We expect many of these general factors to also be applicable in the present case. The empirical literature on enterprise productivity in Sub-Saharan Africa is however scant. The literature analyzes mostly the productivity of formal African enterprises. Rijkers et al. (2010) find that non-farm _manufacturing_ enterprises in rural Ethiopia are less productive than urban ones. S ̈oderbom et al. (2006) and S ̈oderbom and Teal (2004) find, analyzing manufacturing enterprises, that more productive enterprises tend to survive longer in Africa. Frazer (2005) finds, using Ghanaian enterprise-level data, that more productive enterprises are also more likely to survive compared to less productive enterprises. These and other studies also find that a poor business environment reduces enterprise productivity in Africa, e.g. Dollar et al. (2005), Arnold et al. (2006), Eifert et al. (2008) and Dethier et al. (2010).

From the review in this section we expect that the determinants of the labor productivity of rural enterprises in Africa are also related to the motivation for their existence, reflecting factors such as economic geography (demand and competition), geographical and idiosyncratic shocks (push factors), type of business activity, and facilitating characteristics on both individual and household level such as age, education, access to credit, and household size.

# **2.3 Survival and Exit**

While starting an informal enterprise in rural Africa is relatively uncomplicated (Shiferaw, 2009), it is more challenging for existing enterprises to raise their productivity, grow and survive (Bekele and Worku, 2008). To date there have been few empirical studies that examine the survival and exit of these enterprises in rural Africa. The literature on enterprise survival largely deals with urban-based enterprises in developed countries. In this literature a number of salient facts have been established such as that larger, older and more productive enterprises have a higher probability of survival (see for instance Geroski, 1995; Sutton, 1997; Caves, 1998). Managerial capabilities are important, and as per Mincer (1974) often seen as an indicator of enterprise productivity (see also Variyam and Kraybill, 1994; Key and Roberts, 2007). Firm age and size can reflect an enterprise’s ability to overcome financial constraints.

In Africa only a few studies have dealt with enterprise survival and exit. One of the first studies uses firm-level data and proportional hazards regression models (McPherson, 1995). The data cover approximately 21,000 firms across Botswana, Malawi, Swaziland, and Zimbabwe. The author finds that enterprise size does not significantly affect the survival of enterprises in Botswana and Swaziland, but that larger firms are less likely to survive in Zimbabwe. These results are in contrast to those found in developed countries. McPherson (1995) also finds that rural enterprises are more likely to fail than urban ones and that enterprises based in and around the household also face a higher likelihood of exiting operations. Female-owned enterprises also show a higher likelihood of failure compared to male-owned enterprises in Malawi and Zimbabwe.

Since McPherson’s (1995) study, the determinants of enterprise survival, growth and exit in Africa have also been investigated by Frazer (2005), Bekele and Worku (2008), 6