Although non-farm enterprises are
ubiquitous in rural Sub-Saharan Africa, little is yet known
about them. The motivation for households to operate
enterprises, how ... Show More +productive they are, and why they exit the
market are neglected questions. Drawing on the Living
Standards Measurement Study -- Integrated Surveys on
Agriculture and using discrete choice, selection model and
panel data estimators, this paper provide answers using data
from Ethiopia, Niger, Nigeria, Malawi, Tanzania, and Uganda.
The necessity to cope following shocks, seasonality in
agriculture, and household size can push rural households
into operating a non-farm enterprise. Households are also
pulled into entrepreneurship to exploit opportunities.
Access to credit and markets, household wealth, and the
education and age of the household head are positively
associated with the likelihood of operating an enterprise.
The characteristics are also associated with the type of
business activity a household operates. Rural and
female-headed enterprises and enterprises with young
enterprise owners are less productive than urban and
male-owned enterprises and enterprises with older owners.
Shocks have a negative association with enterprise operation
and productivity and a large share of rural enterprises does
not operate continuously over a year. Enterprises cease
operations because of low profits, a lack of finance, or the
effects of idiosyncratic shocks. Overall the findings are
indicative that rural enterprises are "small businesses
in a big continent" where large distances, rural
isolation, low population density, and farming risks limit
productivity and growth. Show Less -