Louise Fox

Household Enterprises in Sub-Saharan Africa: Why They Matter for Growth, Jobs, and Livelihoods

Despite 40 percent of households relying on household enterprises (non-farm enterprises operated by a single individual or with the help of family members) as an income source, household enterprises are usually ignored in low-income Sub-Saharan-African development strategies. Yet analysis of eight countries shows that although the fast growing economies generated new private non-farm wage jobs at high rates, household enterprises generated most new jobs outside agriculture. Owing to the small size of the non-farm wage job sector, this trend is expected to continue for the foreseeable future. This analysis of enterprises and their owners shows that although it is a heterogeneous sector within countries, there are many similarities across countries, indicating that cross-country learning is possible. For labor force participants who want to use their skills and energy to create a non-farm income source for themselves and their families, household enterprises offer a good opportunity even if they remain small. The paper finds that given household human capital and location, household enterprise earnings have the same marginal effect on consumption as private wage and salary employment. The authors argue that household enterprises should be seen as part of an integrated job and development strategy.

Africa's Got Work to Do: Employment Prospects in the New Century

Estimates of the current and future structure of employment in sub-Saharan Africa (2005–20) are obtained based on household survey estimates for 28 countries and an elasticity-typemodel that relates employment to economic growth and demographic outcomes. Agriculturestill employs the majority of the labor force although workers are shifting slowly out of thesector. Sub-Saharan Africa’s projected rapid labor force growth, combined with a lowbaseline level of private sector wage employment, means that even if sub-Saharan Africarealizes another decade of strong growth, the share of labor force employed in private firmsis not expected to rise substantially. Governments need to undertake measures to attractprivate enterprises that provide wage employment, but they also need to focus on improvingproductivity in the traditional and informal sectors as these will continue to absorb themajority of the labor force.

Attacking Africa's poverty : experience from the ground

By all measures, poverty in Africa as a whole has increased and deepened. But in fact, Africa contains a number of undocumented success stories of poverty reduction. This book presents case studies of thirteen of these success stories, giving grounds for some real hope, and providing useful learning for all policymakers, governments, businesses, service providers, non-governmental organizations, and donors. Case studies are drawn from the experiences of Uganda, Rwanda, Senegal, Kenya, Botswana, Mauritania, Tanzania, Lesotho, Zambia, Malawi, South Africa, and Ghana.

Gender Dimensions of Pension Reform in the Former Soviet Union

The authors analyze the gender implications of pension reform in Kazakhstan, the Kygyz Republic, Latvia, and Moldova. The new systems deliberately penalize early retirement and reward longer careers, so that with no change in behavior or policy, womens pensions will be lower than mens on average. Still, the implicit financial returns for women remain higher on average than returns for men, because of womens longer life expectancy and because of redistributory minimum pensions. Overall, however, the net change in wealth resulting from the reforms will be larger on average for men than for women, because they will work longer and get a larger pension. Womens longerlife expectancy means that women can expect to spend the last years of their lives alone. If their pensions are too low because of their work histories, poverty among elderly women may increase.

The Household Enterprise Sector in Tanzania: Why it Matters and Who Cares

The household enterprise sector has a significant role in the Tanzanian economy. It employs a larger share of the urban labor force than wage employment, and is increasingly seen as an alternative to agriculture as a source of additional income for rural and urban households. The sector is uniquely placed within the informal sector, where it represents both conditions of informal employment and informal enterprise. This paper presents a case study on Tanzania using a mixed approach by combining both quantitative and qualitative analysis to examine the important role of household enterprises in the labor force of Tanzania, and to identify key factors that influence their productivity. Household enterprise owners are similar to typical labor force participants although primary education appears to be the minimum qualification for household enterprise operators to be successful. Access to location matters -- good, secure location in a marketplace or industrial cluster raises earnings - and access to transport and electricity is found to have a significant effect on earnings as well. In large urban areas, the biggest constraint faced by household enterprises is the lack of access to secure workspace to run the small business. Although lack of credit is a problem across all enterprises in Tanzania, household enterprises are more vulnerable because they are largely left out of the financial sector either as savers or borrowers. Although HEs are part of the livelihood strategies of over half of households in Tanzania, they are ignored in the current development policy frameworks, which emphasize formalization, not productivity. Tanzania has a large number of programs and projects for informal enterprises, but there is no set of policies and program interventions targeted at the household enterprise sector. This gap exacerbates the vulnerability of household enterprises, and reduces their productivity.

