Non-farm Enterprises Research Articles

Employment Growth in Urban Informal Non-Farm Enterprises in Assam

The paper analyses the growth in employment in the urban informal non-farm enterprises (INFEs) in the northeastern state of Assam during the first half of the second decade of the 21st century. The findings of the paper has brought out that employment in the urban INFEs has been growing significantly during the first half of the 2010s, while its rural counterpart witnessed an absolute decline in employment. Across the sectors within the urban INFEs, the services enterprises witnessed the highest growth in employment followed by trading enterprises, while employment growth in manufacturing enterprises was abysmally low.

Do Non-farm Enterprises Offer Pathways for Upward Mobility in Rural Pakistan? Evidence from Panel Dataset

This study has analysed the dynamics of rural non-farm enterprises and their role in employment provision, equity enhancement and poverty alleviation in Pakistan. Multiple data sources have been used including cross-sectional and panel datasets. The results show that majority of the rural non-farm enterprises in Pakistan are micro-enterprises with only a limited share in manufacturing. They are informal and have poor forward and backward linkages and high closure rate. Despite the poor asset base, they are providing jobs to more than half of the rural population, contributing to reduction in poverty and equity enhancement among the rural masses. Rich households own enterprises and poor households gain employment from non-farm enterprises. Non-farm economy has a significant impact in reducing multiple deprivations and also has a significant positive impact in pulling households out of poverty with the passage of time. Pakistan, being a country where most of the population is still residing in rural areas and where rural land is not equitably distributed; such non-farm activities are highly important not only to tackle the ongoing food security challenges but also for resource diversification of households. JEL Classification: I32, J21, J43, O14, Q10, R11 Keywords: Rural Development, Non-farm Sector, Employment, Poverty, Multidimensional Poverty

English

Bee decline is a threat worldwide. An extension project was initiated to make the general public, industry, and municipalities aware of this problem. This study demonstrated pollinator habitat suitable for Maine farms by developing cooperation between the Maine wild blueberry industry and a regional commercial waste landfill. The reason for involving the landfill industry was to demonstrate and encourage non-farm enterprises to become involved in pollinator conservation. This project arose from previous research of ours on pollinator reservoirs in the Maine (USA) wild blueberry agro-ecosystem with the objectives of: (1) comparing three seed mixes, (2) providing demonstration areas where farmers and the general public can see such gardens, and (3) encouraging others to plant for pollinators. The methods involved planting two types of gardens in 2015, one that contained three different commercially available pollinator forage seed mixes, and one that contained shrubs and some perennials that are visited by pollinators early and late in the season, but that are not readily grown in a wildflower meadow. For all three seed mixes, at least some plant species produced flowers that were visited by bees, but there were also gaps in flowering and some species on which we saw few bees. We observed more bees coming to flowers of corn poppy, tall yellow clover, oxeye daisy, black-eyed Susan, anise hyssop, and bergamot. Ox-eye daisy and black-eyed Susan were not in any of the seed mixes but were allowed to grow among the sown plants. More than 600 people came through the booth or toured the gardens at four open houses in 2015 and 2016, and many people know of the project through presentations we have given. The stakeholders and public learned about bees and floral resources. Several municipalities and farmers have planted pollinator reservoirs since this project was initiated. Key words: Pollinator reservoirs, wildflower seed mix, demonstration, landfill, wild blueberry.

Employment Deceleration in the Unorganised Rural Non-Farm Sector in Assam

The aim of this paper is to examine the recent employment trends in the unorganised rural non-farm enterprises (URNFEs) in Assam. The analysis based on the National Sample Survey (NSS) 67th and 73rd quinquennial rounds of enterprise survey data reveals that there has been an absolute decline in employment in the URNFEs in the state during 2010-11 to 2015-16. Much of this decline in employment took place in the services sector, though the other sectors such as, manufacturing and trading also experienced a decline in employment. The growth rate of real output of the URNFEs in the state has also been very slow. The employment elasticity of the URNFEs turned out to be negative and fairly high indicating the failure of the sector to create employment opportunities in the state despite having immense potentiality for it.

Understanding the Role of Rural Non-Farm Enterprises in Africa’s Economic Transformation: Evidence from Tanzania

Tanzania’s recent growth boom has been accompanied by a threefold increase in the share of the rural labour force working in nonfarm employment. Although households with nonfarm enterprises are less likely to be poor, a substantial fraction of these households fall below the poverty line. Heterogeneity in the labour productivity of rural nonfarm businesses calls for a two-pronged strategy for rural transformation. Relatively unproductive enterprises may be part of a poverty reduction strategy but should not be expected to contribute to employment and labour productivity growth. Failure to account for this heterogeneity is likely to lead to disappointing outcomes.

