CC Contingency Coefficient
CBO Community Based Organization
CIA Conditional Independence Assumption
CIDA Canadian International Development Agency
COMESA Common Market for East and Southern Africa
CSA Central Statistical Agency
CITIES Convention on International Trade in Endangered Species
DA Development Agent
DDC Dryland Development Center

DID Double Difference or Difference-In-Differences

EPELP Enhancing Pastoralist Environmental Right and Livelihood Project
FAO Food and Agricultural Organization
FDRE Federal Democratic Republic of Ethiopia
FGD Focus Group Discussion
GDP Gross Domestic Product

GHA Greater Horn of Africa

GTZ German Technical Cooperation
HH Household
IBC Institute of Biodiversity Conservation
IFPRI International Food Policy Research Institute
IIED International Institute for Environment and Development
ILRI International Livestock Research Institute

viii
IPMS Improving Productivity and Market Success
ITDG International Technology Development Group
IUCN The World Conservation Union
KII Key Informant Interview
NEMBA National Environmental Management Biodiversity Act
NGOs Non-Governmental Organizations
NTFPs Non-timber Forest Products
NN Nearest Neighbor
OBFED Oromiya Bearu of Finance and Economic Development
OLS Ordinary Least Squares
PA Pastoral Associations
PPS Probability proportional to size
PSM propensity score matching
PSNP Productive Safety Net Program
SNNPRs Southern Nations Nationalities and People’s Regional State
TLU Tropical Livestock Unit
VIF Variance Inflation Factor
UNDP United nations Development Program
USD United States Dollar

ix
 TABLE OF CONTENTS

BOARD OF EXAMINERS iii

DECLARATION iv

ENDORSEMENT v

DEDICATION vi

ACKNOWLEDGMENT vii

LIST OF ABBREVIATIONS viii

TABLE OF CONTENTS x

LIST OF TABLES xiii

LIST OF TABLES IN THE APPENDIX xv

ABSTRACT xvi

1. INTRODUCTION 2

1.1 Background 2

1.2 Statement of the Problem 3

1.3 Objective of the Study 5

1.4 Significance of the Study 5

1.5 Scope and Limitations of the Study 5

1.6 Organization of the Thesis 6

2. LITERATURE REVIEW 7

2.1 Definition and Basic Concepts 7

2.2. Livelihood Diversifications 8

2.2.1. Pastoral Livelihood Diversification Strategy in Borana 10

2.3. General Description of Aloe Plant Features, Products and Marketing 11

2.3.1 Aloe Plant Products 14

2.3.2. Aloe Plants and their Role in Trade: 15

2.3.3. Aloe Commercial Extracts and Their Uses: 15

2.3.4. Aloe as Horticulture 19

x
 2.3.5. Aloe as Bee Plant: 20

2.3.6 Aloes as Food 20

2.3.7. Aloe as Medicinal Uses 21

2.4. Empirical Studies 22

3. RESEARCH METHODOLOGY 25

3.1 Description of the Programs 25

3.2 Description of the Study Area 26

3.3. Required Type and Source of Data 28

3.4. Sample Design and Size 29

3.5. Methods of Data Collection 29

3.5.1. Primary Source 29

3.5.2. Secondary Data Sources 30

3.6 Data Analysis Method 30

3.6.1. Descriptive Analysis 30

3.6.2. Qualitative Data Analysis 31

3.6.3. Econometric Data Analysis 31

3.6.4. Matching Algorithm Selection 35

3.6.5. Variable Definition and Measurement 40

4. RESULTS AND DISCUSSION 45

4.1. Social, Organizational and Institutional Aspects of Aloe based Livelihoods 45

4.1.1. Aspects of Institutional Networks on Aloe Soap Value Chain Initiatives 47

4.1.2. Aspects of CBOs on Aloe Soap Value Chain Initiatives 47

4.2. Description of Sample Households’ Characteristics 49

4.2.1 Respondents Total Income (TOINC) Estimate per Month 50

4.2.2 Respondents Rank and Perception of the Aloe Soap Making Business 51

4.3. Prospects & Determinant Factors of Aloe based Livelihood Diversification 52

4.4. Econometric Results of Propensity Score Matching 53

4.4.1 Odds Ratio and Households Participation in Aloe Soap Processing 54

4.4.2. Propensity Scores 55

4.4.3. Matching Participant and Comparison Households 58

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 4.4.4. Estimates of Average Treatment Effect on the Treated (ATT) Income 61

5. CONCLUSONS AND RECOMMENDATIONS 62

5.1 Conclusions 62

5.2 Recommendations/Suggestions 64

6. REFERENCES 66

xii
 LIST OF TABLES

Table Page

Table 1: Sap Yield for Various Aloes in Different Localities in Kenya ............................................................. 17

Table 2: Distribution of Sample Households.................................................................................................... 29

Table 3: Summary of Variable Definitions and Measurement........................................................................... 43

Table 4: Summary Statistics of Variables ........................................................................................................ 50

Table 5: Respondents Total Income per Month (TOTINC) in Birr .......................................................................51

Table 6: Rank of Positive Effects of Aloe Soap Making Business .................................................................... 51

Table 7: Respondents’ Perception of Aloe Soap Making Business ................................................................... 52

Table 8: Logistic Regression of Odds Ratio of Participants ..................................................................................55

Table 9: Logit Results Household Program Participation ................................................................................. 57

Table 10 : Logistic Regression for Choices of Matching Algorithm ................................................................. 59

Table 11: Estimate of ATT of income per month ............................................................................................. 61

xiii
 LIST OF FIGURES

Figure Page
Figure 1: Livelihood diversification in North Kenya, Turkana ..................................................................... 9

Figure 2: Livelihood Options for the Borana People..................................................................................... 11

Figure 3: Location of the study area............................................................................................................. 28

Figure 4: Graph of Kernel density of propensity score distribution................................................................. 60

Plates

Plate 1: Typical Wild Aloe calidophilla Plant in Borana Rangelands.......................................................... 13

Plate 2: Various parts of Aloe plant from which products can be sourced.................................................. 16

Plate 3: Aloe Soap Products........................................................................................................................... 17

Plate 4: Exposed Inner Parts of Aloe Leaf Cut............................................................................................. 18

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 LIST OF TABLES IN THE APPENDIX

Appendix Table Page

Appendix 1 Conversion Factors Used to Estimate TLU ................................................................................... 74

Appendix 2: Aloe Vera Plant and the Bioactive Chemical Constituent ............................................................. 74

Appendix 3: Multicollinearity Test for Continuous Explanatory Variables ....................................................... 75

xv
 ALOE SOAP VALUE CHAIN INITIATIVE AND ITS EFFECT ON LIVELIHOOD
DIVERSIFICATION STRATEGY: THE CASE OF PASTORALIST AND
AGROPASTORALIST OF BORANA, SOUTHERN ETHIOPIA

ABSTRACT

This study aimed at assessing the effect of ‘aloe soap value chain initiative’ on pastoralists and agro-
pastoralists in supplementing their livelihood diversification strategy to overcome impacts of recurrent
shocks in the DidaYabello, Fulduwa and Dambala Badana Pastoral Associations (PA) in Yabello, Arero
and Dire districts, respectively, of Borana Zone. Wild Aloe plant is one of the abundant plant species found
in the area and most neglected/underutilized as means of livelihoods except few traditional medicines and
ritual purposes. The research employed qualitative and quantitative research methods using both primary
and secondary data. Purposive sampling method was used by which three sample PA administrations with
potential aloe soap processing sub-centers were selected for data collection. A total of 120 sample
households (60 participants and 60 nonparticipants) were selected by using probability proportional to size
for the survey.

Data analysis was made by descriptive statistics and econometrics using propensity score matching
method. This study therefore evaluates the effect of aloe soap value chain initiatives interventions of the
project in the target PAs. The study has used cross-sectional survey data of 2012-2013 to see the effect of
the intervention in supplementing their livelihood diversification strategy. The intervention has resulted in
an increased amount of income made by participants to earn an average total income of about Birr
2688.70 per month from the aloe soap production over the counter parts. It also enabled them to consider
aloe plant as productive plant species which is market oriented and has best economic value. Moreover,
the aloe plant species are found to be environmentally friendly, drought tolerant and best for soil and water
conservation if properly used in addition to its magnificent medicinal uses. Based on the results obtained,
such innovative product of market development interventions has a paramount importance for the
enhancement of alternative livelihood diversification strategies of the pastoralists and agro-pastoralists.

Key words: pastoralist, recurrent drought, wild, Aloe soap, livelihood, propensity score matching

xvi
 1. INTRODUCTION

1.1 Background

In Greater Horn of Africa (GHA), pastoralism is one of the most important economic
activities from which millions of people derive their livelihoods. Pastoralists in this region
keep a significant part of their wealth in the form of livestock. For example, out of the total
population, pastoral and agro-pastoral population are about 60% in Somalia; 33% in Eritrea;
25% in Djibouti; 20% in Sudan and 12% in Ethiopia (Coppock, 1994, quoted in Ahmed et al.,
2001). Ouma et al., (2012) have described, a rapidly diminishing rangelands resource base
and the continued fall in animal productivity, pastoral households suddenly found themselves
in a situation where they have to seek alternative forms of livelihood to sustain their families.
This situation has forced pastoralist to seek temporary income and subsistence bases; thus,
livelihood diversification has become a common phenomenon among pastoral households.

Ethiopia is home for more than 12-15 million pastoralists and agro pastoralists who reside in
61% of the nation's landmass. The pastoral areas are estimated to comprise 42% of the
national total livestock population. Livestock and livestock products provide about 12-17% of
Ethiopia’s foreign exchange earnings, out of which hides and skins contribute about 90%. It
contributes about 33% to the agricultural GDP and 16% to the national GDP (cited in
Adugna, 2012). Livelihoods diversification is complex, and strategies can include enterprise
development (Adugna and Wegayehu, 2012). Diversification of income sources, assets, and
occupations is the norm for individuals or households in different economies, but for different
reasons (Adugna, 2005).

Stark et al., (2011) has stated that in Borana alternative economic activities, such as trading,
crafts, salt mining, incense and gum collection, and the harvesting of Aloe for soap and
related production are generally better thought of as supplements to unstable pastoralist
livelihoods which depends on livestock only rather than as fully supportive alternative
livelihoods. Teshale (2011) also described that a variety of NGOs in Borana have been
working to reverse the livelihood crises initiated by recurrent droughts. Currently, they have
diversified their intervention approach from aid to strategies that bring long term livelihood

2
impacts. He further explained that some NGOs like AFD, GTZ, and SOS Sahel Ethiopia are
working on improving the productivity of the gum and resin trees, trading access, and value
addition.

Promoting alternative livelihood diversification strategies on non-timber forest product

natural resources such as gum and resin production and trade in Borana has an invaluable
importance to supplement the fragile livestock based livelihood. SOS Sahel Ethiopia has
explored through its different projects the livelihood diversification potential of wild Aloe
plant products such as aloe soap among others through value addition process. Accordingly,
products of soaps from Aloe are already tested (Teshale, 2011) and it has continued
implementing this livelihood activity since 2007 which is termed as ‘Aloe soap value chain
initiative’. Among many project intervention districts of SOS Sahel Ethiopia there were three
Aloe soap producing pastoralist and agro-pastoralist groups/cooperatives in Yabello, Dire and
Arero Districts. Hence, the research work focuses on the effect of this ‘Aloe soap value chain
initiative’ in supplementing the livelihood diversification strategy of these households of the
selected study area.

1.2 Statement of the Problem

Pastoralist and agro-pastoralist areas of Borana with their high degree of climatic variability
and unpredictability have required flexibility, mobility and adaptation to different
opportunities and challenges. The causes of these are traced by most of the literatures as
settlement, population pressure, conflicts and the recurrent droughts (Little et al. 2004).

In Borana, pastoralism is the principal livelihood strategy with recent attempts to diversify
into agriculture, forest products marketing, and petty trade (Tache and Oba, 2010).
Simultaneous outbreaks of livestock diseases are common in pastoral areas and spread along
the drought fronts, aggravating the number of animal mortalities. Therefore, pastoralists in
general and the livestock in particular are vulnerable to unpredictable macro climatic
variability (Amaha, 2006). Degradations in biological and physical rangeland resources have
become serious challenges, bearing negative impacts on the pastoral ecosystems, livestock
production and livelihoods thereof (Vetter, 2005).

3
Eyasu and Feyera (2010) stated that similar to other Sub-Saharan countries; the Ethiopian
pastoralists have been subjected to political marginalization. The land alienation is behind
many of the problems detected in the pastoral areas today. These problems include
environmental degradation, food insecurity, drought vulnerability and ultimately destitution.
The same authors has revealed that the root causes of these problems lies on the fact that
policy tends to be biased against pastoralism in favor of alternative economic activities such
as commercial agriculture, wildlife conservation parks and modern ranches.

The pastoralists in Borana have developed and practiced different types and forms of
indigenous survival and adaptive strategies to cope with recurrent drought. Among, other
things, digging of deep wells, mobility between wet and dry season grazing areas or rotational
grazing, herd diversification, eating wild foods, splitting of herds and families, strategic
settlement pattern and traditional supporting system are worth mentioned. However,
“development interventions did not consider such knowledge because the pastoral production
system was considered as backward and a factor for land degradation’’ (Scoones, 1995 cited
in Gamado et al., 2006).

