The impact of social capital on entrepreneurship among smallholder farmers in rural South Africa

Abstract

This paper investigates the effect of social capital on entrepreneurship among smallholder farmers in rural South Africa. Farmers gain access to social capital through memberships in both agricultural and non-agricultural groups. A total of 513 households were randomly selected in three districts and the data were analysed using the zero inflated Poisson and instrumental variable probit models. The estimated results indicated that access to social capital was influenced by factors such as age, education, asset values, attitudes towards groups, market access, irrigation, training and distance to the nearest extension office. The results also indicated that access to social capital had a positive effect on entrepreneurship. An additional group membership was associated with an increase of 11 per cent on the chances of being an entrepreneur. The study findings suggest that promoting memberships in local associations or clubs can play a positive role in stimulating entrepreneurship among smallholder farmers in the rural areas of South Africa.