Determinants of household participation in non-farm enterprises in Uganda

Abstract

Despite the increasing number of households in Uganda depending on household enterprises as an income source, non-farm household enterprises are often neglected in low-income Sub-Saharan African development strategies and receive minimal policy consideration. Non-farm household enterprises remain central to addressing the country’s poverty reduction agenda and socio-economic transformation, as agricultural households increasingly transition from subsistence to commercial agriculture. The government has introduced several interventions, including the Parish Development Model (PDM) and Emyooga, that increasingly impact the non-farm household enterprise economy to achieve this. Despite these efforts, there is limited empirical evidence in Uganda on the determinants of non-farm household enterprise ownership. Against this backdrop, this study uses cross-sectional data from the UNHS 2019/2020 using the logit estimating approach to analyse the factors influencing household participation in non-farm household enterprises. Individual engagement is found to be connected with marital status, geography, education level, and financial access. Furthermore, people in the eastern and western regions are less likely to work in non-farm industries than those in the centre. Individuals with specialised training and degrees are less likely to work in non-farm enterprises than individuals with only primary schooling. Given these findings, improving access to financing is critical for household involvement. As a result, government schemes such as PDMs are even more important in increasing access to finance.