The resilience of the pastoralist community has declined as drought frequency has increased.
People have lost the capacity to recover from this crisis. The fact that droughts increasingly
affected many households simultaneously means that “many of the informal mechanisms for
mitigating and coping with risk become ineffective” (Skoufias, 2003). However, among these
adaptive strategies, the importance and economic contribution of abundant and easily growing
aloe plant species are not considered or is negligible. The economic potential of underutilized
different wild Aloe plants species to improve alternative livelihoods of pastoralists and agro-
pastoralists of Borana has not been yet realized. The abundant vegetation of Aloe plants were
of no any recognized economic use to the community except few traditional uses as medicine
and rituals. Moreover, before ‘Aloe soap value chain initiative’ was started, Aloe plants were
rather considered as invasive plant species like bushes in the Borana rangeland.

Therefore, this study attempts to provide empirical evidence on the effect of innovative ideas
started on Aloe soap making technology interventions held to supplement the livelihood
diversification strategies of pastoral and agro-pastoral communities in selected site Dida

4
Yabello, Fulduwa and Dambala Bandana PAs of Yabello, Arero and Dire districts,
respectively, in Borana Zone.

1.3 Objective of the Study

The overall objective of the study is to assess the effect of ‘Aloe soap value chain initiative’
intervention on supplementing pastoralist and agro-pastoralist household’s livelihood
diversification strategies in the study area. The specific objectives of the study are:

 Describe changes in the social, organizational and institutional aspects of aloe based
livelihood diversification due to intervention in the target areas;
 Assess the effect of Aloe soap value chain initiative in supplementing livelihoods of
target households in the study areas.
 Assess the prospects and determinant factors in Aloe based livelihood diversification
in the study areas.

1.4 Significance of the Study

In Ethiopia, the analysis of economic effect of Aloe plant species product development on
households’ livelihood, are negligible. Hence, the study is aimed to bridge this research gap
through providing useful information, knowledge and skill to enhance the effect of adoption
of local Aloe soap making technologies in supplementing households’ livelihood
diversification strategy from an underutilized and neglected Aloe plant species. It has
generated valuable knowledge to inform pastoralists and agro-pastoralists, donors,
implementing agencies, policy makers and researchers for designing appropriate polices for
intervening in the development of non-livestock sub–sectors mainly for ex-pastoralists and
better rangeland management systems in the study areas.

1.5 Scope and Limitations of the Study

This study was carried out in three pastoral associations (PAs) Dida Yabello, Fuldowa and
Dambala Badana in adjacent districts of Yabello, Arero and Dire, respectively, in Borana
Zone major pastoral and agro-pastoral areas. During the field survey of this study, there are
increasing numbers of aloe soap making groups being scaled up and aloe domestication sites

5
initiated in these target districts by different NGOs operating in the pastoral areas of the zone.
The study covers one pastoral/agro-pastoral associations (PAs) from each district which are
nearly close to each other implementing the Aloe soap making technology in their respective
areas.

Due to budget and time limitations, only 120 pastoral and agro-pastoral sample households
(60 participants and 60 nonparticipants into aloe soap making activity) from the three target
PAs were included in the survey. Accordingly, the study was limited to the effect of wild
Aloe soap processing on supplementing livelihood diversification strategies of target
households. In addition, there is lack of baseline data; clear and wide range of previous
empirical studies of propensity score matching (PSM) model particularly on the effect of Aloe
soap value chain initiatives on household livelihood diversification strategy, its clear
indicators for its measurements. Given all these limitations, the study has generated important
information for the project owners as well as the policy makers.

1.6 Organization of the Thesis

The remaining chapters of the thesis are structured as follows. In chapter two reviews of
theoretical and empirical literature related to Aloe plant, livelihood diversification, pastoral
and agro-pastoral situations are presented. Chapter three and four deal with the research
methodologies, results and discussion of the research, respectively. Finally, chapter five draws
conclusions from the main findings of the study and suggests the possible policy implications.

6
 2. LITERATURE REVIEW

2.1 Definition and Basic Concepts

Pastoralists are households where more than 50% household income/consumption is derived
from livestock or livestock related activities, either as a result of sales of livestock products or
of direct consumption, and agro-pastoralists as deriving 25-50% income/consumption from
livestock produce Swift (1988) as cited in Adugna (2012),.

Pastoralism is considered as the most economically, culturally and socially appropriate

strategy for maintaining the well-being of communities in dry land areas, because it is the
only one that can simultaneously provide secure livelihoods, conserve ecosystem services,
promote wildlife conservation and honor cultural values and traditions (ILRI, 2006).
Moreover, pastoralism is the best means to make productive and sustainable use of natural
resources in arid and semi-arid areas that would, otherwise, remain unexploited (FAO, 2006).
The most common categorization of pastoralism is by the degree of movement, from highly
nomadic through transhumant to agro-pastoral (Roger, 2001).

According to Odi (2010), there are four dominant livelihood systems in pastoral areas across
the Horn of Africa in general and Borana in particular: 1) Pure pastoral livelihoods-livestock
– based livelihoods; 2) Agro-pastoral livelihoods – these combine extensive livestock rearing
and rain-fed cereal production; 3) Sedentary farmers – practice mixed farming, cultivating
food crops with modest sheep and goat herds; 4) Ex-pastoralists – these are households who
have lost their livestock and now depend largely on human labor.

Livelihood diversification: World Bank (2003) states “livelihood diversification as range of

coping strategies, investments in livestock and non-farm income, and migration that are used
to reduce fluctuations in income which also include traditional copying strategies”. Among
many pastoralist groups in the Horn of Africa, diversifying is not new and has been combined
historically with pastoral mobility. It is a form of risk management on a continuum with risk
management within livestock production through mobility and flexible off-take strategies

7
(COMESA 2009). However, diversification is now also bound up with sedentarization
(Fratkin 2012; Livingstone and Ruhindi 2012) - both forced sedentarization from loss of
access to grazing lands and drought-related destitution, and proactive sedentarization to grasp
new economic opportunities.

Pastoral livelihood diversification: is defined as the pursuit of any non-pastoral income-

earning activity in both urban and rural environments (ILRI, 2000). This includes various forms
of wholesale and retail trade (e.g. selling livestock, milk, hides and skins, honey, and artisan
goods etc.), rental property ownership and sales, waged employment (local and non-local,
including working as a hired herder, farm worker and migrant laborer), farming (subsistence
and commercial), and the gathering and selling of wild products (e.g. gum arabic, firewood, or
medicinal plants like Aloe) (Little, 2001).

Aloe soap value chain initiative: is an innovative idea of making soap locally from wild aloe
sap initiated by SOS Sahel Ethiopia projects implemented in Borana rangelands since 2006 to
enhance pastoral and agro pastoral livelihood diversification strategy. The aloe soap is made
manually by the local community using simple and locally available materials except few
industrial ingredients. The Aloe soap is made from formulated combination ratio of edible oil,
caustic soda, water, perfumes, colors/dyes and drops of Aloe sap/exudate collected from Aloe
plant species leaves’ cut. Based on the interest of the target customer, different colors and
perfumes are used for further attractiveness (SOS Sahel project reports). There are steps and
given combination ratios of the ingredients with few minutes time to produce a batch of bars
of Aloe soap.

2.2. Livelihood Diversifications

As stated by Kisiangani and Aziz (2011), pastoralism and agro-pastoralism are the dominant
livestock production systems and opportunistic farming in most parts of Sub-Saharan Africa’s
arid and semi-arid zones, including Ethiopia. Grazing lands are being lost due to drought,
increasing population pressure and restricted access to land. This is forcing more and more
pastoralists to settle and grow crops, resulting in considerable reduction in grazing lands.
Figure1 summarizes some of the livelihood diversification strategies among the Turkana
people of North Kenya which is neighboring to Borana rangelands. Farming is the most

8
common form of livelihood diversification strategy with 60% of the target area. The farming
type was mainly early maturing forms of grain crops such a sorghum and maize breeds. Aloe
production contributes up to 15% and it was another common practice in the area (Ouma et
al., 2012).

Figure 1: Livelihood diversification in North Kenya, Turkana

Source: Adapted from Ouma et al., 2012

Other studies done by UNDP (2006), Little (2001), Field (2005) and ITDG (2005b) all
highlighted aloe farming as a form of livelihood diversification. Moreover, Practical Action
(Formerly the ITDG, 2005b) has attempted to promote the production, processing and
marketing of commercial Aloe vera.

Pastoralism in Ethiopia is the most important economic activity as many millions of people
derive their livelihoods from this occupation. It has been variously estimated that about 12%
of the populations of Ethiopian are engaged in this economy. As cited in Sileshi (2006),
Coppock (1994) and Yemane (2000) have estimated that 30-40% of the livestock of Ethiopia
are found in pastoral and agro-pastoral areas, which are mainly situated in the dry lands. The
worth noting is that pastoralism in Ethiopia is both viable and vulnerable. Amaha (2006) has

9
revealed that the dry lands of Ethiopia are dominated by rangeland based livestock production
systems known as pastoralism and agro-pastoralism (partly involved in opportunistic
cropping) and represent a significant sector of the national agriculture in the country. The
main reason for some households to follow diverse livelihoods is the household food
shortage. Recurrent drought, degradation of natural resources and rapid population growth are
among the main causes of declining per capita food production (FAO, 2006).

Livelihood diversifications is becoming the dominant activity for rural households who are
most of the time affected by recurrent food shortage which is the main challenge, while they
are dependent on a single livelihood activity driven by small landholding owing to over-
population, low productivity due to land degradation and inability to use modern technology
and shortage of input subsides from the government side. He added, land scarcity and low
productivity in Ethiopia is forcing the rural household to engage in diversifying livelihoods to
raise their income (Degefa, 2005).

2.2.1. Pastoral Livelihood Diversification Strategy in Borana

According to Hurst et al., (2012), the livelihood diversification strategies for most Borana
pastoralists are beekeeping and honey, Aloe products (soaps and lotions), scent wood (similar
to perfume or “locally named qayya”), incense and gum, poultry farming (for sale of birds in
the market, not for direct consumption), charcoal, employment (local and distant eg. a family
member relocates to Nairobi to seek employment), milk (for sale in local market only), gold
mining, salt mining (sodda), cut firewood. These authors have also described that households
cope with changing climate and social structures, many of them are choosing to increase the
diversity of their livelihood strategies.

Moreover, Jibat et al., (2013) have also described that among livelihood options and food
sources for the Borana people livestock-related livelihood options accounted for about 32% of
the total means of food, social and economic contributions, whereas farming, food aid and
petty trade contributed 21%, 15% and 14%, respectively. In addition, mining, charcoal
production and employment are also mentioned as means of living (Figure 2).

10
Figure 2: Livelihood Options for the Borana People

Source: Adapted from Jibat et al., 2013.

2.3. General Description of Aloe Plant Features, Products and Marketing

Different literatures showed that, the genus Aloe is represented in several biodiversity
hotspots, including the Horn of Africa, Madagascar and Indian Ocean Islands, Maputaland-
Pondoland-Albany, Cape Floristic Region and Succulent Karoo (Mittermeier et al., 2004;
Myers et al., 2000) and includes many taxa that are naturally rare and geographically
restricted (Oldfield, 2004). The majority of Aloe species occur in southern and eastern side of
the African continent (Newton, 2004).

The term Aloe is derived from Arabic “alloeh” which means a bitter substance (Joseph and
Raj, 2010). The leaf-succulent genus Aloe plants are perennial plants that comprise herbs,
shrubs and small trees. Most Aloes are characterized by their thick and fleshy leaves with
spiny margin. They have tubular flowers that are brightly yellow, orange or rarely white in
color (Smith and Steyn, 2004 as cited in Fikre, 2012). Aloe comprises over 500 species,
ranging from diminutive shrubs to large tree-like forms, with new taxa still being described
regularly (Frodin, 2004), fully comprehensive studies of the taxonomy and biology of Aloe

11
plants are difficult and research to date has largely focused on geographical or taxonomic
subsets.

Most aloes require rainfall of between 300mm to 850mm annually. Aloes have shallow roots
and do well in fertile, rocky/gravel soil. Aloes grow well in soils with high nitrogen content
(0.4 - 0.5 %), with pH range between 4.5 to 7.0 (Mukonyi, 2003). The species grow poorly in
sandy soils and in areas prone to water logging.

In the flora of Ethiopia and Eretria, 46 species of Aloe have been described out of which 41
(89%) are endemic or near endemic indicating that they have high degree of endemism in the
flora area. Only five species: Aloe laterita, Aloe macrocarpa, Aloe rivae, Aloe secundiflora
and Aloe vituensis have wider distribution extending to east or West Africa. However, most
other species have restricted distribution area and known from few localities and populations.
The altitudinal distribution of Aloes in the flora area is wide ranging from 500m.a.s.l (e.g.
Aloe megalacantha in desert and semi-deserts of Somalia region) to above 3000m.a.s.l (e.g.
Aloe steudneri and Aloe ankoberensis), both of which reach the sub-afro-alpine vegetation
(Sebsebe et al 2001; 2003; 2011).

The degree of endemism in the genus Aloe in the flora is therefore nearly three times higher
than the average figure for all vascular plants (Friis et al., 2001; Sebsebe Demissew et al.,
2001). Only five species are wide spread extending to East Africa or West Africa: Aloe
lateritia, Aloe macrocarpa, Aloe rivae, Aloe secundiflora and Aloe vituensis (Reynolds, 1966,
Sebsebe Demissew & Gilbert, 1997, Sebsebe Demissew et al., 2001).

Fikre (2012) described that though not yet fully investigated and exploited for their use as in
other parts of Africa, Aloes in the flora of Ethiopia and Eretria may have potential economic
and ecological values. The leaf gels from Aloe debrana and Aloe trichosantha are used in the
manufacturing of sucks for coffee export. It has also been reported that Aloe gilbertii
individuals are being used by the local community in rehabilitating degraded land (Fikre,
2006). Aloe calidophilla, a shrubby species with relatively wider range of distribution in the
southern lowlands of Ethiopia including Borana pastoral areas and in the northern part of
Kenya, is identified to be one of the commercially important species and listed among species
that need conservation attention in Kenya (Wabuyele and Keyalo, 2008).

