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Household enterprises in Mozambique : key to poverty reduction but not on the development agenda ?

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  • Fox, Louise
  • Sohnesen, Thomas Pave

Abstract

Household enterprises -- usually one-person-operated tiny informal enterprises -- are a rapidly growing source of employment in Sub-Saharan Africa, especially in lower-income countries. Household enterprises tend to operate with limited interest or support from governments. This is the case in Mozambique, where neither the poverty reduction strategy nor small and medium enterprise development policies include household enterprises. Using multiple household surveys, including a recent panel data set, this paper identifies the characteristics of the sector and its development during the period in which Mozambique experienced rapid economic growth. The analysis finds that household enterprises in Mozambique are associated with higher household consumption, lower rural poverty, as well as upward mobility, particularly for rural and poorly educated households. But if the Mozambican government wants to tap this potential, it will need a different strategy than one designed to support small and medium enterprises, because creation and survival in this sector seems to depend on a set of factors related to the human capital in the household and development in the location, not the soft business environment constraints, such as licensing and permitting and corruption, which are cited by larger business.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6570.

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Date of creation: 01 Aug 2013
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Handle: RePEc:wbk:wbrwps:6570

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Keywords: Access to Finance; Rural Poverty Reduction; Housing&Human Habitats; Regional Economic Development;

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  1. Loening, Josef & Mikael Imru, Laketch, 2009. "Ethiopia: Diversifying the Rural Economy. An Assessment of the Investment Climate for Small and Informal Enterprises," MPRA Paper 23278, University Library of Munich, Germany.
  2. Arndt, Channing & Simler, Kenneth R., 2005. "Estimating utility-consistent poverty lines," FCND briefs, International Food Policy Research Institute (IFPRI) 189, International Food Policy Research Institute (IFPRI).
  3. Alfani, Federica & Azzarri, Carlo & d'Errico, Marco & Molini, Vasco, 2012. "Poverty in Mozambique : new evidence from recent household surveys," Policy Research Working Paper Series 6217, The World Bank.
  4. Channing Arndt & M. Azhar Hussain & E. Samuel Jones & Virgulino Nhate & Finn Tarp & James Thurlow, 2011. "Explaining Poverty Evolution: The Case of Mozambique," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Working Paper W, World Institute for Development Economic Research (UNU-WIDER).
  5. Mead, Donald C. & Liedholm, Carl, 1998. "The dynamics of micro and small enterprises in developing countries," World Development, Elsevier, Elsevier, vol. 26(1), pages 61-74, January.
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Cited by:
  1. Nagler, Paula & Naudé, Wim, 2014. "Non-Farm Entrepreneurship in Rural Africa: Patterns and Determinants," IZA Discussion Papers 8008, Institute for the Study of Labor (IZA).
  2. Owoo, Nkechi S. & Naudé, Wim, 2014. "Non-Farm Enterprise Productivity and Spatial Autocorrelation in Rural Africa: Evidence from Ethiopia and Nigeria," IZA Discussion Papers 8295, Institute for the Study of Labor (IZA).

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