Beating the odds : sustaining inclusion in Mozambique's growing economy

This assessment, reflecting povertys many dimensions in Mozambique, combines multiple disciplines and diagnostic tools to explore poverty. It draws on a combination of approaches and tools from three separate analytical diagnostics developed by the World Bank: poverty assessment, country gender assessment, and country social analysis. It uses monetary, human, and social indicators and combines quantitative and qualitative approaches to understand trends in poverty and the dynamics that shape them. The objective is to support the development and implementation of pro-poor policies that really work by taking povertys multiple dimensions into account. Because Mozambique has not collected nationally representative household survey data measuring poverty status and outcome indicators since 2003, the report focuses primarily on the changes in poverty and household community welfare through that year. When data are available after 2003, the assessment uses them, including data from a special non representative survey developed for this report-the poverty and vulnerability survey. The starting point for the analysis uses multiple quantitative and qualitative indicators that describe levels of and changes in opportunities and outcomes for households and communities in Mozambique since 1997. The rest of the report explains these changes.

Is informality welfare-enhancing structural transformation ? evidence from Uganda

While Africas recent decade of growth and poverty reduction performance has been lauded, concern has been expressed regarding the structure of this growth. In particular, questions have been raised about whether the growth is based on a commodities boom, or whether it is the beginning of a structural transformation that will lift workers from low-productivity jobs into higher-productivity ones. Macro evidence has suggested that the structural transformation has not started. But macro analysis misses the evidence that the process of transformation has started, because this process begins at the household level. Household livelihoods do not move from ones based on subsistence farming and household level economic activities into livelihoods based on individual wage and salary employment away from the household in one leap -- this process takes generations. The intermediate step is the productive informal sector. It is income gains at the household level in this sector that fuel productivity increases, savings, and investment in human capital in this sector. Ensuring that most households are able to diversify their livelihoods into the non-farm sector through productive informality not only increases growth, but also allows the majority of the population to share in the growth process. This paper illustrates this point with the case of Uganda which followed this path and experienced two decades of sustained growth and poverty reduction.

Different dreams, same bed: collecting, using, and interpreting employment statistics in Sub-Saharan Africa -- the case of Uganda

Employment and earnings statistics are the key link between the size and structure of economic growth and the welfare of households, which is the ultimate goal of development policy, so it is important to monitor employment outcomes consistently. A cursory review of employment data for low-income Sub-Saharan African countries shows both large gaps and improbable variation within countries over time and among countries, suggesting that low quality data are routinely reported by national statistics offices. Unfortunately, policies are formed and projects developed and implemented on the basis of these statistics. Therefore, errors of measurement could be having profound implications on the strategic priorities and policies of a country. This paper explains the improbable results observed by using data from Uganda, where the labor module contains variation both within and across surveys, to show the sensitivity of employment outcomes to survey methodology. It finds that estimates of employment outcomes are unreliable if the questionnaire did not use screening questions, as labor force participation will be underestimated. Likewise, surveys that use a seven-day recall period underestimate or potentially misrepresent employment outcomes, owing to seasonality and multiple jobs. Common multivariate analysis applied on household survey data will be affected, as the errors in measurement in the dependent and independent variables will be correlated. Corrections to reduce measurement bias in existing data are tested with the survey data; none are found to be completely satisfactory. The paper concludes that there is a knowledge gap about employment outcomes in Sub-Saharan Africa that will continue unless collection techniques improve.

Are skills rewarded in Sub-Saharan Africa ? determinants of wages and productivity in the manufacturing sector

Using recent matched employer-employee data from the manufacturing sector in 20 Sub-Saharan African countries, the authors analyze how the supply of skills and legal origin of the country affect the wage setting process. The wage analysis yields three main findings. First, increasing returns to education, especially for older workers, suggest that the expansion of education in Africa has reduced returns to education for entrants in the labor market. Second, age effects matter not just for returns to education, but also for the wage setting process more generally. In particular, in civil-law countries, returns to seniority are rewarded only after a certain age. Third, workers exercise some power in the wage setting process but their influence varies by linguistic group. In common-law countries, union presence benefits all workers equally, not just members, whereas in civil-law countries, only older members enjoy higher wages. The authors also contrast wage premia with relative marginal productivities for different age, occupation, and education categories. The findings show that in general, older, highly educated, and highly ranked workers receive wage premia that do not reflect a higher relative marginal productivity.

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.