12
Plate 1: Typical Wild Aloe calidophilla Plant in Borana Rangelands
Source: Field survey 2014.

Wabuyele and Keyalo, (2008) described that most of the Aloes are exploited from the wild; it
is only Aloe Barbendensis (Aloe Vera) which is under cultivation. Aloe Vera is the primary
species selected for commercial production across the world for its active ingredients, high
leaf gel content and strong growth history. Aloe Ferox is a species successfully exploited in
the industry primarily in South Africa, African largest producer of Aloe-based products that
are consumed in Africa. Aloe species propagation varies according to variety, however most
of them propagate through suckers and a smaller proportion also through seeds.

The ethnobotany of Aloe is described in a considerable body of literature, analysis of which

suggests most species are valued in some way and used on a local scale (Grace et al., 2008,
2009). For a specious genus of appreciable ethnological value, surprisingly few species of
Aloe have been known in formal trade. It is described by same author that the market profiles
of species such as Aloe ferox Mill and Aloe vera appear to be expanding, yet the trade in Aloe-
derived products remains poorly understood and relevant information unavailable.

13
2.3.1 Aloe Plant Products

According to Ogola (2013), Aloe plant products at cottage industry and household level
include like soap, shampoo, lotion and sale of Aloe bitter gum. Apart from the ‘traditional’
use of Aloes outlined here, commercialization of Kenyan Aloes occurs at two levels; in the
last decade or so, the sap (exudate) of this species has gained popularity as an ingredient of
‘homemade’ soaps and detergents in many rural villages in Kenya. In this regard, individuals
and community groups have taken to ‘Aloe soap’ making as a cottage industry to subsidize
income. On the other hand, large-scale commercial extraction of Aloes targets markets
abroad, mainly in Europe, and the Middle East (Oldfield, 2003) where it is used in the
cosmetics and drug manufacturing industries. Farming of Aloes is a recent undertaking in
Kenya, and no known plantations of mature plants exist. All known substantial harvesting of
Aloes is from wild-growing populations. As noted by Newton (1994) attempts to establish
plantations in the past have been inconsistent since whole plants were dug up from the wild
for replanting on farmland.

Many supermarkets in Kenya stock ‘Aloe vera’ juices and soaps that are locally manufactured
and that have become quite popular in recent years. However, documentation of this trade is
scanty and insufficient as a basis for identifying species and quantities exploited. A variety of
indicators attest to the cultural and economic value of Aloe, such as the numerous vernacular
names and uses recorded for the genus (Grace et al., 2008, 2009, 2011). The ethnobotany of
Aloe is described in a considerable body of literature, analysis of which suggests most species
are valued in some way and used on a local scale (Grace et al., 2008, 2009).

The economic scales at which Aloe is valued by people vary by orders of magnitude, from the
rural poor whose sole livelihood is based on a single species of Aloe growing on communal
lands, to agricultural economies based on several species of cultivated Aloe, and the
extraordinary global production of Aloe vera (Grace, 2011).

14
2.3.2. Aloe Plants and their Role in Trade:

Grace (2011) stated that the commercial trade in Aloe-derived natural products is based
mainly on two materials obtained from the leaves of certain Aloe species: leaf exudate- used
in laxatives, and leaf mesophyll- used in products applied topically for skin ailments or taken
internally for digestive complaints and general wellbeing.

Ogola (2013) described Aloe plant as drought tolerant, grows naturally, has an already
established market, and can provide an alternative source of income. It has the potential to
contribute to household food security through increased economic security, and should not
threaten food production due to its ability to grow naturally in harsh environments. The same
author stated that creation of alternative livelihood in micro-enterprises, commercializing
Aloe production, beekeeping (honey/ wax production) and tourism activities will diversify
income sources from livestock dependency. The author showed that the ethnobotanical survey
of parts of Kenya has documented many uses of Aloes that were summarized as: a) Medicine
(human and livestock), b) Fodder, c) Fencing and hedging, d) Soil conservation/compaction,
e) Traditional brewing, and f) Cosmetic/beauty therapy.

In southern Africa, the current natural product trade is estimated at USD 12 million per
annum, with potential to grow to USD 3.5 billion, half the value of current agricultural
exports from the Southern African Development Community region (Bennett, 2006). A
growing sector of commercial natural products employs up to nine million casual, largely
female, workers. Niche markets for ecosystem products do indeed allow local people to make
money. However, the risk of creating scarcities of valued products through exploiting
common access resources unsustainably is a real one.

2.3.3. Aloe Commercial Extracts and Their Uses:

As described by Kavaka and Nellie (2008), different products can be extracted from various
parts of aloe plant which includes flowers, leaves, stems and roots. There are different
products from various parts of aloe plant such as from flowers – herbal tea; from leaves –
sap/exudate, processed gum and gel; from stems and roots – fermentation catalyst, that is, the

15
dried stem and roots are ready for use in fermentation process. About 15 roots of Aloe
secundflora are used to brew 20 Liters of alcohol.

Plate 2: Various parts of Aloe plant from which products can be sourced
Source: Adapted from Kavaka and Nellie (2008)

Kavaka and Nellie (2008) have described that Aloe sap tapping occurs where the leaf is
harvested. Harvesting sap is done when aloes are 3 to 4 years old. The sap is harvested
immediately after the rainy season. Avoid harvesting during the rains or drought. Tapping is
done between late morning and early afternoon on a hot still (not windy) dry day.

In Borana, the community collects sap/exudate from the most popular Aloe calidophila and
Aloe Scandiflora and Aloe Scabrifolia to process their soap. These aloe plants have different
capacity to generate sap/exudate (Table1). Hence, currently the aloe soap producers use 5
milliliters of aloe sap to produce 5000 grams of dry aloe soap or 10 bars (500 grams/bar) at
production time. They use vegetable oil, caustic soda, water as a main ingredient, and dye
(food color) or perfume will be added into it based on consumer preference.

16
Table 1: Sap Yield for Various Aloes in Different Localities in Kenya
Aloe Species Site Number of Sap yield Milliliters (mls)
leaves harvested (mls) obtained per leaf
Aloe secandflora Laikipia, 25 60 2.40
Aloe scabrifolia Samburu, 22 60 2.73
Aloe calidophila Moyale 20 120 6.00
Aloe rivae Marsabit 19 35 1.84
Source: Adapted from Kavaka and Nellie (2008)

Plate 3: Aloe Soap Products

Source: Dida Yabello PA, 2014

Aloe calidophila is the most popular specie found in Borana range lands. As shown in table 1,
it has high sap yield per leaf which has a paramount importance in aloe soap processing.
Among the parts of aloe leaf (Figure 6) only its sap is currently used for the aloe soap making.
But as many literatures show none of aloe plant parts (flower, stem, leaf and root) are wasted,
i.e., all have their own economic value to the people growing it (Figure 5).

The selected community members were provided with technical trainings. The information
obtained from the aloe producers groups/cooperatives and Milki Forest Products Marketing

17
Union shows that if all necessary ingredients and conditions are fulfilled or normal, a person
can produce an average of 593 bars of soaps with 500gm. They are mostly challenged by the
supply of vegetable oil and caustic soda which are not locally available.

Aloe leaf

Green peel

Aloe gel

Aloe sap/exudate

Plate 4: Exposed Inner Parts of Aloe Leaf Cut

Source: Photo from Field survey 2014

According to Joseph and Raj (2010), the bitterness of aloe plant results from the presence of
aloin and aloe- emodin. Aloe vera secretes two types of fluid containing proteins and cellular
elements. One is a reddish-yellow thick bitter fluid secreted from the pericyclic cells of the
plant and the other, a transparent mucilage gel produced by tubular cells in the central
parenchyma zone of the leaf (Joseph and Raj, 2011). These fluids are mainly used for laxative
(reddish-yellow) and several medical (gel) purposes some of which will be summarized in the
following sub sections.

In Ethiopia, Ermias Dagne (1996) has investigated the variation in the distribution of typical
Aloe compounds in leaf exudates/sap (i.e. Aloenin, Barbaloin, Nataloin, Aloinoside,
Homonataloin, 7-Hydroxyaloin, Aloesin and Microdontin) was reported among and between
eleven species found in the country: Aloe debrana, Aloe calidophila, Aloe camperi, Aloe
elegans, Aloe sinana, Aloe megalacantha, Aloe pubescens, Aloe pulcherrima, Aloe rivae, Aloe
secundiflora, and one unidentified Aloe species. Similarly, Aloe calidophila yielded
Homonatalion as its major constituent. Others, however, share one to three compounds
between and among themselves, indicating some degree of relationships in their chemical
composition.

18
2.3.4. Aloe as Horticulture

Grace (2011) described that Aloes are both decorative and highly collectable. They have
become common in the general horticultural trade servicing gardeners and landscapers,
particularly in the regions where the genus occurs naturally, as well as the specialist
ornamental plant trade.

Gamba (2005) pointed out that by 2004 in Kenya drylands farmers in Kajiado and Samburu
districts identified Aloe farming as a better alternative to wheat and livestock since the crop is
drought tolerant, requires little tending and has a ready market.

There is no doubt that plant species that are endemic and rare; and also at the same time have
potential economic value but under threat are of conservation priority (IBC, 2004). The
reasons for rarity of a given plant species might be twofold: linked to the biology of the
species such as population structure and reproductive strategies and also the ecology of the
species distribution area (Reveal, 1997).

Sebsebe et al, (2001, 2003) and Fikre (2006) have identified most species which have very
restricted distribution and put them in three local centers of endemism which has its own set
of endemic taxa. For example, in southern highlands, lowlands and rift valley among
identified nine endemic taxa are Aloe calidophila, Aloe gilbertii and Aloe yavellana are few of
them. Fikre, (2006) has focused to compare the population structure and reproductive success
of two selected Aloe species which are most popular in Borana Zone of southern Ethiopia:
Aloe calidophilla (identified as commercially important and with relatively wider distribution
range) and Aloe yavellana (narrow endemic and rare) so as to suggest appropriate
conservation strategy.

Aloe calidophilla, a shrubby species with relatively wider range of distribution in the southern
lowlands of Ethiopia and in the northern part of Kenya, is identified to be one of the
commercially important species and listed among species that need conservation attention in
Kenya (Wabuyele and Keyalo, 2008).

19
2.3.5. Aloe as Bee Plant:

Aloes are well-known bee plants in Africa. Species in flower during the dry season afford an
important source of nectar for honey bees (Apismellifera) and nectariferous birds (Grace,
2011). In South Africa, Aloe davyana is the most highly regarded: extensive flowering stands
of the species on the outskirts of Pretoria are used seasonally by beekeepers, who move their
hives to these so-called “Aloe fields” in order to build up colonies, rear queens and increase
colony numbers, as well as for winter honey production (Human and Nicholson, 2006).

Honey produced by bees foraging on Aloe davyana is pale in colour and free from any after-
taste, except for a slight hint of smokiness (Glen and Hardy, 2000). It is not clear from the
literature whether hives supported by Aloe species are kept only for subsistence, but it is
likely that beekeepers may, at times, derive income from surplus honey and comb produced
by their hives. On a commercial scale, at least one beekeeper in Kenya, near Nairobi,
produces quality honey from a locally abundant species of Aloe (P. Latham, pers. comm.).

2.3.6 Aloes as Food

As cited in Grace (2011), there exists several species of edible Aloes, their uses including
snack foods, famine foods, as a cooked vegetable and as an ingredient in preserves. It should
be noted that not all species of Aloe are edible: some contain toxic alkaloids (Dring et al.,
1984) and certain species, including Aloe vera, may cause adverse reactions (Steenkamp and
Stewart, 2007). The cultivated species Aloe arborescens and Aloe vera have been used on a
large scale in foodstuffs, especially in dairy products such as yoghurt and ice cream, in Asia
and the United States for some years. In South Africa, a perceptible increase in the variety of
manufactured food products containing Aloe ferox, such as confectionary and fruit juice
blends, apparently mirrors the global rise in popularity of Aloe vera leaf mesophyll in foods.
The use of Aloe ferox leaves in commercially manufactured preserves and condiments follows
a centuries-old tradition of use in the Western Cape (Watt and Breyer-Brandwijk, 1962).

20
2.3.7. Aloe as Medicinal Uses

Wabuyele et al (2008) has explained that alongside other medicinal plants, extensive use of
Aloes in treatment of human and livestock diseases in Africa has been documented. Indeed, in
some areas of East Africa, herbal treatments are the only option for up to 80% of the
population. According to same authors, up to 50% of the species were used as medicine, with
malaria being the most common human sickness cured by Aloes. Other uses of Aloes include
their use in traditional rituals and cultural practices in some groups of coastal Kenya.
Generally, use of Aloes seems to be dictated by availability (distribution) as well as
morphology; the widespread Aloe secundiflora was most popular as compared to less well
known species; Aloe lateritia with its high leaf gel content was popular in beauty therapy and
leggy species such as Aloe kedongenis were preferred as hedges. Species such as Aloe
ruspoliana that are known to be poisonous are used for killing hyenas and wayward dogs in
Northern Kenya.

As revealed by different literatures aloe plant has different composition and bioactive
chemical that constituents of Aloe plant leaf. As shown in Figure6, the Aloe leaf is divided
into two parts in general, an outer green rind and the inner colorless parenchyma containing
gel (Hamman, 2008). The Aloe vera gel contains up to 99.5% water with an average pH of
4.5, the remaining 0.5-1% is solid material (Eshun and He, 2004; Hamman, 2008). Various
chemical constituents have been isolated from both the solid and the gel material of the Aloe
vera leaf (Appendix2). The solid material consists of many bioactive compounds. The many
health benefits of Aloe vera have been attributed to its bioactive constituents found in the gel
of the leaves (Hamman, 2008). Present in the gel are polysaccharides such as proteins,
glucomannan, calcium, zinc, glucose, salicylic acid, vitamins, lignins, saponins and amino
acids (Atherton, 1998). Chemical compounds such as anthraquinones (alion, aloe-emodin) are
found in the latex leaf lining (Kemper and Chiou, 1999).

