The Role of Non-farm Household Enterprises in Poverty Reduction, Employment Creation and Economic Growth in Rwanda

Abstract

In this paper we consider the role that household enterprises play in Rwanda in terms of poverty reduction, employment creation and economic growth. We argue that household enterprises play a significant role in poverty reduction and providing non-farm employment. We suggest that household enterprises range from subsidiary income generating activities to owner operated businesses. We also identify three types of household enterprises: survivalist, steady employment and entrepreneurial. We conclude that their major role is in reducing poverty and providing employment. Their role in economic growth is by increasing the spending power of the operators, thereby increasing demand in the economy through the multiplier effect. Few, however, will create employment by growing into micro or small enterprises.