Effect of Household and Local Enterprise Activity on Poverty Alleviation across Uganda’s Diverse Regional Contexts

Abstract

This study employs Monte Carlo simulation methods to assess the potential impact of household and local enterprise development on poverty alleviation across Uganda’s diverse regional contexts. Using data from the Uganda National Household Survey (UNHS) 2023/24, I simulate the households per region across 5,000 Monte Carlo iterations, modeling both baseline poverty scenarios and counterfactual scenarios in which enterprise activity is strengthened. The findings indicate that intensified enterprise development is associated with an expected reduction in Uganda’s national poverty headcount of approximately 2.0 percentage points, from 16.1% to 14.1%, representing nearly 900,000 individuals lifted out of poverty. This effect demonstrates remarkable consistency across regions, with rural areas, urban centers, and even the impoverished Karamoja subregion all showing statistically significant poverty reductions of similar magnitude. The results suggest that policies aimed at expanding and stabilizing household and local enterprise activity—including self-employment, smallholder commercialization, and informal microbusiness development—constitute a meaningful lever for poverty reduction across Uganda’s varied economic landscapes. However, the analysis also reveals that in regions with extremely high baseline poverty rates, such as Karamoja, enterprise development alone is insufficient and must be complemented by interventions addressing infrastructure, education, health, and food security.