Access to mobile phones and the wellbeing of non-farm enterprise households: Evidence from Ghana

In this paper, we use the sixth round of the Ghana Living Standards Survey (GLSS 6) and robust methods to examine the access to mobile phones and wellbeing of non-farm enterprise households in Ghana. The findings of the study show that having access to a mobile phone improves the chances of being non-poor. With regards to the transmission channel, the results show that access to mobile phones is positive and significantly related with the revenues of nonfarm enterprises, suggesting that having mobile phones may expedite the business activities of nonfarm enterprises and thus leads to higher sales revenues. Finally, the locality disaggregated estimations of the effect of access to mobile phones on non-farm household wellbeing indicate that the significant positive effect of access to mobile phones on household wellbeing seems to be the case only among rural nonfarm enterprise households with urban nonfarm enterprise households' wellbeing not reliant on their access to mobile phones. However, having access to mobile phones improves the sales revenue of nonfarm enterprises in both rural and urban areas.

Social Protection Programmes, Agricultural Production and Youth Employment Nexus in Nigeria: A Qualitative Discus from LSMS-ISA

This study examined how effective implantation of social protection programmes in the agricultural sector will induce youth participation, thereby creating employment for the youths and reduce the incidence of households’ poverty in Nigeria. The study engaged a qualitative discuss methodology from the Living Standard Measurement Study-Integrated Households Panel Survey on agriculture for two farming seasons (post-planting and post-harvest seasons). Results showed that, out of the three main activities (agricultural, non-farm enterprise and wage employment) engaged by the Nigerian households, for the post-planting interview, agriculture remains the most engaged activity, this is because; about 38.5% of the rural households engaged in agriculture; 17.9% engaged in nonfarm enterprise, while 7.8% engaged in wage employment. It was also noted that; more of the women engaged in a household-nonfarm activities (25%) than men; however, fewer youths engaged in both agriculture (21.8%) in the post-planting visit. The farmers revealed that, one of the reasons for less youth participation in the agricultural activities is due to the low attractiveness of the sector to the youths. Therefore, the study recommended that the agricultural activities should be made attractive through the implementation of social protection programmes to induce youth participation as this will boost rural opportunities and reduce the rural-urban migration and its attendant challenges.

Non-Farm Enterprises and the Rural Youth Employment Challenge in Ghana

Non-farm enterprises have generally been perceived as a silver bullet solution for rural unemployment. This article therefore provides some insights on their potential to resolve the youth unemployment challenge in rural Ghana. Non-farm enterprises in Ghana are heterogeneous in nature based on type of enterprise, range of activities and productivity. Evidence suggests that motivations for operating these enterprises are mixed. Some households operate them as a coping mechanism to deal with household or agricultural shocks, while others may also be operated as business entities with the potential to grow sustainably and offer employment to young people. In order to harness the full potential of non-farm enterprises to address the rural youth employment challenge, it is imperative for policymakers in Ghana to identify specific sub-sectors that lend themselves to growth and have the capacity to offer sustainable employment avenues, and to critically interrogate and examine the primary reason of their establishment.

Factors Influencing Nutritional Adequacy among Rural Households in Nigeria: How Does Dietary Diversity Stand among Influencers?

ABSTRACTThis study examined the influence of food consumption diversity on adequate intakes of food calories, proteins and micronutrients among households in rural Nigeria within the framework of panel data econometrics using a nationally representative data. We found that substantial proportion of households suffered deficiency of calories, proteins and certain micronutrients; with higher percentage of sufferer households occurring in the post-planting season. The different measures of dietary diversity (constructed and used for analysis) consistently indicate significant and positive influence of dietary diversity on the likelihood of adequate consumption of food nutrients. While higher level of income, education and non-farm enterprise engagement may strongly stimulate adequate nutrient intakes, increases in the number of adolescents would substantially diminish it. Although our findings call for renewed attention on diet diverseness, we stress the complementary/synergistic roles of education and rural income improvement, especially through non-farm enterprise diversification in tackling multiple nutritional deficiencies in rural Nigeria.

