Abstract

Maimba Ashley and Macheal Muchanneta

Rural micro-enterprises play a pivotal role in developing country agriculture as the major sources of inputs and ready markets for agricultural produce. This makes an understanding of their diversity and dynamism vital to issues of sustainable food security and poverty alleviation. This paper uses cluster analysis and a logit regression model to establish the factors underlying the heterogeneity of microenterprise firms with a view to unearth the reasons behind their inclination towards agro-dealership. Rural micro-enterprises were found to vary greatly due to size, firm life, capital intensity and their motives for entry into business. Capital intensity in tern determines firm size, willingness to expand and the firm’s likelihood to stay in business. Larger firms with a long firm life and a high capital base were found to have a greater tendency to deal in agribusiness commodities as opposed to small firms with lower capital intensity and a short firm life. It was concluded that firm proclivity to agro dealership could be increased through increasing capital base and provision of incentives for voluntary entry into business.