In southern parts of Ethiopia, Borana People Chew the stem and pith of Aloe shoots to apply
on to a snake-bite, while the leaves are squeezed to obtain sap for treating ear pain, eye
problems, skin wounds and burns (Abubeker, 2003). Moreover, root extracts are used to treat

21
stomach ache, epiphora, cold and flu. In addition, a piece of Aloe is frequently placed on top
of huts to announce a birth (Coppock, 1994). Leaves of the Aloe plant are used by the Gerri
people to treat burns, after drying, burning and mixing with water (Kebede, 2004) and protect
tick infestations for livestock.

2.4. Empirical Studies

There is lack of available information on effect of ‘Aloe soap value chain initiative’ on
livelihood diversification strategy studies. Therefore, only applications of the model used by
different researcher are discussed. Below are reviews of some of the recent studies which
applied propensity score matching (PSM) in program evaluations in Ethiopia and elsewhere.

PSM technique was applied by Jalan and Ravallion (2003) in their study on the benefit
incidence of an antipoverty program in Argentina. Hope (in press) has conducted a study to
evaluate social impacts of watershed development in India. The study was intended to
estimate changes in gross agricultural returns from two crops and access to domestic water in
rural villages following the introduction of watershed development project. The author
adopted a PSM method to analyze the impact of the program on farmers’ income and
domestic water collection time. Esquivel and Pineda (2006) employed the PSM method in
their study of the role of international remittance on poverty in Mexico using food-based,
capabilities-based and assets-based outcome indicators.

Similarly, Mendola (2007) also applied a PSM technique to evaluate the impact of
agricultural technology on household poverty in rural Bangladesh. The study found that the
adoption of high yield variety of rice has a positive impact on farm household wellbeing.
Allowing for interactions between agricultural technology and other determinants of income,
the study quantifies the positive impact of technology adoption on resource-poor farmers, in
terms of rise of income and poverty reduction. Furthermore, potential gains from agricultural
technology are lower for near-landless and higher for small and medium-scale farmers. This
might be evidenced by those directly achieving production enhancements in small and
medium farms may have an important causal impact in terms of household wellbeing. On the
other hand, technology adoption seems to increase income of poorer near-landless but it

22
hardly helps them to come out of the poverty line, unless other equity enhancing policy
measures are undertaken.

Gilligan et al. (2008), used PSM method in analyzing the impact of social protection on food
security and coping mechanisms in Ethiopia's productive safety nets program and they found
that participation in the public works component of the PSNP (defined as receipt of at least
100 Birr) in payments over the first five months has modest effects. It improves food security
by 0.40 months and increases growth in livestock holdings by 0.28 Tropical Livestock Units
(TLU). It leads to an increase of 4.4% in the likelihood that a household is forced to make a
distress asset sale.

In assessing the impact of the Productive Safety Net Program (PSNP) in Ethiopia on livestock
and tree holdings of rural households, Andersson et al. (2009), have applied PSM model.
They found that there was no indication that participation in PSNP leads households to
disinvest in livestock or trees. In fact, the number of trees increased for households that
participated in the program. It could be the case that participation in the PSNP, leads to
households becoming more skilled in forestry, and that they switch to increased forest
planting as a result.

Ibrahim (2012) has applied PSM in analyzing socio-economic impact of forage technology
development on household livelihood in Mieso district. The study found that improved forage
has significant positive impact on participated households’ income, women working time,
students’ study time and expenditure on health services. Results further showed that, on
average, improved forage adoption has increased physical income of participated households
by 6,010.97Birr, which is approximately higher by about 41.81% than non-participants.

Tihitina (2011) has applied in assessing the impact of Input and Output Market Development
Interventions by IPMS Project in Mieso Woreda of Oromiya National Regional State. The
study found that the project has resulted in statistically significant market surplus which is the
proportion of produce sold for participants. Participants sold about 68% more of onion and
fattened goat about 20% and cattle about 25% to the market over non-participants.

Yemisirach (2010)) has applied assessing the impact of input and output market development
interventions of the IPMS project at Alaba and Dale. The study found that after controlling
the pretreatment differences the PSM, Kernel matching estimator, has resulted in a positive

23
and significant impact of input use, productivity, net income, marketed surplus and market
orientation of treated households.

Yebeltal (2008) applied the PSM to assess the impact of Integrated Food Security Program in
Ibant district of Amhara Region. The study found that the program has increased participating
households’ calorie intake by 30% (i.e., 698 calories) compared to the nonparticipating
households.

Based on these empirical studies, this study used PSM method to evaluate the effect of ‘Aloe
soap value chain initiative’ in supplementing livelihood diversification strategies of pastoral
and agro-pastoral communities of Borana in the Southern Ethiopia.

24
 3. RESEARCH METHODOLOGY

This part deals with the methodology of the study which embraces the agro-pastoral and
pastoral households in the study area to be used in sample selection, gathering information
and data analysis.

3.1 Description of the Programs

The Aloe soap value chain initiative is emanated from SOS Sahel Ethiopia’s different
programs/projects implemented in Borana rangeland since 2006. SOS Sahel Ethiopia is a
resident charity organization currently operating in Amhara, Oromia and Southern Nation
Nationalities and Peoples Regions State (SNNPRs) Regional States. SOS Sahel Ethiopia
started piloting Aloe soap value chain initiative together with other components in Borana
lowland by developing three projects. The first project is “Pastoralist food security partnership
project (PFSPP)” funded by European Commission through Trocaire, CAFOD, SCIAF and
Christian Aid implemented in partnership with Action for Development since 2006 in Borana
and Guji Zones. The second project is “Value Chain Empowerment through Women-Led
Initiative of Pastoral Community of Borana Project” funded by Oxfam Canada (CIDA) since
2007 and implemented in Yabello District. The third project is “Enhancing Pastoralist
Environmental Right and Livelihood Project (EPELP)” in Borana and Guji Zones funded by
Norwegian Peoples Aid (NPA) implemented since 2008 in Borana and Guji Zones to enhance
the livelihoods of the pastoralist and agro-pastoralist communities through promoting
participatory natural resource management system and commercializing non-timber forest
products (NTFPs). These projects were implemented mainly in Yabello, Arero, Dire and
Liban districts of the zones (SOS Sahel, 2009).

Hurst et al., (2012) confirmed that women who live in close proximity to forests or wooded
areas may use products from the forest to supplement their incomes. Moreover, the same

25
authors have verified that SOS Sahel Ethiopia has helped a number of women to create and
cooperatively run soap and lotion business in the Borana pastoral and agro-pastoral areas.

Based on these projects, the value addition and natural resource mapping, community action
planning practices have become a strong initiative for the local people to sustainably manage
and utilize the resources in which their livelihood depends. These projects have also helped
the community to identify productive but underutilized plant species that have potential to
produce different natural products such as Aloe, gum, resins/incense, myrrh or “qumbi” and
scent wood, which can serve as the source of income generation. The projects have been
implementing the integrated program activities, out of which ‘Aloe soap value chain
initiative’ is derived to supplement the pastoralists and agro-pastoralists livelihood
diversification strategies.

To effect this initiative the project have undertaken the assessment which include the
botanical, bio-physical and vegetation cover of different Aloe species found in Borana
rangelands. After identifying potential areas of Aloe vegetation the organization started pilot
soap making training in Dida Yabello, Fulduwa and Dambala Badana PAs of Yabello, Arero
and Dire districts, respectively. The target community members were organized in to groups,
cooperatives and recently into NTFP producing and marketing Union at Borana Zone level as
an apex institution to ease the provision of credit and input supply for the Aloe soap
processing and other possible rangeland NTFPs.

3.2 Description of the Study Area

The study was conducted in Borana zone which is located in the Southern part of Oromiya
National Regional State. The zone has 13 districts out of which about eight have pastoral and
agro-pastoral ecosystem. Specifically, Yabello, Dire and Arero districts of Borana Zone
which are very adjacent pastoral and agro-pastoral area were deliberately selected for the
study purpose.

Location: Astronomically Borana Zone is located 30261 to 60321N latitude and 360431 to
400461E longitudes extending for about 30 or 331.6Kms North to South and for about 40 or
442.06Kms East to West and vice versa. Borana zone shares common boundaries with Guji
Zone in the East, Somali Regional State in South-East, Southern Nations Nationalities and

26
Peoples Region of Southern Ethiopia in the North and West, and one international boundaries
with Kenya government in the South-West at 521Kms long and the zone has an area of
63,028Km2 (BZFED, 2009) (Figure 7).

Climate: The Borana rangeland is characterized by arid to semiarid climate with extreme
inter-annual rainfall variability (Coppok, 1994). The mean annual rainfall is about 500mm
(Angassa and Oba, 2007). The rainfall is bimodal with long rains (ganna) that occurs between
March and May and the short rains (hagayya) usually between September and October. The
long rains account for 60% of the total annual rainfall, while the short rains contribute about
30% (Coppock, 1994). Pastoralists state that about 10% of the total rainfall is expected from
the occasional rains termed as 'furmaata, which offer irregular relief by interrupting the dry
season stress on human and livestock populations. The mean annual temperature is about
24ºC with a mean maximum of 28ºC and mean minimum of 17ºC (Adefris, 2006).

Population: The current population of Borana is estimated at 1,178,690 of which 582,122 are
female (CSA, 2008 and BZFEB 2009 forecast). The Borana Oromo are numerically the
dominant ethnic group inhabiting the lowlands of Borana, and are predominantly pastoralists.
Their economy is mainly based on cattle herding (Oba, 1998; Gemedo et al., 2005).

Vegetation: The vegetation is tropical savanna with varying proportions of open grassland,
and perennial herbaceous and woody vegetation (Pratt and Gwynne, 1977). The Borana
rangeland also has stretches of Acacia-Commiphora small-leaved deciduous woodlands, with
a mixture of the genera Acacia, Boswellia and Commiphora. Other important genera include
Boscia, Maerua, Lannea, Balanites and Aloe plants (Coppock, 1993; Gemedo et al., 2005;
Adefris, 2006).

27
Figure 3: Location of the study area

D/Yabello
Fulduwa

D/Badana

Source: Borana Zone Finance and Economic Development (BZFED) Office, 2009

3.3. Required Type and Source of Data

In this study, both primary and secondary data were used. The data have both Quantitative
and Qualitative nature. Enumerators who have at least college diploma, previous experience
in data collection, know the local language and the context were recruited and trained. Before
commencing data collection, the structured questionnaire was pre-tested to evaluate the
appropriateness of the design, clarity and interpretation of the questions, relevance of the
questions and time taken for an interview. Hence, appropriate modifications & corrections

28
were made on the questionnaire. Data was collected under continuous supervision of the
researcher.

3.4. Sample Design and Size

The research design followed a multistage stratified sampling procedure. In the first stage,
Yabello, Arero and Dire Districts where Aloe soap processing is being implemented in
Borana Zone were selected purposively. In the second stage, three PAs (Dida Yabello,
Fulduwa and Dambala Badana) were purposely selected from the three target districts,
respectively; based on the Aloe soap production practices and the relatively abundant Aloe
plant vegetation cover. Finally, a total number of 120 households were selected randomly
from both participant and nonparticipant households in Aloe soap value chain initiative from
the target PAs based on probability proportional to size (PPS).

Table 2: Distribution of Sample Households

Participants Non-participants Total

Districts PAs Total HH
Total Sample Total Sample HHs
Yabello Dida Yabello 816 73 28 743 18 46
Arero Fulduwa 859 52 20 807 20 40
Dire Dambala Badana 903 30 12 873 22 34
Total 2,578 155 60 2,423 60 120
Source: Field survey 2014

3.5. Methods of Data Collection

3.5.1. Primary Source

Primary data was collected from sampled respondents through pre-tested structured
questionnaire from March to April 2014. The data focuses on the effects of the ‘Aloe soap
value chain initiative’ induced and attitudinal characteristics of pastoralists/agro-pastoralists
and the factors directly influencing their livelihood diversification strategies. Check lists were
used to collect preliminary information about the study area. Five focused group discussion
(FGD) with women, men, youth (boys and girls), elderly groups and one general discussion.

29
Each group was composed of 8 to 12 persons without repetition in each Dida Yabello,
Fulduwa and Dambala Badana Pastoral Associations. There were different key informant
interview (KII) conducted with two project staffs, two Zonal pastoral development office, and
one staffs from each district Yabello, Arero and Dire Pastoral Development Offices (PDO)
districts, one Gada leaders and one elders were contacted to support the formal survey. To
collect reliable information, qualified enumerators were recruited and trained on how to
collect the data using questionnaire, the survey instruments were scheduled for respondents
during data collection.

3.5.2. Secondary Data Sources

Secondary data were collected from written documents obtained from Regional, Zonal,
District level relevant sector offices and other non-governmental organizations’ reports.
Recent published articles and research findings at national and international level about the
pastoral/agro-pastoral livelihood diversification, Aloe plant and Aloe product businesses were
also used.

3.6 Data Analysis Method

In this study, the overall objective of the study is to assess the effect of Aloe soap value chain
initiatives intervention on pastoral and agro-pastoral household’s livelihood diversification
strategies of the study area in supplementing their livelihood options. The study opts to use
descriptive, qualitative and econometric analysis.

