constraints growth of their business. The RICs data set is especially rich as it contains data on the perceptions of households that have an HE, and those that do not.

A key factor in starting and sustaining a business is managing risk. HEs are unique in that they face two types of risks - business risks and household risks. This is because (a) the finances of the business are often intertwined with the household as it may be the only source of savings for the household in case of need, and (ii) if a household member falls ill or is in any other way incapacitated and cannot work, the labor cannot be replaced so the business suffers. Either type of shock can cause the business to close, and indeed, closure HEs or even small enterprises owing to lack of profits is quite common in all settings. But household risk can even cause a profitable business to close.

Rural and peri-urban households who responded to the RICs 2010 reported that business risk was the most commonly identified cause for closure of the HE, but household risk was not negligible, especially for women. Female heads of households in particular were likely to close their business in response to household risk (table 5). This may be a reflection of female headed households having fewer adult members and that female heads are more likely to be single, limiting the options for keeping the business running while attending to illness or death among family members<sup>14</sup> .

**Table 5 Reason for closure of HE**

||All|Female head|Male head|
|---|---|---|---|
|Illness or death of household member|24%|55%|18%|
|Household member moved away|13%|14%|13%|
|Household member found a wage job|9%|5%|9%|
|It was not profitable|61%|37%|66%|
|Liquidity problem or lack of working capital|56%|60%|56%|
|Other|20%|12%|22%|

Source: RICS 2010 Both the RICS and INFOR surveys provide some guidance on what HEs see as other main challenges to their enterprise growth or sustainability. RICS only covers rural and peri-urban households, but provides much richer information on challenges as perceived by enterprises. Ranking of challenges to HE survival in both the INFOR and RICS surveys shows that the following areas are major constraints: 1) access to credit, 2) access to technology and inputs, 3) fierce market competition, and 4) access to markets. Rural enterprises also report lack of access to physical infrastructure as roads, cell phones, and electricity among the severe challenges (unfortunately there is no survey for urban areas that look into the importance of infrastructure for urban areas). Fierce market competition is not necessarily a negative as free and fair market competition generally lead to cheaper and better products for the consumer. It also reflects the ease of entry into the sector, leading to limited profit margins. In some cases rural households also report monopoly or oligopoly in the market to be a severe challenge (26 percent), such challenges are generally damaging to market competition. More of a concern to rural HEs

> 14 42 % of female heads of households report to be single compared to 2 % among male heads of households. Average number of adults in female headed households is 2.6 compared to 2.9 in male headed households.

21 | P a g e