Factors affecting establishment of household enterprises in Uganda

Abstract

The study investigated the factors affecting the establishment of household enterprises in Uganda. The specific objectives of the study were to examine the effect of Socio-demographic and Socio-economic characteristics on establishment of household enterprises in Uganda. The study used data from the Uganda National Household Survey 2019/2020. The study estimated the logit model that was identified as the most appropriate model. The key findings from the study were establishment of household enterprises in Uganda was positively and significantly influenced by Rural/Urban location of household head, Access to informal financial services, and household income while on the other hand, household enterprise establishment was negatively and significantly influenced by Post secondary education, Senior Citizen Grant (SCG) and Age of household head. The policy recommendations from the study were that government should integrate conditional elements into the Senior Citizen Grant, that can harness the positive behavioural incentives as identified by Blattman et al. (2014) of requiring recipients to participate in business training or use the funds for specific entrepreneurial activities. This approach will aim at encouraging beneficiaries to reduce their reliance on the grants, thereby promoting sustainable economic growth among senior citizens. Secondly increase funding of informal financial institutions like Rotating Savings and Credit Associations (ROSCA’s), Accumulative Savings and Credit Associations (ASCA’s), Village Savings and Loans Associations (VSLA’s) that would provide financial resources to aspiring entrepreneurs at household level.