3.6.1. Descriptive Analysis

The effect of Aloe soap value chain initiative on pastoralist and agro-pastoralist households
livelihood diversification strategy, the economic and social issue of the households’,
environmental and institution issues were analyzed from the survey data collected from
individual household. The descriptive analysis uses tools such as minimum, maximum, mean,
percentage, standard deviation, frequency distribution and T-test and chi-square statistics to
compare participants and non-participant households in Aloe soap making processes.

30
3.6.2. Qualitative Data Analysis

Necessary information on changes in environmental, organizational and institutional aspect of

Aloe soap value chain initiatives on pastoral and agro-pastoral households’ livelihood, were
collected from the community using focus group discussion, interviewing experts in different
organizations in the district and community members; and reference made to secondary
sources which were described and explained qualitatively as well as physical observation of
the researcher. This information were also used to augment the quantitative analysis results.

3.6.3. Econometric Data Analysis

Foster, (2003) stated that distilling the effect of intervention per se from those factors that
affect individuals in examining outcome response of an intervention involved is the central
methodological challenge in non-experimental evaluation method. There are different
econometric approaches that have been used to avoid or reduce this problem.

Double difference or difference-in-differences (DID): This is method in which one

compares a treatment and comparison group (first difference) before and after a project
(second difference). Comparators should be dropped when propensity scores are used and if
they have scores outside the range observed for the treatment group. In this case potential
participants are identified and data are collected from them. However, only a random sub-
sample of these individuals is actually allowed to participate in the project. The identified
participants who do not actually participate in the project form the counterfactual (Jalan and
Ravallion, 1999; Baker, 2000).

A reflexive comparison: is the method in which a baseline survey of participants is done

before the intervention and a follow-up survey, is done after. Here, participants who receive
the intervention are compared to themselves before and after receiving the intervention. The
counterfactual group is the set of participating individuals themselves (Jalan and Ravallion,
1999; Baker, 2000).

Propensity Score Matching (PSM): The PSM method as devised by Rosenbaum and Rubin
(1983) can justifiably claim to be the solution to this problem, and thus to be the observational
analog of a randomized experiment. The method balances the observed covariates between
the treatment group and a control group (sometimes called comparison group for non-random

31
evaluations) based on similarity of their predicted probabilities of receiving the treatment
(called their propensity scores). The difference between PSM and a pure experiment is that
the latter also assures that the treatment and comparison groups are identical in terms of the
distribution of all observed or unobserved characteristics. Hence, there are always concerns
about remaining selection bias in PSM estimates.

Among quasi-experimental design techniques, matched-comparison techniques are generally

considered a second-best alternative to experimental design (Baker, 2000). PSM tries to create
the observational analogue of an experiment in which everyone has the same probability of
participation. The difference is that in PSM it is the conditional probability (P(X)) that is
intended to be uniform between participants and matched comparators, while randomization
assures that the participant and comparison groups are identical in terms of the distribution of
all characteristics whether observed or not. Hence, there are always concerns about remaining
selection bias in PSM estimates (Ravallion, 2005).

In this study, PSM is used in measuring the effect of Aloe soap value chain initiatives on
livelihood diversification strategies of the target households. PSM is a method that improves
on the ability of the regression to generate accurate causal estimates by the virtue of its non-
parametric approach to the balancing of covariates between the “treatment” and “control”
group, which removes bias due to observable variables. According to Heckman et al., (1998),
the conventional approaches to assessing the effect of an intervention on using with and
without method, has essentially been hampered by a problem of missing data. Due to this
problem, the effect of intervention cannot be accurately estimated by simply comparing the
outcome of the treatment groups with the outcomes of control groups. One of the alternative
techniques followed in recent literature to assess the effect of discrete treatment on an
outcome is the method of propensity score matches developed by Rosenbaum and Rubin in
1983.

The matching econometric estimators are becoming increasingly popular among economists
as the methods to measure impacts of program (Smith and Todd, 2005; Dehejia and Wahba,
2002; Heckman et al., 1998). The propensity score matching approach aims to build matched
pairs of comparable users from the program participants and non-participants that show a
similarity in terms of their observable characteristics. This is achieved by grouping

32
households from participated individuals and non-participated individuals in to Aloe soap
making process simply which shows a high similarity in their explanatory variables.

Different authors have stated that statistical matching method is an alternative to econometric
regression. With this method meaningful counterfactual (control) group will be selected
among a large group of nonparticipants, which is identical to the participating group (Bryson
et al., 2002; Caliendo and Kopeinig, 2005) to match the characteristics of the project
population (causality of potential outcomes) as closely as possible. It matches control groups
with treatment groups on the basis of observed characteristics or by a propensity (to
participate) score; the closer this score, the better the match. A good control group is from the
same economic environment and is asked the same questions by similar interviewers as the
treatment group. Thus, to support the result obtained from regression analysis, the effect of
Aloe soap value chain initiative approach is examined using econometric PSM method.

Estimating propensity score: is the first step in estimating the Aloe soap value chain
initiative effect on livelihood diversification strategies of the target households. To get this
propensity scores any standard probability model such as logit, probit or multi-nominal logit
can be used (Rajeev et al., 2007). Since the propensity to participate is unknown, the first task
in matching is to estimate this propensity. Any resulting estimates of program effect rest on
the quality of the participation estimate. This can be routinely carried out using a choice
model. The appropriate choice model depends on the nature of the program being evaluated.
If the program offers a single treatment, the propensity score can be estimated in a standard
way using a probit or logit model, where the dependent variable is ‘participation’ and the
independent variables are the factors thought to influence participation.

In this study, the logit model was used to assess the effect of participating in ‘Aloe soap value
chain initiatives’ on households’ livelihood diversification strategy. Because, a logit
regression of treatment status (1 if a household is participated in aloe soap processing, 0 if
household non-participant) was run for the sampled households, on observables that include
age, education, family size, experience in aloe soap making, access to market center,
extension visits, livestock holding and access to rural credit services. The major concern of
this regression was to predict the probability of a household to participated in aloe soap
making used for supplementing pastoral and agro-pastoral households livelihood

33
diversification strategies, i.e., to predict propensity*-+y scores, based on which, the treatment
and control groups of households were matched using the matching algorithms.

As cited by different authors, Pindyck and Rubinfeld (1981) have specified the cumulative
logistic probability function as:

(1)

Where: e = represents the base of natural logarithms (2.718…); Xi = represents the ith
explanatory variable; Pi = the probability that an individual participants in the Aloe soap value
chain initiative intervention project; and are parameters to be estimated.

Interpretation of coefficients will be easier if the logistic model can be written in terms of the
odds and log of odds (Gujarati, 2004). The odds ratio implies the ratio of the probability that
an individual will be a participant ( ) to the probability that he/she will not be a participant
( ). The probability that he/she will not be a participant is defined by:

(2)

Using equations (1) and (2), the odds ratio becomes:

(3)

Alternatively, (4)

Accordingly, taking the natural logarithms of equation (4) will give the logit model as
indicated below.

(5)

Where, is probability of participating in making Aloe soap that ranges from 0 to 1 and
is a function of n explanatory variables , is an intercept, …, are the slope
parameters in the model.

34
If we consider a disturbance term , the logit model becomes:

(6)

So, the binary logit will become: (7)

Where, is project participation, is the dependent variable project participation and X

is a vector of observable covariates of the households:

PALVCI = (X) = [FSIZHH, SEXHH, AGEHH, EDUHH, ACRD, ACEXT, AMKT, TLU,
PASP, KAEC, FMPASM, CMPASM, ASLDV, ALMKTY, ASCOMPT, PEASVCI, RDGT]

Where: PALVICI = Participation in Aloe soap making value chain initiatives; FSIZHH =
family size of the household; SEXHH = sex of the household head; AGEHH = age of
household head; EDUHH = education level of household head; ACEXT = access to
extension service (DAs) of HH residence; ACRD = access to credit; AMKT =
household Access to Market; TLU = size of livestock holding; PASP = perception of
aloes soap; KAECU = knowledge about aloe plant economic uses; FMPASM =
family members participating on aloe soap making; CMPASM = community income
groups participating on aloe soap; ASLDV = aloe soap supplementing livelihood
diversification; ALMKTY = aloe soap marketability in the local market; ASCOMPT
= Aloe soap competency or preferability, PEASVCI = positive effects/rank of aloe
soap value chain initiative in the area and RDGT = Recurrent drought.

3.6.4. Matching Algorithm Selection

The propensity score estimation by itself is not enough to estimate the ATT of interest. This is
due to the fact that propensity score is a continuous variable and the probability of observing
two units with exactly the same propensity score is, in principle, zero. Various matching
algorithms have been proposed in the literature to overcome this problem. The methods differ
from each other with respect to the way they select the control units that are matched to the
treated, and with respect to the weights they attribute to the selected controls when estimating
the counterfactual outcome of the treated. However, they all provide consistent estimates of
the ATT under the CIA and the overlap condition (Caliendo and Kopeinig, 2008). The most
commonly applied matching estimators only are described as below:

35
Nearest Neighbor (NN) Matching Estimator: According to Caliendo and Kopeinig (2008),
this is the most straightforward matching estimator. An individual from a comparison group is
chosen as a matching partner for a treated individual that is closest in terms of propensity
score. NN matching can be done with or without replacement options. In the case of the NN
matching with replacement, a comparison individual can be matched to more than one
treatment individuals, which would result in increased quality of matches and decreased
precision of estimates. In the case of NN matching without replacement, a comparison
individual can be used only once. Matching without replacement increases bias, but, it could
improve the precision of the estimates. In cases where the treatment and comparison units are
very different, finding a satisfactory match by matching without replacement can be very
problematic (Dehejia and Wahba, 2002).

Caliper Matching Estimator: As clearly stated, the above discussion tells that NN matching
faces the risk of bad matches, if the closest neighbor is far away. To overcome this problem
researcher’s use the second alternative matching algorism called caliper matching. Caliper
matching means that an individual from the comparison group is chosen as a matching partner
for a treated individual that lies within a given caliper (propensity score range) and is closest
in terms of propensity score (Caliendo and Kopeinig, 2008). If the dimension of the
neighborhood is set to be very small, it is possible that some treated units are not matched
because the neighborhood does not contain a control unit. One problem in caliper matching is
that it is difficult to know a priori what choice for the tolerance level is reasonable.

Kernel Matching Estimator: According to Becker and Ichino (2002), it is a matching

method whereby all treated units are matched with a weighted average of all controls with
weights which are inversely proportional to the distance between the propensity scores of
treated and controls. Kernel weights the contribution of each comparison group member, so
that more importance is attached to those comparators providing a better match. The
difference from caliper matching, however, is that those who are included are weighted
according to their proximity with respect to the propensity score. The most common approach
is to use the normal distribution (with a mean of zero) as a kernel, where the weight attached
to a particular comparator is proportional to the frequency of the distribution for the
difference in scores observed (Bryson et al., 2002).

36
According to Caliendo and Kopeinig (2008), the drawback of this method is that possibly bad
matches are used as the estimator includes comparator observations for all treatment
observation. Hence, the proper imposition of the common support condition is of major
importance for kernel matching method. A practical objection to its use is that it will often not
be obvious how to set the tolerance. However, according to Mendola (2007), kernel matching
with 0.25bandwidth is most commonly used.

The question remains on how and which method to select. Clearly, there is no single answer
to this question. The choice of a given matching estimator depends on the nature of the
available data set (Bryson et al., 2002). After obtaining the predicted probability values
conditional on the observable covariates (the propensity scores) from the binary estimation,
matching will be done using a matching algorithm that is selected based on the data at hand.
Then the effect of household’s participation in the Aloe soap value chain initiative supported
by SOS Sahel Ethiopia’s intervention on a given outcome (outcome in this study is the
additional income obtained due to Aloe soap value chain initiative) (Y) is specified as:

(8)

Where is treatment effect (effect due to participation in the Aloe soap making process), is
the outcome on household i, is whether household i has got the treatment or not (i.e.,
whether a household participated in the Aloe soap making innovative approach or not).

However, one should note that and cannot be observed for the same
household at the same time. Depending on the position of the household in the treatment
(Aloe soap value chain initiatives), either or is unobserved outcome
(called counterfactual outcome). Due to this fact, estimating individual treatment effect is
not possible and one has to shift to estimating the average treatment effects of the population
than the individual one. Most commonly used average treatment effect estimation is the
‘average treatment effect on the treated ( ), and specified as:

(9)

As the counterfactual mean for those being treated, is not observed, one has to choose

a proper substitute for it in order to estimate the average treatment effect (ATT). One may

37
think to use the mean outcome of the untreated individuals, as a substitute to the

counterfactual mean for those being treated . However, this is not a good idea

especially in non-experimental studies. Because, it is most likely that components which

determine the treatment decision also determine the outcome variable of interest.

In this particular case, variables that determine household’s decision to participate in the Aloe
soap making process developed by the project interventions could also affect household’s
input use intensity, level of productivity, household income, etc. Therefore, the outcomes of
individuals from treatment and comparison group would differ even in the absence of

treatment leading to a self-selection bias. By rearranging, and subtracting from both

sides, one can get the following specification for ATT.

(10)

Both terms in the left hand side are observables and ATT can be identified, if and only if

; i.e., when there is no self-selection bias. This condition can be

ensured only in social experiments where treatments are assigned to units randomly (i.e.,
when there is no self-selection bias).

3.6.4.1. Assumptions
In non-experimental studies one has to introduce some identifying assumptions to solve the
selection problem. The following are two strong assumptions to solve the selection problem.

A) Conditional Independence Assumption (CIA): It is given as:

, (11)

Where, ⊥ indicates independence, X -is a set of observable characteristics, - Non-

participants and -Participants.

