Towards identifying enablers and inhibitors to on-farm entrepreneurship: evidence from smallholders in KwaZulu-Natal, South Africa

Abstract

Enabling on-farm entrepreneurship is an important step to enhance the contribution of smallholder agriculture to rural employment and poverty reduction in South Africa. Using attributes derived from positive psychological capital as proxies for entrepreneurship and data collected from 458 smallholders in and around irrigation schemes in KwaZulu-Natal, the study empirically examines factors affecting smallholder engagement in entrepreneurship activities. Findings show that access to extension and information from scheme committees, being a male farmer, having more earned income, membership to a cooperative and access to markets have a positive effect on farmers' entrepreneurial behaviour. Factors inhibiting entrepreneurship in the context of smallholder farming include land tenure insecurity, access to land without the necessary complementary resources, consumption credit and staying far away from irrigation schemes. The study recommends addressing gender bias regarding access to resources and information. Promoting interactive learning through networking will also result in positive entrepreneurial behaviour. There is also a need for the provision of demand-driven extension services, facilitation of market linkages and enhancing access to finance for would-be entrepreneurs. Access to credit should be directly linked to agricultural production through input vouchers and value chain financing. Addressing land tenure issues along with access to other complementary resources, inputs and services will also enhance on-farm entrepreneurship in the smallholder agriculture sector.