A profile of non-farm household enterprises in Sub-Saharan Africa

Paula Nagler

#2017-048

This paper provides a comprehensive descriptive profile of non-farm household enterprises in ten Sub-Saharan African countries, disaggregated by the households' consumption quintiles. Various enterprise-related aspects are covered, such as the share of households that operate an enterprise, the motivation to start a business venture, and various owner and enterprise characteristics. The figures show that household enterprises are more prevalent among wealthier households, although push factors overall dominate as entry motive. Enterprises in lower quintiles are more often operated by owners with less education, and in most countries female owners are more frequently found among poorer households. The enterprises themselves are characterised by a small size, generally solo entrepreneurship, which only marginally increases along wealth levels. Poorer households operate more seasonal types of businesses, which employ rarely any external labour, and which contribute less to total household income compared to wealthier households. While business profits grow along the welfare quintiles, profits show a big jump from the fourth to the top quintile. Finally, poor entrepreneurial households are considerably more often located in rural than in urban areas. Based on these findings, this paper suggests a set of policy recommendations that include expanding the access to and availability of finance, education, and infrastructure, and introducing gender-sensitive entrepreneurial policies.

JEL Classification: J43, L26, 055, Q12

Keywords: Consumption Quintiles, Household Enterprises, Informal Sector, Self-Employment, Sub-Saharan Africa