Therefore, given a set of observable covariates (X) which are not affected by treatment (in our
case, Aloe soap making participant), potential outcomes (level of productivity, income, etc)
are independent of treatment assignment (independent of how the Aloe soap making
participation decision is made by the household). This assumption implies that the selection is

38
solely based on observable characteristics and variables that influence treatment assignment
(Aloe soap making participation decision is made by the household) and potential outcomes
(productivity level, income, etc) are simultaneously observed (Bryson et al., 2002; Caliendo
and Kopeinig, 2008).

After adjusting for observable differences, the mean of the potential outcome is the same for
and , and . Instead of conditioning on ,
Rosenbaum and Rubin (1983), suggest conditioning on a propensity score (propensity score
matching). The propensity score is defined as the probability of participation for household
given a set which is household‘s characteristics ( ) = ( = 1/ ). Propensity scores are
derived from discrete choice models, and are then used to construct the comparison groups.
Matching the probability of participation, given covariates solves the problem of selection
bias using PSM (Liebenehm et al., 2009). The distribution of observables is the same for
both participants and nonparticipants given that the propensity score is balancing score
(Liebenehm et al., 2009). If outcomes without the intervention are independent of
participation given , then they are also independent of participation given ( ). This reduces
a multidimensional matching problem to a single dimensional problem. Due to this,
differences between the two groups are reduced to only the attribute of treatment assignment,
and unbiased impact estimate can be produced (Rosenb aum and Rubin, 1983).

B) Common support Assumption: It rules out perfect predictability of D given X. That is,
. This assumption ensures that persons with the same X values have a
positive probability of being both participants and non-participants. Given the above two
assumptions, the PSM estimator of ATT can be written as:

(12)

Where P(X) is the propensity score computed on the covariates X. Equation (12) is explained
as the PSM estimator is the mean difference in outcomes over the common support,
appropriately weighted by the propensity score distribution of participants.

39
3.6.5. Variable Definition and Measurement

3.6.5.1. Dependent Variable (Yi)

The dependent variable for this study is participation into a program which takes the value of
1 if the household participated in Aloe soap making technology and zero otherwise.

Income: This refers to the total income from Aloe soap sell, crops sell, livestock and their
products sales and income generated from off/non-farm activities per month. Adoption of
Aloe soap making technology is hypothesized to increase total income of the households.

3.6.5.2. Independent Variables

Age of Household Head (AGEHH): It is a continuous variable and measured in years. Aged
households are believed to be wise in resource use, on the other hand, young household heads
have long investment horizon and it is expected to have either positive or negative effect on
volume of Aloe soap processing. Adugna (2009) found that age of the household head have
negative effect on the elasticity of onion supply to the market. Thus, age of the HH is
hypothesized to have a positive relationship with participation choice decision of Aloe soap
producers.

Sex of the Household Head (SEXHH): It is a dummy variable taking zero if female and one
if male for variable to be considered. Culturally defined gender roles, social mobility
limitations and differential ownership of access to assets affect livelihood diversification
(Galab et al., 2002). Awol (2010) indicated negative relation between sale volume of poultry
and male-headed household. Mamo and Deginet (2012) found that sex of the household head
has statistically significant effect on whether or not a farmer participates in the livestock
market and his/her choice of a market channel. Thus, keeping the influence of other factors
constant; the likelihood of women’s choice of participation in Aloe soap processing livelihood
diversification strategy increases.

Distance from Market (DMKT): It is a continuous variable measured as the distance in

kilometer (Km) that the household travel to reach the nearby market. The closer the market,
the lesser would be the transportation charges, reduced walking time, and reduced other

40
marketing costs, better access to market information and facilities. In this study, distance to
nearest market is hypothesized to have a positive contribution to the adoption and households’
participation in an innovative Aloe soap value chain initiatives as their alternative livelihood
diversification strategy.

Credit Access (CRDAC): This is a dummy variable taking the value one if the household
takes loan and zero otherwise, which indicates credit taken for Aloe soap production. Access
to credit would enhance the financial capacity of the households to purchase the inputs,
thereby increasing Aloe soap production and market share size. Urquieta (2009) found that
access to loan was significant determinant of choices. It is also hypothesized that access to
credit would have influence on households’ choice decisions. Therefore, it is hypothesized
that access to credit will have positive effect on level of participation and technology adoption
in Aloe soap value chain initiatives.

Access to Extension Service (ACEXT): A dummy variable taking a value of one if Aloe
soap producer household has access to extension service and zero otherwise and representing
extension services as a source of information on technology. It is expected that extension
service widens the household’s knowledge with regard to the use of improved technologies,
wild Aloe plant conservation and domestication; promotion of economic and medicinal uses
of Aloe; and has positive impact on Aloe soap value chain initiatives volume. Therefore, this
variable is hypothesized to influence participation in Aloe soap value chain initiatives
positively.

Education of the Household Head (EDUHH): It is a binary variable measured in terms of

whether the household has a formal education at different level from illiterate to Grade 12.
Education broadens pastoralists and agro-pastoralists’ intelligence and enables them to
perform the Aloe soap production activities perceptively, accurately and efficiently.
Moreover, better educated households tend to be more innovative and are therefore more
likely to adopt the Aloe soap processing technology and systems. Formal education enhances
the information acquisition and adjustment abilities of the household, thereby improving the
quality of decision making (Fakoyaet al., 2007). Astewel (2010) found that if paddy producer
gets educated, the amount of paddy supplied to the market increases, which suggests that

41
education improves level of participation and sales that affects the marketable surplus.
Therefore, education of the HH head is hypothesized to influence the probability of choice of
participation in Aloe soap value chain initiative in supplementing HHs’ livelihood
diversification positively.

Livestock (TLU): This is a continuous variable measured in tropical livestock unit.

Pastoralists who have large livestock are anticipated to specialize in livestock production so
that they encourage allocating large share of the communal land for pasture. As Aloe covers
most of the grazing land, the higher the Aloe plant vegetation, the lesser the pasture will be.
On the other hand, it is assumed that household with larger TLU have better economic
strength and financial position to purchase sufficient amount of input (Kinde, 2007). But for
this study TLU is hypothesized to influences volume of Aloe soap processing negatively.

Family Size (FSIZHH): Family size of a respondent is a continuous variable measured in

terms of number of family members and expected to affect the household’s adoption of this
innovative Aloe soap making technology. As Aloe soap production is labor intensive activity,
Aloe soap production in general and market supply of Aloe soap products in particular is a
function of labor. Accordingly, families with more household members tend to have more
labor which in turn increase participation in Aloe soap processing and then increase Aloe soap
production. On the other hand, family size also decreases market supply because high
proportion of the product would be used for consumption. Anyways, for this study family size
is expected to influence positively the participation in Aloe soap value chain initiative and the
adoption of the new and simple Aloe soap making technology.

Membership to Cooperative (MCOOP): It is dummy variable and takes the value of one if
the household is member of the aloe soap making cooperatives engaged in business, otherwise
zero. It is expected to be associated with participation choice decision of Aloe soap producers.

Recurrent Drought (RDGT): It is a dummy variable measured in terms of whether the

livestock and crop production is decreased as compared to the normal time. It takes the value
of one if the drought occurred or zero otherwise.

42
Table 3: Summary of Variable Definitions and Measurement
Expected
Variables Type Definition Measurement Signs
Treatment Participation in aloe soap
(PALVCI) Dummy making 1 if yes, 0 otherwise
Covariates
AGEHH Continuous Age of head of household In year +
Number of household
FSIZHH Continuous members Number +
1 if Male, 0
SEXHH Dummy Sex of household head otherwise +
1 if literate, 0
EDUHH Dummy Education of household head illiterate +
Distance to the nearest
DMKT Continuous market In Kilometers -
Credit accessibility to 1 if access, 0
CRDAC Dummy Household head otherwise +
1 if access, 0
ACEXT Dummy Access to extension services otherwise +
Tropical Livestock
TLU Continuous Livestock holding size unit -
Knowledge about aloe plant
KAECU Dummy economic uses 1 if yes, 0 otherwise +
Family members
participating on aloe soap
FMPASM Dummy making +
Community income levels
participating on aloe soap
CMPASM Dummy making -
Aloe soap supplementing
ASLDV Dummy livelihood diversification 1 if yes, 0 otherwise +
Aloe soap marketability in
ALMKTY Dummy the local market 1 if yes, 0 otherwise +
Aloe soap competency or
ASCOMPT Dummy preferable 1 if yes, 0 otherwise -
Positive effects/rank of aloe
PEASVCI Dummy soap value chain +
RDGT Dummy Recurrent drought 1 if yes, 0 otherwise -

43
Before proceeding to estimate the data using logit model, checking the existence of
multicollinearity between explanatory variables tests were undertaken. The variance inflation
factor (VIF) technique was employed to detect the problem of multicollinearity for the
continuous variables VIF can be defined as;

(13)

Where, is the squared multiple correlation coefficient between and other explanatory
variables. The larger the value of VIF, the more troublesome it is. As a rule of thumb, if a VIF
of a variable exceeds 10, the variable is said to be highly collinear.

Similarly, for dummy variables contingency coefficients (CC) test were employed using the
following formula:

(14)

Where C is contingency coefficient, is chi-square value and n = total sample size.

For dummy variables if the value of contingency coefficients is > 0.75 the variable is said to
be collinear. Heteroscedasticity exists when the variances of all observations are not the same,
leading to consistent but inefficient parameter estimates. More importantly, the biases in
estimated standard error may lead to invalid inferences (White, 1980). Heteroscedasticity was
detected by using Breusch - Pagen test (hettest) in STATA 12.

Finally, the Aloe soap value chain initiative effect on pastoral and agro-pastral households
livelihood diversification strategy were estimated through STATA 12 software using
psmatch2 developed by Leuven and Sianesi (2003). In addition SPSS version 16.0 software
was deployed to analyze the descriptive statistics.

44
 4. RESULTS AND DISCUSSION

In this chapter, the social, organizational and institutional effects of aloe based livelihood
diversification; both descriptive and econometric results are presented and discussed. The
descriptive analysis employs the tools such as minimum, maximum, mean, percentage,
standard deviation and frequency distribution. In addition, t-test and chi-square (X2) statistics
were employed to compare participants and nonparticipants in to aloe soap value chain
initiative technology with respect to some explanatory variables.

Econometric analysis was conducted in order to analyze if there are significant livelihood
differences between participants and nonparticipants in to aloe soap value chain initiative and
identify the socio-economic, demographic and institutional factors affecting participation. The
study used PSM for identifying factors affecting participation in aloe soap value chain
initiative and whether there are significant differences between participants and non-
participants in terms of the income to enhance livelihood options.

4.1. Social, Organizational and Institutional Aspects of Aloe based Livelihoods

 Social aspects of Aloe based Livelihood Diversification Strategies: Based on the

result obtained from FGD, the project interventions on the NRM and NR based
income generation activities are economically affordable. Traditional pastoral
adaptation strategies for coping with climatic effects and other shocks attempt to
maintain their livelihoods through rational use of existing resources and affiliating
with other neighboring communities to share scanty resources.

 The introduction of Aloe soap value chain initiative was not easily accepted by the
community, because, the plant was not used to produce any economic benefits to the
local community for longer period of time. It took time to convince the community to

45
 use Aloe plant as source of livelihood and valuable to mitigate the risk of drought and
other shocks (KII).

 The pastoral community were convinced that Aloe plant species are the most reliable
and drought tolerant which grows throughout the year. Aloe plant species has now got
recognition from the local government and community members as the potential
income generating plant in supplementing the pastoral and agro-pastoral livelihood
diversification strategies. Currently, this aloe soap value chain initiative was able to
attract the attention of local government, donors, likeminded NGOs and observed
being scaled up to adjacent districts and Guji Zone. During this survey period, there
are about 12 aloe soap producing groups initiated and aloe plant domestication is
being exercised (KII).

 Organizational aspects of Aloe based Livelihood Diversification Strategies: The

pastoralists or agro-pastoralists groups were organized into cooperatives and union.
That helped them share capital investments, gain bargaining power relative to
middlemen, and enforce their contracts. In organizing themselves vertically, they
benefited not only by collecting but also providing basic processing services in order
to sell higher value aloe plant products on the market like soap for different purposes.
At the same time, aloe soap production is restricted externally by the presence of input
supply, fixed costs, lack of credit markets and the lack of infrastructures.

 Institutional aspects of Aloe based Livelihood Diversification Strategies: Under

the umbrella and guidance of the customary institutions, pastoralists and agro-
pastoralists of Borana have adapted in many ways to the uncertainty of their
environment. As all respondents agreed, the pastoral livelihood assets such as natural,
financial, human and social assets on which Borana community depend are
significantly affected by recurrent drought, other human and climate related shocks.
The pastoral and agro-pastoral communities have never tried to use aloe plant for
supplementing their usual means of livelihood. They have been using aloe plant only
for traditional medicines for both human and animals; and ritual purposes (FGD and
KII).

46
4.1.1. Aspects of Institutional Networks on Aloe Soap Value Chain Initiatives

A successful marketing chain of actor and institutions are needed to bring an aloe soap
product of satisfactory quality onto the market at a reasonable price. There were an
endogenous lack of organizational structure, with lack of information, risk and vulnerability
for the primary producers. This situation was improved by coordinating meetings among
actors and setting up institutional relationships, such as a contractual arrangement between
input suppliers and private traders at local and regional levels. This situation needed for
horizontal and vertical integration to allow a more effective/equitable distribution of margins.

As IFPRI (2006) has stated, in certain countries, the expansion of cellular phone networks has
greatly improved basic communications, making it possible for one actor to inquire about the
spot price of a product before deciding to bring it to the market. It is also necessary to explore
issues related to grants and credit guarantees for producers groups, in order to reduce the risk
of production and facilitate market entry. More fundamental investment in infrastructures and
transport always helps to increase efficiency within the market chain, lowering major sources
of transaction costs.

