One of the greatest tragedies of extreme poverty is its intergenerational transmission. Poor, malnourished children do not develop normally, physically or cognitively; poor adolescents are unable to take proper advantage of educational opportunities and are more likely to engage in risky behaviors. After generations of poverty, many families and communities cannot envision cooperation to break this cycle. The Hunger Project (THP) works towards tackling poverty in Africa by partnering with local people to establish community centers ("epicenters") offering a comprehensive range of services, from health and education, to agriculture, microfinance, water and sanitation, as well as fostering community spirit. This randomized evaluation of THP's multi-faceted program aims to assess the impact on the various outcomes it strives to improve.
Researchers from Yale University and IPA have partnered with THP to evaluate the long term-impact of this strategy on health, nutrition, income, gender roles, social cohesion and education. The Hunger Project plans to cover the entire Eastern Region of Ghana, however it is neither feasible nor desirable to build all 112 centers at once. A lottery is conducted within each district to determine which of the 112 communities are offered a center in the first years (treatment group). Communities that do not win the lottery for early invitation, the comparison group, may receive an invitation a few years later. A pre-intervention baseline survey of approximately 4000 households with over 20,000 individuals was completed in 2008 and a follow-up survey of the same households will be launched in early 2013. The longitudinal nature of the survey allows us to examine if the effects of the centers are sustained over time and whether or not the strategy is financially sustainable. Generally, these centers aim to be economically sustainable within 5 years.
There are a number of development organizations in Ghana that provide services to micro and small enterprises (MSEs) seeking to expand their operations. However, as there are few rigorous evaluations of entrepreneurial development programs, IPA is working with local consultants to undertake a rigorous study aimed at understanding the key factors that prevent MSE entrepreneurs from developing and expanding their businesses as well as identifying the value of providing consulting services to them.
Microenterprises and small enterprises make up a large portion of employment in the developing world. As an alternative to employment in large firms in formal sectors, small enterprises create opportunity for the poor with few resources. Despite implications for public policy, little is understood about the constraints of these small enterprises. It is unclear which factors prevent small businesses from expanding and employing more workers. This study focuses on two possible constraints, capital and business acumen, in assessing the potential for small business growth.
Context of the Evaluation:
In Ghana businesses of less than 99 workers (commonly called small or medium enterprises), employ around 66% of the nation’s work force. These businesses are diverse in product offerings, ranging from agricultural produce to crafts to tourism services.
Ernst and Young, a professional services firm, works in assurance, tax, transaction, advisory services and strategic growth markets. Around the globe, Ernst and Young works with a range of organizations to provide consulting services, in this case tailors in Ghana. The entrepreneurs participating in the study were diverse: 57% of them were female, they came from 26 different ethnic groups, and spoke 12 different languages at home. The businesses they operated were in general very small- all had less than 5 employees, and 35% of them had no employees at all.
Description of Intervention:
IPA partnered with Ernst and Young to offer business consulting services to small businesses in the city of Accra. Out of a group of 157 tailors, 77 were randomly selected to receive one year of free consulting services while the others served as a comparison group. Four consultants from Ernst and Young met with twenty tailors each between February 2009 and February 2010. Each tailor received an average of ten hours of consulting over the course of the intervention, with the consultants visiting each tailor two to three times per month. All tailors received thirteen training modules on topics like record keeping, time management, and costing, in addition to individualized mentorship. After six months, a randomly selected38 tailors who were receiving the consulting and 36 additional tailors in the comparison group were awarded a grant of 200 Ghana Cedi (about $133 US) to invest in their businesses. Eight rounds of surveys were administered to measure the impact of the consulting services, the cash investment, and the combination of the two.
Results and Policy Lessons:
Kozak, Marta “Micro, Small, and Medium Enterprises: A Collection of Published Data,” http://rru.worldbank.org/Documents/other/MSMEdatabase/msme_database.htm.
