This research was carried out with the aim examining and understanding the different nonfarm activity diversification strategies pursued by the households in Deber Elias Woreda. A multi stage sampling procedure was employed to select 120 households. First the Woreda Kebeles are stratified in to three region based on the agro ecology. From each stratum, three sample target kebeles and respective villages selected for data collection. Descriptive statistics, wealth Ranking, income portfolio analysis and binary logit model was used to analyze quantitative data. Narration used to analyze the qualitative data. The income portfolio analysis revealed that agriculture(crops and livestock production) is the main livelihood activity in the study area by contributing 86.9 % of the total income of studied households and followed by nonfarm activity (varieties of activities which are not farm related) income which accounts for 5.7% of the total income of sampled households. Off-farm activities (agricultural wage labor and other activities related to agriculture) contribute 5.1% of the total income and remittances (the flow of cash and other resources from relatives and others) contribute the remaining 2.3% share of the total income. Only 40.8 % of the sample respondents participate in nonfarm activity diversification activities. Regarding the participants in diverse nonfarm activity activities in the study area female-headed households diversified more than male-headed households, Better offs diversified more than poor, Educated households diversified better than illiterates and households with large number of family members more diversified than those with small family size. The binary logit model result for determinants of nonfarm activity diversification reveals that sex of household head, educational status of household head, credit access; landholdings of households and family size were statistically significant. Lack of technical skill, lack of favorable credit service and saving institution, absence of organized institutions and poor infrastructural development found as the main challenges that affect participation of nonfarm activity income diversification in the study area.

Keywords: Participants; non-participants; diversification; income and nonfarm activity