Survival Chances Of Off-Farm Micro and Small Enterprises: The Case Study Of Lilongwe District

Micro and Small Enterprises (MSEs) have been widely recognized for playing significant role in poverty reduction through income generation from sales, job creation at low cost, utilization of locally found resources, adding value to agricultural produce, and production of goods and services that meet basic needs of the poor. However, the contribution of MSEs to poverty reduction processes and development in general is much dependent on the length of period these enterprises survive. This study determined the survival chances of MSEs and analyzed the impact of capital constraints, owner characteristics, enterprise characteristics and business environmental factors on survival chances of off-farm MSEs at any time period using Cox Proportional Hazard model. The results indicate that the survival chance of MSEs declines quickly in the first 5 years after inception. Enterprises that have operated for 5 years continuously have a survival chance of 0.5837. In addition, the results shows that initial capital invested, family size of proprietor, completion of primary school level, business training and the street vendor relocation programme significantly reduce the chances of closing an enterprise at any time. In general, proprietor characteristics have a significant impact on enterprises’ survival. The policy implications are that measures aimed at enhancing access to credit should be devised, promote business and vocational training for small entrepreneurs, and ensure that there are enough market infrastructures so that small enterprises operate from a designated market places.