Many believe that small and medium natural resource-based enterprises (NRBEs) provide a vision to reduce poverty in the Third World’s rural communities and households. As a result, new rural enterprises should be created and existing ones reinforced within a framework of sustainable livelihoods that target all appropriate members in the communities. This study investigates the impact of the natural resource based enterprises income on the rural livelihoods in the households using a rural natural-based craft enterprise (using reeds, Cyperus spp, as raw material), as a case study, Ikhowe Craft Enterprise, situated in small town called Eshowe in northern KwaZulu-Natal, South Africa.. In designing this study, a combination of both qualitative and quantitative research methods was employed. This was influenced by the aim and the type of data required for the study. The said methods were (a) semi-structured interviews for producers (a questionnaire had a pre-determined mix set of both open-ended and closed-ended questions); (b) interviews for management were conducted with a purely qualitative questionnaire which consisted of only structured and open-ended questions; (c) field observations, and (d) a review of secondary materials (administrative records). Apart from how derived income impacts on the participants, data required also included performance of the enterprise, access to markets, support available, and livelihood analysis of the participants households which included issues such as households’ economies and exploring extent of, and reasons for diversification, and challenges both the enterprise and participants’ households face daily in relation to making a living. The results show that there was a significant increase in business annual turnover and producers’ earnings between 2003 and 2005. In 2003, about 50% of the producers earned less than R1000 per year, while in 2005 only 3% earned less than R1000 per year. Despite the total annual increase of earnings and the significant contribution of craft income to producers’ households’ incomes, individual earnings varied considerably amongst the producers and as a result the economic impact was also variable. Other than craft, strategies such as government grants enhanced livelihood diversification in the case study. However, lack of understanding of basic business principles and skills amongst both the crafters and management posed threats to the sustainability of the enterprise. The income derived from the NRBE activity, especially since it is based on natural resources with low economic value (reeds) was found to have both diversifying and supplementing effects on different producers’ other strategies. Although, the enterprise is achieving growth, there is a concern and a need to measure the future sustainability of the enterprise. In addition there is a need to improve the producers’ basic business skills and business management competency

Thesis (M.Env.Dev.)-University of KwaZulu-Natal, Pietermaritzburg, 2008.