Determinants of Non-farm Micro and Small Enterprise Participation in Rural Ghana

The non-farm sector is critical for the socio-economic development of Ghana especially the rural poor. Literature suggest that people engage in non-farm enterprises as a way out of poverty or a survival strategy, perhaps as a substitute for the landless. This paper analyses the determinants of individual participation in non-farm enterprises and the intensity of participation. The paper uses EGC/ISSER Socio-Economic Panel Survey data collected in 2009. The paper estimated the determinants of participation using a probit model and then estimated the intensity of participation using a truncated regression model. The results indicate that majority of women (about 73%) are engaged in non-farm enterprises in rural Ghana. The study found that females tended to participate more in non-farm self-employment and are less likely to participate in non-farm wage employment. The results further showed that individual characteristics such as the gender of the individual, being head of a household, being the spouse of a household head, having formal education, age of the individual, having access to credit, possessing a mobile phone, per capita landing holding and ownership of livestock influenced the participation of individuals in self-and wage employment. Results from truncated regression model for self-employed enterprises showed that having access to mobile phones, owning more livestock and electricity are important in determining the intensity of participation in self-employed enterprises. For wage-employment, being a household head, spouse of household head, having access to mobile phone and owning more livestock increased the number of days working on wage employment. Education is relevant for employment in the non-farm sector especially wage-employment. Government should play a lead role in making formal education accessible to the rural people. Deliberate policies should focus on addressing critical factors such as access to credit, mobile phone, electricity and education which are relevant for increasing participation intensity in rural enterprises.

Linkage Between Rural Non-Farm Income and Agricultural Productivity in Nigeria: A Tobit-Two-Stage Least Square Regression Approach

Multiple motive prompt agricultural households to diversify their income activities. Some of these activities were due to the push and Pull factors. The consequence(s) of these factors are the widespread households' income diversification. One of such is Non-farm activity which seems to offer a pathway out of poverty. This study therefore examines the effect of rural non-farm income on agricultural productivity in Nigeria. Data from Nigeria General Household Survey–Panel 2010 was used to generate information on households' access to non-farm income, agricultural production, investment and socio-economic characteristics. Data were analyzed using descriptive statistic (mean, frequency and percentage) and inferential statistics such as Tobit regression and Two Stage Least Square (2SLS). Tobit regression was used to analyze factors influencing non-farm income in the study area. While 2SLS model was further employed to analyze the effect of non-farm earnings on agricultural productivity of the respondents. In this study, the descriptive result shows that the mean age of households' head in Nigeria was 52 years, with most households being married and having mean households' size of about 12 persons. Also, the majority (88.3%) of the households were male headed. The mean non-farm income among the participating households was 251, 723 ($1,678.18) per annum. In addition, the mean value of surplus crop produced was 34, 274 ($228.49) while mean area cultivated was 1.99 Ha per respondent. Also, of the six regions in the country, South west was the most favourable to earnings in both cropping and non-farm activities. The households participating in non-farm activities were more productive agriculturally than their non-participating counterparts. Tobit regression result of the factors influencing non-farm income across rural areas in Nigeria indicates that estimates of equation of the model are jointly significant at 1% level of significance. The pseudo R square was 38% and from the thirteen included variables only four (Educational attainment, non-farm enterprise investment, sex of households' head and marital status) were statistically significant at different levels. Furthermore, the effect of nonfarm income on agricultural productivity is positive and significant at 5% in both the 2SLS and Ordinary Least Square Regression (OLS). Educational attainment of the household and capital investment significantly increase the ability of a typical rural household in Nigeria to earn non-farm income. The important linkage between farm and non-farm activities among rural households in Nigeria therefore suggests that attention needs to be given to non-farm sector for rural development as non-farm activity was not only a source of income for the participating household but a source of investment fund to boost agricultural productivity.

Financial Inclusion and Growth of Non-Farm Enterprises in Ghana

Financial Inclusion and Growth of Non-Farm Enterprises in Ghana

A spatio-temporal analysis of non-farm enterprise performance in Uganda: 2010-2012