Many small-scale farmers in the developing world face significant income uncertainty, and rural farmers who live from harvest to harvest don’t have much room for error. Variables beyond the farmers’ control, such as fluctuating crop prices, can make a significant difference in how much a family earns for the year. Farmers may be unwilling to take on additional risks by borrowing and making long-term investments due this uncertainty. This reluctance is thought to contribute to the decision of many farmers not to invest in technologies such as hybrid seeds, fertilizer, or irrigation that could potentially improve crop yields. Many lenders are also extremely wary of extending credit to farmers, fearful that they will inherit the risks inherent to farming. Crop price insurance could help solve this problem, reducing the risk to farmers and providing them with encouragement to make investments in their farms. Lenders, too, may feel more confident in lending to farmers with greater income certainty, facilitating even more capital investments.
Context of the Evaluation:
In Ghana, 50 percent of the rural population lives in poverty. In the Eastern Region where Mumuadu Rural Bank (MRB) operates, an estimated 70 percent of households make a living in the agricultural sector, but agricultural loans make up only 2 percent of the bank’s loan portfolio. Focus groups with maize and eggplant farmers in the area revealed that farmers were hesitant to borrow for fear that fluctuations in crop prices could force them to default. Rainfall fluctuations, typically an important source of risk for farmers, are not a great concern in this part of Ghana. The prices offered for traded crops, however, do fluctuate greatly. Information gathered in baseline surveys suggested that there was a potential but untapped market for crop price insurance: farmers in the area served by MRB expressed that they would be willing to pay to guarantee a certain minimum crop price. Despite this encouraging baseline finding, banks and insurance providers face the challenge that insurance is not a commonly understood concept among farmers in the region.
Details of Intervention:
Researchers developed an agricultural loan product in coordination with MRB that had an insurance component that partially indemnified farmers against low crop prices. Specifically, if crop prices at harvest dropped below a set price floor (the 10th percentile of historical prices for eggplant and the 7th percentile for historical maize prices), the bank would forgive 50 percent of the loan and interest payments. Borrowers were not required to pay any premium for the insurance product. The goal of incorporating insurance into the loan product was to reduce farmers’ risk in borrowing to invest in agriculture inputs. The intervention targeted maize and eggplant farmers in particular because the crops are both commonly grown in the region and subject to volatile (but historically well documented) prices.
Standard Mumuadu procedure is to invite farmers to meet in a group with Mumuadu employees to discuss the bank’s financial services, and to encourage farmers to come to a branch to apply for a loan. The average loan size is approximately US$159, which represents a significant change in cash flow for the borrower. For this project, Mumuadu employees approached community leaders to obtain a list of all maize and eggplant farmers in the village. The same community leaders then invited farmers to attend one of the bank’s information sessions. Farmers on the list were randomly assigned to one of four groups, each of which received a variation on the Mumuadu marketing pitch. The four groups were:
Farmers who were offered the standard Mumuadu loan product;
Farmers who were offered the Mumuadu loan product with complimentary crop price insurance;
Farmers who received financial literacy training, before being offered the standard Mumuadu loan product;
Farmers who received financial literacy training, before being offered the Mumuadu loan product with complimentary crop price insurance.
Prior to the marketing of the loans, Mumuadu employees conducted a survey of the farmers, gathering information relating to their credit history, risk perception, financial management skills, and cognitive ability. An analysis of baseline data, bank administrative data, and a followup survey that focused on farmer investment decisions allowed researchers to draw conclusions on the effect of crop price insurance on borrower behavior and agricultural investment in Ghana.
Take up of loans among farmers was quite high, with 86 percent of farmers in the comparison groups choosing to borrow and 92 percent of farmers in the treatment groups taking out a loan. This high take up across both treatment and control groups made an analysis of the features that predicted take up difficult. In fact, the researchers found no systematic difference across the treatment and control groups when considering which features predicted borrowing. Overall, those who borrowed tended to be older, with higher scores on tests of cognitive ability. They were also more likely to have a record of previous borrowing.