In order to promote businesses based on Aloe plant species, product diversification into body
lotions and shampoos is necessary to preserve minimum incomes for the aloe soap producers
once market problems have been taken care of and products become profitable. Competitions
occurred in the study area because of substitutions with other soap products introduced from
cross border.

4.1.2. Aspects of CBOs on Aloe Soap Value Chain Initiatives

The FGD has revealed that the Borana pastoralists have been in a favorable position to
develop an exceptionally efficient natural resource management. They were specialized on
extensive cattle breeding in a semi-sedentary production system. The limited availability of
permanent water at the traditional deep wells was the key variable that determined the rules
for the utilization of pastures. Through flexible natural resource use strategies and stratified
herd management they matched the livestock to the available grazing and water resources
during times of abundance as well as in scarcity. Institutional arrangements and networking

47
within and between pastoral groups were elaborated to enforce decisions among multiple
resource users by Community Based Organizations (CBOs) or local customary institutions.

In the target study area, livelihood revolves around livestock production, opportunistic
farming and the exploitation of common property natural resources. Since the over-extraction
of natural resources poses a threat to biodiversity, reconciliation between income generation
and conservation will be a realistic step to underpinning the goals of sustainable resource
management and at the same time improving livelihood diversification strategy through well
informed CBOs.

To make the social, organizational and institutional aspect of aloe soap value chain initiative
more productive to the target community; a market oriented production system must entail
several key characteristics. These are standardized and environmentally friendly production
procedures and a standard marketing mix by the producers and traders of aloe plant-based
herbal products are vital. Therefore, investigating appropriate devices is a major challenge in
managing aloe plants resources, regardless of whether marketing (utilization) and
conservation co-exist through a livelihood enabled production system.

Aloe soap production from aloe plant species has become socially acceptable employment
avenues for women (personal observation). These typically include soap product from aloe
plant raw materials that are collected, processed and sold. Aloe plants product is now
becoming family - based health (sanitation and hygiene) and livelihood oriented enterprises in
the pastoral and agro-pastoral areas of the targets under study. Traditional healers have been
running aloe plant based health care systems to earn their livelihoods. This aloe soap is
preferred by most of the community members or the consumers by its medicinal value of
ecto-parasites (like fungus and bacteria) and its skin moisturizing effect in addition to its
detergent effect.

Finally, the KIIs from government, SOS project staffs and community have clearly described
that CBOs have a greater role in promoting aloe plant production and productivity subsector.
In turn, this needs a new push and direction by defining a set of parameters to design and
develop a people centered, livelihood focused, and market oriented production systems vis-a-
vis conservation system. This needs to recognize both the opportunities and the challenges
faced by the aloe plants product development sub-sector and to plan a holistic program.

48
Meanwhile, biodiversity enhancement and livelihoods improvement goals need to be treated
as an integral part of the operation. Moreover, ecological and environmental factors,
regulatory mechanisms, technology choice and costs, market information, and the availability
of professional extension and support services are the key points that need to be considered in
the aloe based livelihood diversification strategy.

4.2. Description of Sample Households’ Characteristics

A combination of different descriptive statistics was performed on the sample households’

data to inform the subsequent empirical data analysis. To describe the sample households
included in this study both continuous and discrete variables were used. The descriptive
statistical analysis was run to observe the distribution of the independent variables.

The socio-economic and institutional characteristics of the sampled households such as age,
sex, family size, market distance, extension visit, accesses to credit, livestock holding, were
identified to affect participation in the program. Of the total 120 sample respondents
interviewed 60 were participants and the rest were non-participants of aloe soap making
technologies (Table 4).

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Table 4: Summary Statistics of Variables

Variable Mean Std. Dev Min Max

FSIZHH 6.64 2.99 2 16
PALVCI 0.5 0.5 0 1
SEXHH 0.43 0.5 0 1
AGEHH 38.24 13.73 18 87
EDUHH 1.46 0.94 1 4
PASP 1.13 0.42 1 3
KAECU 0.58 0.5 0 1
FMPASM 5.13 15.67 1
CMPASM 2.4 1.19 1 4
ASLDV 0.93 0.25 0 1
ALMKTY 0.43 0.5 0 1
ASCOMPT 0.77 0.42 0 1
MCOOP 0.5 0.5 0 1
CRDAC 0.7 0.46 0 1
DMKT 12.09 3.29 5 15
ACEXT 0.7 0.46 0 1
RFINSC 205.11 435.79 1
RDGT 0.83 0.37 0 1
PEASVCI 2.6 0.76 1 4
TLU 9.43 11.72 0 75

4.2.1 Respondents Total Income (TOINC) Estimate per Month

Under favorable conditions, that is, if the ingredients such as caustic soda, vegetable oil, water
and aloe sap, are available and other things remain constant, those household members who
participate in aloe soap making business have more income than those who are not.
Participant households undertake the aloe soap making business parallel to their usual
livelihood activities and able to fetch their additional income. Note that the participants’
income is not only from aloe soap sales, but also from livestock and livestock products sales

50
and other incomes they are opt to get under normal circumstances. It shows that the
participant’s income is better than those non-participant households (Table5).

Table 5: Respondents Total Income per Month (TOTINC) in Birr

PALVCI mean Std. Dev. min max
Non-participant 1647.00 846.11 540.00 3510.00
Participant 4731.31 1019.63 2801.54 6866.16

As the result in Table 5 shows, the mean monthly income of non-participants’ is Birr1647.00
whereas that of participants’ monthly mean income is Birr4731.31. The participants’ monthly
mean income is higher due to the income they additionally obtain from aloe soap processing
business.

4.2.2 Respondents Rank and Perception of the Aloe Soap Making Business

From all the respondents, there was no any negative effect reflected directly or indirectly. The
survey question was forwarded to check whether there exists any cultural or traditional
situation which hinders the community from using aloe plant for generating income. As
shown in Table 6, about 7% of the total women respondent and none of men have said that
aloe soap business has poor or no significant effect on their livelihood diversification strategy.
The majority of the respondents lay between good and very good way of positive attitude if
than aloe soap marketing value chain initiative is promoted. Similarly, 12% of total women
respondent and 14% of men respondents have said that aloe soap business has an excellent
positive contribution in supplementing their livelihood.

Table 6: Rank of Positive Effects of Aloe Soap Making Business

Sex Poor Good Very good Excellent Total

N % N % N % N % N %
Female 5 7 29 42 27 39 8 12 69 57.5
Male 0 0 24 47 20 39 7 14 51 42.5
Total 5 4 53 44 47 39 15 13 120 100

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The respondents were requested to express their perception based on sex category and ranked
their perception as in Table 7. The 93% of from the total respondent women and 88% of men
expressed their perception as they favor the aloe soap making business

Table 7: Respondents’ Perception of Aloe Soap Making Business

Favor/good Moderate/neutral Disfavor/not good Total

Sex
N % N % N % N %
Female 64 93 3 4 2 3 69 57.5
Male 45 88 4 8 2 4 51 42.5

4.3. Prospects & Determinant Factors of Aloe based Livelihood Diversification

Pastoralists have developed elaborate and complex mechanisms and institutions that enable
flexibility and opportunity mainly herd mobility and diversification. These institutions govern
mobility, resource use and redistribution, and have enabled pastoral societies to withstand
extreme pressures of both their environment and their competitors. The study has revealed
that wild aloe vegetation was thought to be abundant but has negligible economic contribution
to the livelihoods of the sample pastoral community. It was confirmed through KIIs that Aloe
soap value chain initiative was introduced to Borana by SOS Sahel before seven years during
2008/2009 on a trial basis through community participation. Before this initiative, aloe plant
was considered as invading plant covering their grazing areas. Hence, the community has
applied to the zonal government offices to clear-out the aloe plant species (FGD and KII).

To ensure institutional sustainability, different capacity building activities at community and

government level were provided and attempt to link the aloe based cooperatives/groups to the
respective government institutions through legal registration and forums. Due to the
intervention of aloe soap value chain initiatives in the study area, there are magnificent
changes observed regarding the economic use of aloe plant. Prior to the intervention, the aloe
plant species were considered as invading bush encroachment except its traditional medicinal
and ritual services. After the intervention, the aloe soap product was promoted at all events
both at local and national level. There were many networks created from the local traders in
the region to central city Addis Ababa. This innovative approach of making soap from
underutilized aloe plant species has alerted all the local community members, customary

52
institution, government and NGOs to promote as one of the livelihood diversification options
in the Borana rangelands.

Hence, FGD, KII and personal observation reveals that the aloe soap value chain initiatives
has got a wider acceptance from all corners that the households were initiated and organized
into cooperative forms, the government has given them a legal certification or work permit in
aloe soap production and even encouraged them to be organized in to ‘Aloe Soap Producers
and Forest Resources Products Marketing Cooperatives Union’ at Zonal level. The Borana
Zone Administration has given a place/land to construct bio-enterprise center where all the
range land products like aloe soap, gum and incense, honey and scent wood can be sold. Some
NGOs operating in Borana are now encouraging those interested pastoral and agro-pastoral
communities to domesticate aloe plants and fetch their income in a more advanced way than
before.

The aloe soap value chain system includes the individual households, customary institutions,
CBOs, input suppliers, the government line departments like cooperative Offices, Children
and Women Affaires, primary cooperatives, the cooperatives union, financial institutions like
Banks, NGOs, private traders, wholesalers, retailers and consumers. However, there is no as
such matured Aloe soap value chain systems developed in the area except input supply,
product development, promotion and marketing. Hence, the prospects of aloe soap value
chain initiative is promising to be more productive and relatively best option in supplementing
the livelihoods of the respective rural poor and gradually support the local economic
transaction which may lead to advanced and diversified products of aloe plant species found
in the country.

4.4. Econometric Results of Propensity Score Matching

As shown below, this section discusses the results of Propensity Score Matching in detail. To
measure the average treatment effect on the treated (ATT) for outcome variables, a logit
model was estimated in order to get the propensity scores. The odds ratio and marginal effect
is run to identify the variable on the level of household participation. Next a matching
estimator that best fit to the data was selected. Then based on those scores estimated and
matching estimator selected, matching between participants and non-participants was done to

53
find out the impact of the project on the mean values of the outcome variables. Therefore, this
section illustrates all the required algorithms to calculate the average treatment effect on the
treated, which helps us to identify the impact of the project.

4.4.1 Odds Ratio and Households Participation in Aloe Soap Processing

The odds ratio depicted in the Table 8 below shows that the coefficients of variables which
are influencing the probability of households to participate or not in the aloes soap making
business. Interpretation of coefficients will be easier if the logistic model can be written in
terms of the odds and log of odds (Gujarati, 2004). The odds ratio implies the ratio of the
probability that an individual will be a participant ( ) to the probability that he/she will not
be a participant ( ). The odds ratio is one of a range of statistics used to assess the risk
of a particular outcome (or disease) if a certain factor (or exposure) is present. The odds ratio
is a relative measure of risk, telling us how much more likely it is that someone who is
exposed to the factor under study will develop the outcome as compared to someone who is
not exposed. Odds are a way of presenting probabilities, but unless you know much about
betting you will probably need an explanation of how odds are calculated. The odds of an
event happening is the probability that the event will happen divided by the probability that
the event will not happen.

Westergren et al., (2001) has stated that if the odds ratios are greater than one, then the event
(in our case, ‘participation into aloe soap value chain initiative’) is more likely to happen than
not. If the odds ratio are less than one, then the event is less likely to happen than not.
Hence, as seen in the Table 8 below, age, second cycle of education (i.e., grade 5-8),
Knowledge about Aloe economic use (KAEU), Family members participating on aloe soap
making process (FMPASM), aloe soap supporting livelihood diversification (ASLDV), Aloe
soap marketability (ALMKT), Aloe soap competency in the market ( ASCOMPT), distance
from the market (DMKT), access to extension services (ACEXT) and livestock holding
(TLU) has more likely to participate and contributes to the households’ income through aloe
business.

54
Table 8: Logistic Regression of Odds Ratio of Participants
Variable Odds Ratio Standard Errors Z-Value
FSIZHH 1.086* 0.109 0.82
SEXHH 0.381 0.204 -1.80
AGEHH 1.001 0.022 0.70
EDUHH
2 0.482 0.403 -0.87
3 0.573 0.708 -0.45
4 0.422 0.624 -0.58
KAECU 3.540* 2.658 1.68
FMPASM 1.028 0.012 2.42
CMPASM 0.796 0.206 -0.88
ASLDV 12.996* 15.046 2.22
ALMKTY 3.964* 2.214 2.47
ASCOMPT 8.358* 7.542 2.35
CRDAC 1.025 0.629 0.04
DMKT 1.104* 0.101 1.07
ACEXT 0.863 0.456 -0.28
RDGT 0.615 0.545 -0.55
PEASVCI 0.574 0.215 -1.48
TLU 1.065* 0.028 2.41
_cons 0.007 0.018 -1.96
* Shows the variables that have a higher contribution to participate in aloe soap making business
NB: In EDUHH (Education of the HH)1 represents the illiterate sample (EDUHH) and serve as the
reference point; 2 represents samples with grade 1-4; 3 represents grade 5-8; and 4 represents grades
9-12.

4.4.2. Propensity Scores

Prior to running the logistic regression model to estimate propensity scores, the explanatory
variables were checked for existence of sever multicollinearity problem. A technique of
Variance inflation factor (VIF) was calculated to detect the problem of multicollinearity

55
among continuous explanatory variables. Accordingly, the VIF (X) result shows that the data
had no serious problem of multicollinearity (Appendix2). This is because, for all continuous
explanatory variables, the values of VIF were by far less than 10. Therefore, all the
explanatory variables were included in the model (Appendix 3).