PurposeRecent research into enterprise performance has focussed on the importance of firm proximity to total productivity. Using spatial correlation of firm performance as a proxy for knowledge transfers and diffusion, the purpose of this paper is to examine the evidence for these spatial effects in non-farm enterprise performance in Uganda, across space and time.Design/methodology/approachThe author uses data from the geo-referenced Uganda National Panel Survey from 2010 to 2012, and employs explicit spatial techniques in the analysis of rural non-farm enterprise performance. Spatial autocorrelation of firm performance are used as proxies for knowledge transfers and information flows among enterprises across space and over time.FindingsThe study finds evidence of spatial spillover effects across space and time in Uganda. This implies that, as existing studies of developed countries have found, social infrastructure and firm proximity contribute significantly to the performance of rural economies, through information exchange and knowledge transfers.Practical implicationsGiven the communal nature of rural households in the African setting, knowledge exchange and transfers among neighbouring firms should be encouraged as studies have found they have strong effects on business performance. Additionally, business “leaders” could also be useful in disseminating useful new technologies and applications to neighbouring enterprises in order to boost performance and productivity.Social implicationsThere should be better targeting of policy interventions to clusters of particularly needy enterprises.Originality/valueTo the best of the author’s knowledge, this is the first time that spatio-temporal effects of business performance have been explored. While spatial analyses of business performance have been carried out in developed countries, studies using explicit spatial techniques in the developing country setting have been conspicuously absent.

Dynamics of poverty and wellbeing in Ethiopia: an introduction to a Special Issue of the Ethiopian Journal of Economics

Understanding change is critical to policy formulation. Who benefits, who loses from change, and what causes change are core policy questions. Panel data are central to understanding change, and this special issue of the journal is devoted to five papers examining change in wellbeing as measured by two waves of data from the Ethiopia Socioeconomic Survey (ESS). The papers cover changes in consumption poverty, multi-dimensional poverty, food security, malnutrition in the form of wasting and underweight status, and smoothing patterns of nonfarm enterprise activities. The ESS data is freely available for download and immediate use. While the papers in this issue draw from the first two waves of data (2011-12 and 2013-14), the third wave of the ESS (2015-16) is now also publicly available. The ESS is a collaborative effort of the Central Statistical Agency of Ethiopia and the World Bank’s Living Standards Measurement Study – Integrated Surveys of Agriculture program. Keywords: Ethiopia, LSMS-ISA, panel data, poverty, multi-dimensional poverty, food security, malnutrition, nonfarm enterprise

Non-farm entrepreneurship in rural sub-Saharan Africa: New empirical evidence

We report on the prevalence and patterns of non-farm enterprises in six sub-Saharan African countries, and study their performance in terms of labor productivity, survival and exit, using the World Bank’s Living Standards Measurement Study - Integrated Surveys on Agriculture (LSMS-ISA). Rural households operate enterprises due to both push and pull factors and tend to do so predominantly in easy-to-enter activities, such as sales and trade, rather than in activities that require higher starting costs, such as transport services, or educational investment, such as professional services. Labor productivity differs widely: rural and female-headed enterprises, those located further away from population centers, and businesses that operate intermittently have lower levels of labor productivity compared to urban and male-owned enterprises, or enterprises that operate throughout the year. Finally, rural enterprises exit the market primarily due to a lack of profitability or finance, and due to idiosyncratic shocks.

Nonfarm enterprises in rural Ethiopia: improving livelihoods by generating income and smoothing consumption?

In developing countries highly dependent on agriculture, non-farm enterprises (NFEs) are often lauded as income diversification opportunities, helping to smooth income in the farming off-seasons. Using data from the first wave of the Ethiopia Socioeconomic Survey (ESS), a nationally representative survey of rural and small town Ethiopia, we explore the role NFEs play in seasonal income generation, consumption smoothing, and risk mitigation. We find that NFEs are in fact pro-cyclical with agriculture, with the most productive months of NFE operation coinciding with the harvest season and crop sales. This procyclicality appears to be driven by demand-side factors, where increases in community income through crop sales generate higher demand for NFE goods and services. We also find no evidence that households operating NFEs are better able to ward off incidence or duration of food insecurity in the face of shocks, suggesting NFEs do not insure temporally vulnerable households against risks. Keywords: Ethiopia, LSMS, non-farm enterprises, income diversification

Factors affecting performance/success of small-scale rural non-farm enterprises in Lesotho

