Ethiopian Journal of Business and Economics (The)

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Entrepreneurship Drivers in the Non-farming Sector: Rural-Urban Contrast

Abebe Ejigu, Dereje Teklemariam


Using data from 5262 households, we explored entrepreneurial drivers in the non-farm sector. Marital status, religion, ethnicity, education type and the size of the household plays different roles for rural and urban households’ engagement in non-farm enterprises. In both urban and rural areas, household size is a driver to non-farm enterprise engagement. Shocks in the household such as illness drive rural households to engage in the non-farm enterprise sector. However, drought restrains the participation of rural households in nonfarm businesses. Divorced households engage more in enterprises. Unmarried households, however, witnessed less involvement in the sector and it is significant for rural households. Urban illiteracy and rural primary education significantly determine households’ involvement in the non-formal sectors. Moreover, the study identified a non-linear relationship between age and enterprise engagement where engagement in non-farm enterprises increases with age up to 58 years and then declines and it is significant for urban households. In the case of urban households, male-headed households are driven to non-farm engagement. Understanding variations in marital status, socio-economic make-ups, entrepreneurial training, and education can be plausible areas of intervention to adequately understand both the entrepreneurial ecosystem and strengthen the non-farming entrepreneurial sector livelihood.
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