The Determinants of Non-Farm Micro and Small Enterprise Employment and Financial Performance in Ghana
Date
2014-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
University of Ghana
Abstract
Micro and small enterprises play a significant role in the socio-economic development of many
countries over the world. In Ghana, the bulk of these enterprises are in the informal sector
providing employment and income, especially for the poorest members of society. Using data
from the EGC/ISSER survey in 2009/10, the study employed a probit regression model in
examining the determinants of individual participation in the non-farm sector and then estimated
the intensity of participation using a truncated regression model. In examining the effects of
firm-specific and non-firm factors on the financial performance of enterprises, the study
employed quantile regressions.The study used the Sharpe Ratio in adjusting for risks in
comparing the financial performance of male-owned and-female-owned enterprises. The results
indicate that individual and household factors such as gender,household head, spouse of the
household head, formal education, age, size of landholding,access to credit, electricity and
mobile phones shaped the participation of the individual in non-farm self-employment and wage-
employment. Enterprises located in the Savannah and Forest zones were less likely to participate
in non-farm self-and wage-employment as compared to those located in the Coastal zone.The
study found that firm-specific resources dominated market/industry factors in explaining
enterprise financial performance. When risks are not adjusted for, female-owned enterprises
underperform male-owned ones and when risks are adjusted for, women performed no
differently from men. The study recommends technical education and formal registration of
enterprises. The study recommends that deliberate policies should focus on addressing critical
factors such as access to credit, mobile phone, electricity and education, which could serve as
constraints to participation in the non-farm sector. The study also recommends a reorientation of
the mindset regarding female-underperformance hypothesis.
Description
Thesis (PhD) - University of Ghana, 2014
Keywords
Informal Sector, Small Enterprise, Employment, Financial Performance,