Moreover, heteroskedasticity test was done using Breusch-Pagan/Cook-Weisberg test for

heteroskedasticity and the P-value was 0.2954 which is insignificant implying the absence of
the problem of heteroskedasticity (Appendix 4).

A logistic regression model was used to estimate the propensity scores of respondents which
helps to put in to practice the matching algorithm between the treated and control groups. The
matching process attempts to make use of the variables that capture the situation before the
start of the intervention. The logit result revealed a fairly low pseudo R 2 of 0.4057 (Table …
(below). The pseudo-R2 indicates how well the regressors X explain the participation
probability (Caliendo and Kopeinig, 2005). A low R value means participant households do
not have much distinct characteristics overall and as such finding a good match between
participant and non-participant households becomes easier (Yibeltal, 2008).

The maximum likelihood estimate of the logistic regression model result shows that
participation was influenced by 5 variables (Table 9). These are family size, education level,
distance from nearest market, access to extension service and recurrent drought affect the
chance of participation. In addition, households having higher number of livestock are more
likely to be a participant in the market development interventions of the aloe soap value chain
initiatives project and this is on the contrary to the finding of Zikhali (2008) in Zimbabuwe.

56
Table 9: Logit Results Household Program Participation

Variable Coefficient Standard Errors Z-Value

FSIZHH 0.083* 0.105 0.79
SEXHH -0.965*** 0.541 -1.78
AGEHH 0.001** 0.023 0.06
EDUHH
2 -0.730*** 0.894 -0.82
3 -0.556*** 1.235 -0.45
4 -0.863*** 1.082 -0.80
KAECU 1.264** 0.646 1.96
FMPASM 0.027** 0.022 1.26
CMPASM -0.228*** 0.226 -0.89
ASLDV 2.565** 1.286 1.99
ALMKTY 1.377 0.553 2.49
ASCOMPT 2.123 0.746 2.84
CRDAC 0.024* 0.580 0.04
DMKT 0.099* 0.089 1.11
ACEXT -0.148*** 0.561 -0.26
RDGT -0.486*** 0.790 -0.61
PEASVCI -0.555*** 0.366 -1.52
TLU 0.063** 0.027 2.30
_cons -4.921 2.781 -1.77
Number of Obs 120
Wald chi2(18) 60.090
Prob > chi2 0.000
Log pseudo likelihood -53.132
Pseudo R2 0.361
***, ** and * means significant at the 1%, 5% and 10% probability levels, respectively.
NB: In EDUHH (Education of the HH) 1 represents the illiterate sample and serve as the reference
point; 2 represents samples with grade 1-4; 3 represents grade 5-8; and 4 represents grades 9-12.

57
4.4.3. Matching Participant and Comparison Households

As already noted, choice of matching estimator is decided based on the balancing qualities of
the estimators. According to Dehejia and Wahba (2002), the final choice of a matching
estimator was guided by different criteria such as equal means test referred to as the balancing
test, pseudo-R2 and matched sample size. Balancing test is a test conducted to know whether
there is statistically significant difference in mean value of per-treatment characteristics of the
two groups of the respondents and preferred when there is no significant difference.
Accordingly, matching estimators were evaluated via matching the participant and non-
participant households in common support region.

The estimated model appears to execute well for the intended matching exercise. The pseudo-
R2 value is 0.35 (Table 10). The pseudo- R2 indicates how well the covariates explain the
participation probability. Therefore, a matching estimator having balanced (insignificant mean
differences in all explanatory variables) mean, bears a low pseudo R2 value and also the one
that results in large matched sample size is preferred. In line with the above indicators of
matching quality, kernel of Epanechnikov type (default to kernel matching) with no band
width is resulted in relatively low pseudo R2 with best balancing test (all explanatory
variables insignificant) and large matched sample size as compared to other alternative
matching estimators indicated in Table 10. Then it was selected as a best fit matching
estimator for dataset.

58
Table 10 : Logistic Regression for Choices of Matching Algorithm
Variable Coefficient Standard Errors Z-Value
FSIZHH 0.083* 0.105 0.79
SEXHH -0.965*** 0.541 -1.78
AGEHH 0.001** 0.023 0.06
EDUHH
2 -0.730*** 0.894 -0.82
3 -0.556*** 1.235 -0.45
4 -0.863*** 1.082 -0.80
KAECU 1.264* 0.646 1.96
FMPASM 0.027** 0.022 1.96
CMPASM -0.228*** 0.256 -0.89
ASLDV 2.565 1.286 1.99
ALMKTY 1.377* 0.553 2.49
ASCOMPT 2.123 0.746 2.84
CRDAC 0.024** 0.580 0.04
DMKT 0.099** 0.089 1.11
ACEXT -0.148*** 0.561 -0.26
RDGT -0.486*** 0.790 -0.61
PEASVCI -0.555*** 0.366 -1.52
TLU 0.063** 0.027 2.30
_cons -4.921 2.781 -1.77
Number of Obs 120
Wald chi2(18) 34.65
Prob > chi2 0.011
Log pseudo likelihood -53.132
Pseudo R2 0.361
***, ** and * means significant at the 1%, 5% and 10% probability levels, respectively.
NB: In EDUHH (Education of the HH) 1 represents the illiterate sample and serve as the reference
point; 2 represents samples with grade 1-4; 3 represents grade 5-8; and 4 represents grades 9-12.

59
Figure 4: Graph of Kernel density of propensity score distribution

.6 .8 1 1.2 1.4 1.6 1.8 2

kdensity pscore
.4
.2

Common Support Area

0

0 .2 .4 .6 .8 1
x

kdensity pscore: Non participants

kdensity pscore: Participants

Source: Field Survey 2014

On the basis of this participation model, we then computed the distribution of the propensity
score for each household included in the treated and control groups to identify the existence of
a common support. Figure 7 portrays the distribution of the household with respect to the
estimated propensity scores. Most of the treatment households are found in the right side and
partly in the middle. On the other hand, most of control households are found in the left side
of the distribution. In general, the graph shows that there is wide area in which the propensity
score of participants is similar to those of nonparticipants.

60
4.4.4. Estimates of Average Treatment Effect on the Treated (ATT) Income

Given that those who follow through in participating may very well be systematically
different from those who are assigned to treatment but do not participate, it may not be
appropriate to simply compare those randomized to treatment with those in the randomized-
out control group. The voluntary nature of participation in many interventions introduces the
potential for selection bias, where we only observe outcomes for a nonrandom subsample of
all units assigned to treatment. This is an example where propensity-score matching (PSM)
could be used to match participants with members of the control group who are similar in the
same selective ways as those who receive services.

As shown in Table 12, the ATT reveals that participants would have lost a physical amount of
birr near to 2688.70 if they didn’t participate in aloe soap making business. The difference
that the participants can make in fetching their additional income is that totals to about
Birr2688.70 per month.

Table 11: Estimate of ATT of income per month

Variable Sample Treated Controls Difference S.E. T-stat
TOTINC Unmatched 4731.31 1647.00 3084.31 171.05 18.03
ATT 4683.21 1994.51 2688.70 343.72 7.82
Note: S.E. does not take into account that the propensity score is estimated

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 5. CONCLUSONS AND RECOMMENDATIONS

5.1 Conclusions

This study found out that in addition to the traditional pastoral livelihood diversification
strategies which is based on livestock and livestock products, the sample households were
hunting alternative livelihood strategies including aloe soap making. Furthermore, the study
concludes that households differed on the actual livelihood strategies adopted depending on
the sex, age and family member participating in the aloe soap making business. The sample
households faced challenges due to recurrent drought, unusual settlements, expansion of farm
lands, clan conflict, human capital (illiteracy & lack of appropriate skills). At the same time,
aloe soap production is restricted externally by the presence of input supply, fixed costs, lack
of credit markets and the lack of infrastructures.

As shown in the result, there was cross-sectional data (2012-2013) collected from both
participant and non-participant sample households and analyzed using propensity score
matching method. Accordingly, the average treatment effect on the treated (ATT), that is, the
difference between the mean values of the outcome variable of treated and control of the
intervention has shown the total income earned per month. The participants have received a
total income of about Birr 2688.70 (Two Thousand Eight Hundred Eleven Birr and 88 cents)
per month (Table 11) from the aloe soap production over the counter parts. This difference
was found to be significant at 5% level.

The aloe soap value chain initiative was implemented to supplement the pastoral and agro-
pastoral livelihood diversification strategies. Thus, the sample households had diversified
their livelihood strategies to ensure survival and meet desired livelihood outcomes. The
pursuit of aloe based alternative livelihood strategies was a struggle against challenges, which
needed collective solutions from community, elders, customary institutions, the government,
research centers and NGOs to guarantee success.

62
There was a significant association observed between increased vulnerability of a livestock-
only livelihood strategy and adoption of alternative livelihood diversification strategies.
Similarly, there was a significant association between household characteristics and pursuit of
alternative livelihood strategies.

The finding of this study applies to these particular sample households who have access to
aloe based livelihoods. They cannot be regarded as representative for all pastoralists and agro-
pastoralists in Borana. However, these insights provide an impression of how the livelihoods
diversification strategies can be supplemented by aloe based products in Borana and similar
agro-ecologies and vegetation covers in the country. The constraints are likely to exist
elsewhere and set the frame of aloe based production potential as well as engagement in
additional activities, perhaps even within most rural, small-scale pastoral and agro-pastoral
households in Borana.

The fact that different livelihood strategies were identified indicates a tendency that calls for
different targeted interventions. The aloe soap processing activities are, however, currently
not equally accessible to all households. As the non-livestock activities are to be conducted as
either additional activities or alternative activities, it is possible that even the poorest
household can benefit. Therefore, prioritizing a focus on aloe based alternative livelihood
diversification activities hence appears to be the most reasonable strategy, as the strategy is to
address the destitute households as well.

63
5.2 Recommendations/Suggestions

The finding of this study reveals a positive and statistically significant effect of the project on
participants, an effort of such kind plays a vital role in making pastoralists and agro-
pastoralists market oriented and makes them better off by making their aloe soap making a
business enterprise. The increased level of input use (ingredients, machineries/equipment, and
market information and access) by the side of participants made them beneficiaries of the
increased productivity and earners of higher net income and profits. The development of input
market of such kind which is participatory - supplied by the private sector, integrated
(multifaceted), and sustainable with the provision of market information and new ways of
doing can increase the welfare of the communities in the long run and income in the short run.

In addition, it was observed that the interventions that were delivered by the project were not
the kind that develop dependency syndrome among the beneficiaries. It was a kind of making
beneficiaries self-reliant and resilient as to from where aloe plant is found, as to how to plan
domestication and conservation of the wild aloe plant, to whom to sell and more interestingly
as to how to make informed decision regarding aloe soap producing and marketing.
Therefore, there has to be such an institution which serve as a bridge among the stakeholders,
stimulate the use of NTFPs like the abundant and underutilized aloe plants in the region
informing the pastoral development offices and the CBOs (co-operatives) and ‘innovative
knowledge adviser’ in the nation at large.

Moreover, scaling up of the aloe soap value chain initiative practice of the project to other
places has paramount importance for the development endeavor of the country in line with
enhancing food security of the rural poor and mitigation of the rigorous climate change
affecting the world. Based on the above results, the following are some of the
recommendations that need to get due attention by all stake holders working with pastoralists,
agro-pastoralist and other areas with similar available plant vegetation:

64
 The research centers and government line departments, and customary institutions need to
value the existing natural resources through value addition and innovative interventions
than focusing on handouts that promotes dependency syndrome.

 Promote Aloe soap value chain initiative to support the indigenous adaptation mechanisms
which are environmentally sound and effective. Aloe plant based intervention has multiple
advantages as it is drought tolerant, good in soil and water conservation and medicinal
value to both human and animals.

 Introduce the alternative livelihoods diversification strategies like aloe soap production
activity that may reduce the consequences of depending on livestock only, which directly
depend on natural resources and highly sensitive to human and natural triggered shocks.

 Incorporate aloe plant production and conservation issues in to the local government
development programs and extension services to improve the resilient (resistance to
hazards) capacity of pastoralists and means of minimizing its impact to recurrent shocks.
As aloe plant resource is highly exposed to overexploitation under current circumstance,
attention should be given for the conservation and protection of these aloe plant species.

 Undertake further research on how to invigorate aloe plant cultivation, propagation and
product diversification.

65
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 APPENDICES

Appendix 1 Conversion Factors Used to Estimate TLU

Types of animals TLU
Cow 1
Ox 1
Bull 1
Heifers 0.75
Cafe 0.40
Sheep/ Goat 0.10
Donkey 0.50
Horse/ mule 0.80
Camel 1
Source: Freeman et al., (1996)

Appendix 2: Aloe Vera Plant and the Bioactive Chemical Constituent

Source: Adapted from (http://mumbai.olx.in/Aloe-vera-products-id-4852352)

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Appendix 3: Multicollinearity Test for Continuous Explanatory Variables

Variable VIF 1/VIF

FSIZHH 1.50 0.668
SEXHH 1.33 0.750
AGEHH 1.66 0.601
EDUHH
2 1.37 0.732
3 1.18 0.846
4 1.51 0.663
KAECU 1.53 0.652
FMPASM 1.23 0.810
CMPASM 1.51 0.664
ASLDV 1.11 0.898
ALMKTY 1.24 0.809
ASCOMPT 1.21 0.827
CRDAC 1.18 0.844
DMKT 1.31 0.765
ACEXT 1.23 0.814
RDGT 1.28 0.783
PEASVCI 1.30 0.772
TLU 1.27 0.789
Mean VIF 1.33

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