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Non-Farm Entrepreneurship in Rural Africa: Patterns and Determinants

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  • Nagler, Paula

    (Erasmus University Rotterdam)

  • Naudé, Wim

    (RWTH Aachen University)

Abstract

We are the first to provide a comparative empirical analysis of non-farm entrepreneurship in rural Africa, using the World Bank's unique LSMSISA dataset. This dataset covers six countries over the period 2005 to 2012. We find that rural enterprises tend to be small, informal household enterprises that provide predominantly goods and services to the local economy, and operate intermittently due to seasonality in farming. We furthermore establish that the likelihood of operating an off-farm enterprise depends on individual capabilities, household characteristics and institutional factors. While the results of some variables show consistency across the sample, we also find much heterogeneity, suggesting that rural entrepreneurship is also a response to country-level circumstances and policies. Although more than 50 years have passed since rural development was identified as a priority for African countries, rural entrepreneurship continues to fulfill mainly a risk-diversifying role. This may suggest that policies to foster effective rural-urban migration and wage employment in rural areas, have largely failed in Africa.

Suggested Citation

  • Nagler, Paula & Naudé, Wim, 2014. "Non-Farm Entrepreneurship in Rural Africa: Patterns and Determinants," IZA Discussion Papers 8008, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8008
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    Cited by:

    1. Ghebru, Hosaena & Amare, Mulubrhan & Mavrotas, George & Ogunniyi, Adebayo, 2018. "Role of land access in youth migration and youth employment decisions: Empirical evidence from rural Nigeria," NSSP working papers 58, International Food Policy Research Institute (IFPRI).
    2. Calza, Elisa & Goedhuys, Micheline, 2016. "Entrepreneurial heterogeneity and the design of entrepreneurship policies for economic growth and inclusive development," MERIT Working Papers 2016-043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Sènakpon F.A. Dedehouanou & Dugassa Aichatou Ousseini & Abdoulaziz Laouali Harouna & Jabir Maimounata, 2015. "Spillovers from Off-farm Self-Employment Opportunities in Rural NIGER," Working Papers 2015/03, Maastricht School of Management.
    4. Adesugba, Margaret Abiodun & Mavrotas, George, 2016. "Youth employment, agricultural transformation, and rural labor dynamics in Nigeria," IFPRI discussion papers 1579, International Food Policy Research Institute (IFPRI).
    5. Sinne Borby Ørtenblad & Torben Birch-Thomsen & Lukelo Roden Msese, 2019. "Rural Transformation and Changing Rural–Urban Connections in a Dynamic Region in Tanzania: Perspectives on Processes of Inclusive Development," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(1), pages 118-138, January.
    6. Bannor, Richard Kwasi & Ros-Tonen, Mirjam A.F. & Mensah, Princess Ophelia & Derkyi, Mercy & Nassah, Valerie Fumey, 2021. "Entrepreneurial behaviour among non-timber forest product-growing farmers in Ghana: An analysis in support of a reforestation policy," Forest Policy and Economics, Elsevier, vol. 122(C).
    7. Luc Christiaensen & Kaminski Jonathan, 2016. "Working Paper 229 - Structural change, economic growth and poverty reduction – Micro-evidence from Uganda," Working Paper Series 2322, African Development Bank.
    8. Nagler, Paula & Naudé, Wim, 2017. "Non-farm entrepreneurship in rural sub-Saharan Africa: New empirical evidence," Food Policy, Elsevier, vol. 67(C), pages 175-191.
    9. Wiggins, S., 2016. "IFAD RESEARCH SERIES 1 - Agricultural and rural development reconsidered: a guide to issues and debates," IFAD Research Series 280035, International Fund for Agricultural Development (IFAD).
    10. Nkechi S. Owoo, 2016. "Determinants of choice of economic sector in the non-farm economy in Ghana," African Journal of Economic and Sustainable Development, Inderscience Enterprises Ltd, vol. 5(1), pages 31-54.
    11. Salami, A. & Kounagbe Lokonon, B.O., 2018. "Entrepreneurship and Farm Profit in Rural Niger," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277015, International Association of Agricultural Economists.
    12. Muluken Elias Adamseged & Philipp Grundmann, 2020. "Understanding Business Environments and Success Factors for Emerging Bioeconomy Enterprises through a Comprehensive Analytical Framework," Sustainability, MDPI, vol. 12(21), pages 1-18, October.
    13. Nagler, Paula & Naudé, Wim, 2014. "Young Entrepreneurs in Rural Africa: Prevalence, Determinants, Productivity," IZA Discussion Papers 8564, Institute of Labor Economics (IZA).
    14. Nagler, Paula & Naudé, Wim, 2014. "Labor Productivity in Rural African Enterprises: Empirical Evidence from the LSMS-ISA," IZA Discussion Papers 8524, Institute of Labor Economics (IZA).
    15. Independent Evaluation Group, 2016. "Growing the Rural Nonfarm Economy to Alleviate Poverty," World Bank Publications - Books, The World Bank Group, number 28971, December.
    16. Balla Emese, 2015. "Territorial Distribution Of The Rural Development Supports For Micro-Enterprises In Romania In The 2007 – 2013 Programming Period," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 39-47, August.
    17. Nagler,Paula & Naude, Wim & Nagler,Paula & Naude, Wim, 2014. "Non-farm enterprises in rural Africa : new empirical evidence," Policy Research Working Paper Series 7066, The World Bank.

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    More about this item

    Keywords

    entrepreneurship; rural development; Sub-Saharan Africa; informal sector; labour markets; small business; SMEs;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets

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