Determinants of Non-farm Micro and Small Enterprise Participation in Rural Ghana

Abstract

The non-farm sector is critical for the socio-economic development of Ghana especially the rural poor. This paper analyses the determinants of individual participation in non-farm enterprises and the intensity of participation. The paper used the Economic Growth Centre (EGC)/Institute of Statistical, Social and Economic Research (ISSER) Socio-Economic Survey data collected in 2009. The paper estimated the determinants of participation using a probit model and then estimated the intensity of participation using a truncated regression model. The results indicate that majority of adults engaged in non-farm enterprises in rural Ghana are women (about 73%). The study found that females tended to participate more in non-farm self-employment and are less likely to participate in non-farm wage employment. The results further showed that individual characteristics such as the gender of the individual, being head of a household, being the spouse of a household head, having formal education, age of the individual, having access to credit, possessing a mobile phone, per capita ownership of land and livestock influenced the participation of individuals in selfand wage employment. Results from truncated regression model for self-employed enterprises showed that having access to mobile phones, owning more livestock and electricity are important in