Diversifying livelihood in Egypt: How is it changing?

Livelihood diversification is attracting considerable interest as a tool to cope with economic shocks and resist vulnerability. This brief discusses evidence on livelihood diversification in Egypt with a particular focus on wealth and urban-rural divides. While distress is a potential reason for higher diversification in urban areas, rural households tend to adopt more diversified strategies. Sustainable employment or entrepreneurship opportunities in the rural non-farm sector are needed to secure livelihood of poor households. Improving education and access to credit will reduce high entry barriers of poor households to remunerative income-generating activities.

• Rural households tend to have a more diversified livelihood portfolio compared to urban households.
• In rural areas, there is a notable diversification away from agriculture activities over time.
• The non-farm sector is increasingly becoming an entry point for poor rural households to explore alternative livelihood strategies. Policies are needed to create sustainable employment or entrepreneurship opportunities in the rural non-farm sector to improve livelihood choices.
• Targeted interventions that support access of poor rural households to remunerative non-farm activities could include asset transfer or livestock acquisition given that livestock activities regained consideration in 2018 among poor rural households.
• Wealthy households in urban areas tend to depend on relatively more specialized livelihood clusters that stayed stable across the years implying that distress is a potential reason for diversification in urban areas.
• Reducing market and financial entry barriers of poor households to diversify into formal income-generating activities entails improving their access to credit and target education interventions towards poor households.
• Complementary measures such as job-trainings and career services could remove constraints and expand opportunities to secure the livelihood of poor households through formal employment or entrepreneurship and reduce their vulnerability.