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.