THE CONTRIBUTION OF WOMEN ENTREPRENEURS TO HOUSEHOLD INCOME AND POVERTY REDUCTION IN RURAL AREAS OF EASTERN CAPE

Women entrepreneurship has increasingly been recognised as a critical mechanism for promoting household income generation, women empowerment, and poverty reduction, particularly in rural areas of developing economies. In South Africa, rural women entrepreneurs play a significant role in sustaining household livelihoods and contributing to local economic development despite facing numerous socio-economic and institutional challenges. This study examined the contribution of women entrepreneurs to household income and poverty reduction in rural areas of the Eastern Cape Province, South Africa. Specifically, the study investigated the relationships among women entrepreneurship, income generation, women empowerment, and poverty reduction, with women empowerment modelled as a mediating variable. The study adopted a positivist research philosophy and employed a quantitative research approach using a cross-sectional survey design. Data were collected from 384 women entrepreneurs operating in selected rural areas of the Eastern Cape through a structured self-administered questionnaire. Non-probability purposive sampling was utilised to target active women-owned micro and small enterprises. Structural Equation Modelling (SEM) using SmartPLS was employed to assess the measurement and structural models and to test the hypothesised relationships among the study variables. The findings revealed that women entrepreneurship significantly enhances income generation (β = 0.839; t = 46.216; p = 0.000) and positively influences women empowerment (β = 0.260; t = 3.699; p = 0.000). Furthermore, women empowerment was found to have a strong positive effect on poverty reduction (β = 0.823; t = 20.541; p = 0.000), indicating that empowerment is a critical mechanism through which entrepreneurial activities contribute to improved household livelihoods. The relationship between income generation and women empowerment was also positive and significant (β = 0.488; t = 8.255; p = 0.000), demonstrating the importance of income-generating opportunities in enhancing women’s socio-economic position and decision-making capacity. However, the direct relationship between income generation and poverty reduction was not statistically significant (β = 0.033; t = 0.719; p = 0.472), suggesting that income alone may be insufficient to achieve meaningful poverty reduction without corresponding improvements in women’s empowerment. The mediation analysis further confirmed that women empowerment partially mediates the relationship between income generation and poverty reduction. The findings have important policy implications for strengthening rural entrepreneurial ecosystems in South Africa. Policymakers, local municipalities, development agencies, and financial institutions should implement integrated support programmes that combine entrepreneurial training, access to finance, business mentorship, market access opportunities, and empowerment initiatives aimed at strengthening women’s agency and economic independence. The results further suggest that poverty reduction strategies should move beyond income-generation initiatives and prioritise empowerment-oriented interventions that enhance women’s ability to control resources, participate in household decision-making, and sustain entrepreneurial activities. Such interventions can contribute significantly to inclusive rural development, gender equality, and long-term poverty alleviation in the Eastern Cape and similar rural communities. This study contributes to the limited empirical literature on rural women entrepreneurship by extending the application of Entrepreneurial Ecosystem Theory and Institutional Theory within the context of rural South Africa. The findings demonstrate that women empowerment serves as a critical pathway through which entrepreneurship translates into poverty reduction, thereby providing a deeper theoretical understanding of the mechanisms linking entrepreneurship, empowerment, and socio-economic development. By integrating entrepreneurship, income generation, women empowerment, and poverty reduction into a single framework, the study offers a comprehensive and evidence-based perspective that can inform future research, policy formulation, and development interventions aimed at improving the livelihoods of rural women entrepreneurs.