Apart from predictors of borrowing, researchers were interested in whether crop price insurance changed farmers’ investment behavior. There is evidence that it did, but not overwhelmingly. The small sample and high take up across both groups may have played a role in this outcome. Farmers offered the insurance spent 17.9 percentage points more on agricultural chemicals (mostly fertilizer) than those who had not been offered the product. There was also a trend towards growing more eggplants and less maize among these farmers. Farmers offered the insurance were also between 15 and 25 percent more likely to bring their produce to markets rather than sell to brokers who come to pick up the crop. Anecdotally, it is believed that the so-called “farmgate” sellers offer guaranteed purchase contracts, but at lower prices locked in before harvest. Selling in the market, on the other hand, is a potentially more profitable but riskier option.
There are a number of potential reasons why the researchers did not find large effects of the crop price insurance product on either or take up or investment, and further research in necessary to determine their roles. It is uncertain, for example, whether farmers truly understood the benefits of the insurance. Farmers may also have been reluctant to make long term investments changes before an insurance product demonstrates an established presence in the area. Alternatively, crop price uncertainty may not be as important of an indicator of investment decisions as previously thought. Further research, with a larger sample size, is needed to better understand the roles of risk, financial literacy, and product design in determining microinsurance impact.
What type of people participate in Village Savings & Loan Programs (VSLAs)? What impact do these programs have on households and communities?
Although during the last decades microfinance institutions have provided millions of people access to financial services, provision of access in rural areas remains a major challenge. It is costly for microfinance organizations to reach the rural poor, and as a consequence the great majority of them lack any access to formal financial services. Traditional community methods of saving, such as the rotating savings and credit associations called ROSCAs, can provide an opportunity to save, but they do not allow savers to earn interest on their deposits as a formal account would. In addition, ROSCAs do not provide a means for borrowing at will because though each member makes a regular deposit to the common fund, only one lottery-selected member is able to keep the proceeds from each meeting.
Village Savings and Loan Associations (VSLAs) attempt to overcome the difficulties of offering credit to the rural poor by building on a ROSCA model to create groups of people who can pool their savings in order to have a source of lending funds. Members make savings contributions to the pool, and can also borrow from it. As a self-sustainable and self-replicating mechanism, VSLAs have the potential to bring access to more remote areas, but the impact of these groups on access to credit, savings and assets, income, food security, consumption education, and empowerment is not yet known. Moreover, it is not known whether VSLAs will be dominated by wealthier community members, simply shifting the ways in which people borrow rather than providing financial access to new populations.
Context of the Evaluation:
The Northern region of Ghana is one of the least developed parts of the country. The majority of its residents make their living in agriculture. Services including mail delivery, telephone, and medical clinics are very limited in this sparsely populated part of Ghana.
Description of Intervention:
In Ghana, researchers are working to measure the dynamics of self-selection with VSLAs. This study is conducted with 180 communities selected by our partner, CARE, after being identified as villages in which VSLA programs could be initiated. Ninety villages were randomly selected to receive the VSLA intervention, and the remaining 90 villages are used for comparison. For those villages randomly assigned to receive the intervention, a CARE representative will enter the village to meet with residents and begin to form VSLAs there. Interested participants form groups of 15 to 30 community members, pooling their capital to create a fund from which members can borrow. Members pay back loans with interest, and savings also earn interest, with the rates determined by the group at its founding. The CARE representatives initiate the formation of new VSLAs, but the eventual goal of the intervention is to provide the community with the capacity to make these groups self-sustaining by providing training on initiation and administration of new VSLAs.
Three years after full implementation, a follow up survey will allow researchers to understand who chooses to participate in VSLAs in Ghana, as well as how their lives may be affected as a result.
Results and Policy Lessons:
We are also working with CARE to evaluate their VSLA programs in Malawi and Uganda.
