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