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Non-farm Enterprises in Rural Ethiopia: improving Livelihoods by Generating Income and Smoothing Consumption?

Abstract: 

In developing countries highly dependent on agriculture, non-farm enterprises (NFEs) are often lauded as income diversification opportunities, helping to smooth income in the farming off-seasons.  Using data from the first wave of the Ethiopia Socioeconomic Survey (ESS), a nationally representative survey of rural and small town Ethiopia, we explore the role NFEs play in seasonal income generation, consumption smoothing, and risk mitigation. We find that NFEs are in fact pro-cyclical with agriculture, with the most productive months of NFE operation coinciding with the harvest season and crop sales. This pro-cyclicality appears to be driven by demand-side factors, where increases in community income through crop sales generate higher demand for NFE goods and services. We also find no evidence that households operating NFEs are better able to ward off incidence or duration of food insecurity in the face of shocks, suggesting NFEs do not insure temporally vulnerable households against risks.

Corporate Author: 
Ethiopian Economics Association (EEA)
Publisher: 
Ethiopian Economics Association (EEA)
ISBN/ISSN: 
1993-3681
Primary Descriptors: 

Income ; Enterprises - nonFarm

Secondary Descriptor: 

Food Insecurity 

Geographic Descriptors: 
Ethiopia
Cataloge Date: 
07/10/2017
Broad Subject heading: 
Poverty
Call Number: 
330.5 ETH JOU 2017
Serial Key Title: 
Ethiopian Journal Of Economics
Publication catagory: 
Content type: 
Volume: 
XXV
Year: 
October 2016
Publication date: 
2017-05-01 00:00:00
Number: 
2
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Book
Current frequency: 
Semiannual
Thematic area: 
Special Issue on Dynamics of Poverty and Wellbeing in Ethiopia