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An appropriate rural investment climate (RIC) is essential for rural businesses to be successful and generate employment and income in their communities. Improving the investment climate could facilitate income-generation activities in both farm and nonfarm sectors, thus reducing rural poverty. Nonfarm sector focused growth, combined with agricultural growth, and has been shown by Delgado and others (1998) to have a significant impact on the local economy through the generation of employment and income. This study is the first to focus on both farm and nonfarm enterprises in its 2010 surveys of RIC in Yemen, Burkina Faso, Nigeria, and Mozambique unlike six previous RIC assessment (RICA) pilot projects that focused only on nonfarm enterprises. This report assesses the weaknesses and strengths of all RIC components in farm and nonfarm enterprises of the four countries surveyed, and recommends measures to address the weaknesses. The report identifies similar business obstacles for farm and nonfarm enterprises and four critical areas of the RIC to be improved. The results of the RICA are based on analyses of obstacles perceived by rural entrepreneurs and on assessments by RIC indicators, enterprise entry and exit, and enterprise performance. To have maximum synergy effects, farm and nonfarm enterprises should be promoted together.

Access to Finance --- Access to Information --- Accounting --- Agribusiness --- Agribusiness & Markets --- Agriculture --- Bankruptcy --- Capacity Building --- Collateral --- Commercial Banks --- Corruption --- Cost-Benefit analysis --- Economic Development --- Economies of Scale --- Entrepreneurs --- Finance and Financial Sector Development --- Financial Literacy --- Financial Management --- Fiscal Policy --- Gender --- Household Income --- Human Capital --- Inequality --- Information Technology --- Insurance --- Interest Rates --- Investment Climate --- Knowledge Gaps --- Labor Market --- Macroeconomics and Economic Growth --- Marketing --- Microfinance Institutions --- Mobility --- Productivity --- Profitability --- Property Rights --- Public Service Delivery --- Roads --- Rural Development --- Rural Non-Farm Income Generation --- Rural Policies and Institutions --- Rural Services and Infrastructure --- Rural Transport --- Savings --- Technical Assistance --- Transaction Costs --- Transport --- Transport Costs --- Transport Economics Policy and Planning --- Urban Areas --- Vehicles --- Wages

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This study examines the major constraints of rural business entry and performance in Yemen. The Yemen rural investment climate survey made it possible to analyze rural investment climate constraints for rural businesses. The survey was used to investigate both farm and nonfarm rural enterprises. The rural investment climate was assessed using a combination of subjective impressions related by rural entrepreneurs, and a more objective, empirical set of analyses that employed indicators to rank the constraints to "doing business" in the areas surveyed. These empirical analyses included application of the entry model, the performance model, the closure model, and the migration model. The migration model was introduced to identify how the rural investment climate variables at the community level increase migration and economic activities. Based on the assessment of the rural investment climate, this paper identifies and explains four critical areas in which the rural investment climate in Yemen can be improved: market demand, access to markets, access to finance, and the provision of business services. Because farm and nonfarm businesses often experience common or similar constraints, the climate in which they operate can often be improved with the same measures and policies. Addressing the constraints that affect rural women entrepreneurs in particular, who play a vital role in rural nonfarm enterprises, warrants clear priority as a means to generate income and employment. Security and labor issues are identified as the key such constraints that disproportionately affect women.

Access to Finance --- Agriculture --- E-Business --- Farm Enterprise --- Financial Literacy --- Nonfarm Enterprise --- Rural Development --- Rural Entrepreneurs --- Rural Investment Climate --- Rural Poverty Reduction --- Transport Economics Policy & Planning --- Yemen