Household Enterprises in Mozambique: Key to Poverty Reduction But Not on the Development Agenda?

34 Pages Posted: 20 Apr 2016

See all articles by Louise Fox

Louise Fox

World Bank - Office of the Chief Economist

Thomas Pave Sohnesen

World Bank

Date Written: August 1, 2013

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.

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

Suggested Citation

Fox, Louise and Sohnesen, Thomas Pave, Household Enterprises in Mozambique: Key to Poverty Reduction But Not on the Development Agenda? (August 1, 2013). World Bank Policy Research Working Paper No. 6570, Available at SSRN: https://ssrn.com/abstract=2310451

Louise Fox (Contact Author)

World Bank - Office of the Chief Economist ( email )

Washington, DC 20433
United States

Thomas Pave Sohnesen

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
98
Abstract Views
1,092
Rank
399,889
PlumX Metrics