Large firms are generally viewed as being central to macroeconomic growth and development, but not to building the capabilities and the incomes of the poor, as microenterprise interventions are often portrayed. Current development strategies often do not address the role of large firms in development and may underestimate the welfare gains that come from industrial work. However, there is little evidence regarding the effectiveness of industrial factories in reducing poverty. This study assesses the impact of receiving an industrial job on the poverty, health, and happiness of workers and their households in relation to a microenterprise intervention and alternative forms of employment.
Context of the Evaluation:
This study takes place in Ethiopia. Although the recent Growth and Transformation Plan (GTP) for Ethiopia identifies industry’s role in the economy as a strategic pillar, it still maintains agriculture-led production as the primary engine for economic growth.
IPA currently works with Access Capital S.C., a venture capital firm that invests in various medium-size firms in different sectors and regions of the country. In 2011-2012, IPA expects to increase the partner base to include an additional ten to fifteen new or expanding firms all over Ethiopia. The opening and expansion plans of these firms will be creating hundreds of low-skill jobs. With thousands of applicants to these positions, these firms will be selecting new hires randomly from the pool of qualified applicants, allowing the first randomized evaluation of formal sector wage labor.
BCaD-Consulting Management is a sole proprietorship business organization that is licensed to work all over Ethiopia. It specializes in providing a range of business skills, and entrepreneurship and management trainings. BCaD is partnering with IPA to deliver the microenterprise component of the research study.
Description of Intervention:
To assess the impact of industrial employment, researchers will follow job applicants to a group of 15-20 new Ethiopian firms ranging from water bottling factories to large-scale commercial farms. The study focus within these factories is primarily on low or semi-skilled workers. IPA provides human resources support to the factories during the hiring process by advertising the positions and helping register and screen applicants based on criteria identified by the firm. The target applicant sample per factory is typically three times the size of the hiring need of the factory. New hires (one-third of the target sample) are then randomly selected from the pool of applicants; a second group (also one-third of the target sample) will be offered, at random, the opportunity to participate in a microenterprise intervention, and the final one-third serve as a comparison group that is identical, on average, to the group receiving employment or the microenterprise intervention. All three groups (successful job applicants, microenterprise beneficiaries and the comparison group) will then be followed for a period of two years. A comparison of poverty levels, health, household activities, and political and social behavior one and two years after the application process will thus measure the welfare effect of the factory job relative to the microenterprise intervention and to the average applicants other opportunities.
Can an intensive package of support lift the ultra poor out of extreme poverty to a more stable state? This 24-month program provides beneficiaries with a holistic set of services including: livelihood trainings, productive asset transfers, consumption support, savings plans, and healthcare. By investing in this multifaceted approach, the program strives to eliminate the need for long-term safety net services. Spanning seven countries on three continents, the Ultra Poor Graduation program is being piloted around the globe. IPA is conducting randomized eval
Can an intensive package of support lift the ultra poor out of extreme poverty to a more stable state? This 24-month program provides beneficiaries with a holistic set of services including: livelihood trainings, productive asset transfers, consumption support, savings plans, and healthcare. By investing in this multifaceted approach, the program strives to eliminate the need for long-term safety net services. Spanning seven countries on three continents, the Ultra Poor Graduation program is being piloted around the globe. IPA is conducting randomized evaluations in India, Pakistan, Honduras, Peru, Ethiopia, Yemen, and Ghana to understand the impact of this innovative model.
Governments have often attempted to address the needs of the ultra poor by offering consumption support that is costly and offers no clear pathway out of food insecurity. The Ultra Poor Graduation Pilots attempt to apply a model, developed by BRAC in Bangladesh, which recognizes that the ultra poor need the "breathing space" that is provided by temporary consumption support, but that public funds may be better used to build households’ capacities to maintain a sustainable livelihood. The idea is that this initial assistance, lasting two years, will place households securely on the first rung of the development ladder, which they can then climb with the help of appropriate development strategies. The model incorporates a comprehensive package of services: a productive asset (such as chickens or goats), consumption support, livelihood trainings, healthcare, and financial services. Ideally this wide set of support services will help households to weather any shocks they may face along during their climb out of ultra poverty.
This project is a part of a set of evaluations, in partnership with CGAP and the Ford Foundation, that intends to determine whether the model, pioneered in Bangladesh, is effective in a range of contexts.
Context of the Evaluation:
This study takes place in the Wukro district of the Tigray region of northern Ethiopia. The World Bank reports that 77% of the population lives on less than US$2 per dayand 39% of Ethiopians live at $1.25 per day. Eighty-five percent of Ethiopian households are engaged in agriculture. Droughts are common in Ethiopia and Tigray was the epicenter of the 1984-85 Ethiopian famine. The famine, which attracted worldwide media coverage, resulted in relief aid for the region from Live Aid and other efforts.
More recently, aid efforts have begun to shift from direct food support and food-for work programs to interventions designed to increase long-term prosperity. These interventions include credit for entrepreneurship, savings associations, and agricultural support, such as irrigation, water storage, and market linkages. The Ultra Poor Graduation Pilot targets the lower tier of those households who are already a part of the Productive Safety Net Programme (PSNP),the Government of Ethiopia’s program to address food security issues by offering guaranteed employment for up to fifteen days a month in return for cash or food handouts designed to meet households’ basic nutritional needs.
Description of Intervention:
Five hundred treatment households in ten villages in Wukro district initially receive consumption support transferred through PSNP for six months.Once households’ food consumption stabilizes, they receive individual savings accounts at DECSI, a microfinance institution operating in the region, as well as business training. Later on, participants receive a livelihood asset chosen from a preselected list of options: raising small ruminants, cattle fattening, petty trade or beekeeping, to help jump start a new economic activity. Participants are monitored throughout the process – they receive home visits to help boost confidence and build expertise, and are provided with access to social and health services.
For additional information on the Ultra Poor Graduation Pilots, click here.