In Search of Rural Entrepreneurship: Non‐farm Household Enterprises (NFEs) as Instruments of Rural Transformation in Ethiopia

Sub‐Saharan Africa is mainly agricultural and rural transformation remains slow owing to weak market‐orientation and entrepreneurship development. This study aims at investigating determinants of households’ enterprise engagement and effect on livelihood. Logit model and propensity score matching were employed to analyse data captured from 415 households in Ethiopia. The empirical model reveals that education, cooperatives, socio‐economy, access to transport, communication, credit, and FTC were drivers of households’ engagement in NFE. Livelihood was also significantly better for engaged households. It is suggested that policies to improve infrastructure, credit and extension, and promote rural cooperation would enhance Africa's smallholders’ enterprise development.