Purpose This paper aims to study the different factors that determine the performance or success of small-scale, non-farm enterprises in Lesotho. Evidence shows that small-scale enterprises in developing countries are confronted with different challenges and problems that make them less viable. As a result, the capacity of small-scale, non-farm enterprises in employment creation, income generation and providing the means of livelihood to the poor people is not significant. In Lesotho, many people who are retrenched from the South African mines are absorbed in small-scale, non-farm enterprises to make a living. However, small-scale enterprises are faced with different challenges. The research findings suggest that factors leading to success/performance of rural non-farm enterprises in Lesotho include gender of the entrepreneur, age of the entrepreneur, ability of the entrepreneur to establish wider social networks, large population/market, availability of communication networks and infrastructure, participation of enterprises in the international market and costs of doing business and competition. In this regard, the paper makes policy recommendations that can be used to improve performance/success of small-scale, non-farm enterprises. Design/methodology/approach This research uses both qualitative and quantitative research methods to analyse data. Findings The main finding of the research is that foreign competition hinders the success of non-farm enterprises in Lesotho. The research findings further reveal that enterprises owned by women make the highest turnover compared to those owned by men. Practical implications This study brings in different factors that can ensure or hinder success/performance of small-scale, rural non-enterprises. Originality/value The research paper is of value in that it is the first study in Lesotho that considers different factors that determine business success in relation to employment creation, turnover and profitability.

Financing village enterprises in rural Bangladesh

PurposeThe purpose of this paper is to explore the factors that determine non-farm enterprise revenue and to empirically test the association between access to credit, credit source and firm performance among poor entrepreneurs in rural Bangladesh.Design/methodology/approachUsing a Bangladesh Institute of Development Studies and World Bank survey from over 1,700 households in rural Bangladesh, a panel data model is used to control for unobserved heterogeneity among households and explore the determinants of non-farm revenue.FindingsThe findings suggest that village infrastructure and household labor assets have a positive impact on enterprise development. The findings reveal that the use of rural credit as a production input is important in augmenting revenue for the non-farm enterprise, but there are differential effects by credit source.Research limitations/implicationsBecause the study uses data from a quasi-experimental survey design, unobserved effects that can bias the results must be controlled for. Also, as credit program impacts can be location-specific, caution in generalizing the results of this study must be exercised.Practical implicationsThis study provides evidence on the positive effects of microcredit, family assets and family social capital on economic outcomes and microenterprise growth for poor entrepreneurial households. If enterprise growth is important for development, greater understanding of the determinants of microenterprise performance and the role of credit in the success of microfirms is beneficial for policymakers and the institutions that finance small-scale production.Social implicationsIf it is agreed that entrepreneurship is important in promoting development, self-sufficiency and positive economic outcomes (Yunus, 2007), then credit program design should focus on both the credit needs of the poor and the dynamics inherent in enterprise development for this group of entrepreneurs.Originality/valueThis paper expands the limited literature on the determinants of microenterprise growth and the role of credit in microenterprise development by tracing a positive link between village infrastructure, family demographics and access to credit. The identification of the factors that determine non-farm enterprise revenue is important for policymakers because enterprise growth is perceived as essential for economic development.

Spatial proximity and firm performance: evidence from non-farm rural enterprises in Ethiopia and Nigeria

ABSTRACTSpatial proximity and firm performance: evidence from non-farm rural enterprises in Ethiopia and Nigeria. Regional Studies. The productivity of non-farm enterprises in rural Africa can be associated with the productivity of other spatially proximate non-farm enterprises. To test for the presence and significance of such spatial autocorrelation, the article uses data from the georeferenced 2011 Ethiopian Rural Socioeconomic Survey (ERSS) and the 2010/2011 Nigeria General Household Survey (NGHS), and employs exploratory spatial data analyses. There is evidence of significant spatial clustering of firm performance in both countries. This spatial dependence is empirically modelled using average distance measures between firms. It is found that in addition to other household, firm and community characteristics, spatial proximity between firms plays an important role in explaining firm productivity in Nigeria and Ethiopia.

Farms, Families, and Markets: New Evidence on Completeness of Markets in Agricultural Settings.

The farm household model has played a central role in improving the understanding of small-scale agricultural households and non-farm enterprises. Under the assumptions that all current and future markets exist and that farmers treat all prices as given, the model simplifies households' simultaneous production and consumption decisions into a recursive form in which production can be treated as independent of preferences of household members. These assumptions, which are the foundation of a large literature in labor and development, have been tested and not rejected in several important studies including Benjamin (1992). Using multiple waves of longitudinal survey data from Central Java, Indonesia, this paper tests a key prediction of the recursive model: demand for farm labor is unrelated to the demographic composition of the farm household. The prediction is unambiguously rejected. The rejection cannot be explained by contamination due to unobserved heterogeneity that is fixed at the farm level, local area shocks or farm-specific shocks that affect changes in household composition and farm labor demand. We conclude that the recursive form of the farm household model is not consistent with the data. Developing empirically tractable models of farm households when markets are incomplete remains an important challenge.