The objectives of this paper are: measure the prevalence of rural poverty in 1997 and 2000, based on the nationwide Tegemeo survey; categorize households according to whether they were above the poverty line in both 1997 and 2000, entered into poverty or exited from poverty between 1997 and 2000, or were above the poverty line in both years; identifies the household-level and community-level factors associated with rural poverty through econometric analysis; and the implications of these results for the design of appropriate poverty reduction strategies. Such analysis is intended to guide donor programs and interventions designed to attack the roots of chronic poverty.