IPA is working with Mumuadu Rural Bank (MRB) to study the response to and impact of a new account labeling savings product. Working with Susu customers and Susu agents, the study compares the success of this new product with the current Susu savings product. The new savings product has only a psychological difference: it allows the labeling of funds within an account so that deposits can be directed to a specific goal, such as health, education or business savings.
Saving is hard for most people, rich or poor, educated or not. Setting aside even small sums of money on a regular basis requires a conscious trade-off between buying something now in favor of achieving long-term goals, and even the most prosperous struggle to translate this intention into sustained savings. Saving may be especially difficult for poor individuals, as daily needs and family obligations may distract attention from meeting savings goals.
Poor individuals not only have less income, but often face additional barriers to savings. They tend to be the least educated about their financial options, have the least access to secure financial institutions and are the least able to afford financial mistakes. Due to a variety of challenges, savings rates are quite low across the developing world and individuals often go into debt to maintain family well-being.
Context of the Evaluation:
Ghana's Eastern Region has a vibrant microfinance sector populated by a wide range of formal and informal institutions, and uniquely characterized by a prevalence of "Susu" collectors: traditional savings collectors who walk a daily path through town to collect Susu, "small small moneys", from their customers. Typically, Susu collectors return the funds to their customers at the end of the month in exchange for one day’s worth of collections.
As banks moved into rural areas, they have formalized Susu collection, paying their agents on commission and not charging their customers a direct fee for the service. Competition between banks is highly visible in the urban marketplaces where Susu agents, clothed in the bright batiks of their respective institutions, fight for the patronage of the same group customers.
Description of Intervention:
Researchers collaborated with Mumuadu Rural Bank (MRB) in the Eastern Region of Ghana to test the impact of a new type of savings account aiming to help clients save by focusing attention on savings goals. The evaluation seeks to understand if a purely psychological savings product, which encourages customers to earmark account funds for a specific financial goal, increases savings rates.
Study participants were active savings customers of Susu agents at Mumuadu Rural Bank in five urban and rural communities across Eastern Region in Ghana. Among them, half were randomly selected to receive an offer of the labeled savings account, while the remaining customers continued to access existing savings services from the bank. The new labeled account shared all the characteristics of the regular Susu account with the addition that customers could “label” funds for particular expenditures, such as buying a house or paying children’s school fees. After labeling the account, customers stated how much they planned to save over the next six-month period. The bank provided each customer with a free passbook that had the personal savings goal written on the front as a reminder.
Mumuadu Rural Bank staff were responsible for maintaining the accounts once they had been opened and Susu agents continued their normal rounds, collecting funds for the labeled account alongside the regular Susu savings accounts. Researchers tracked the take-up of the new product and savings activity over six-months among all participating customers.
Preliminary results found that customers with a labeled Susu savings account show a 31.2 percent increase in total deposits after nine months of account operations as compared to Susu customers without the labeled account. This increase is statistically significant across the five study branches, though the effect size varied in each community.
Over the study period, withdrawals by customers with the labeled account were not significantly higher than customers without the labeled account, indicating that these funds provided a stable source of additional capital for Mumuadu Rural Bank. While customers with labeled accounts showed greater savings rates, there was no difference in their expenditure patterns from regular Susu customers.
Additional data is currently being collected and analyzed to determine if these impacts are sustained and if there are identifiable trends in the timing of deposits and withdrawals.
This study assesses the willingness of households in Northern Ghana to purchase a ceramic water filter. The Kosim filter is sold by Pure Home Water (PHW), a Ghana-based NGO, and has been demonstrated to be highly effective at improving water quality without needing electricity. We will also measure the health effects of household-level water treatment in areas with high waterborne disease loads.
Diarrheal diseases, which result poor water quality, are a leading cause of death in the developing world, killing approximately 1.8 million people per year. Achieving the Millennium Development Goals of reducing the proportion of people without sustainable access to safe drinking water is especially difficult for the rural poor. Delivering treated water through pipes has resulted in sustained health gains in developed countries and urban areas in developing countries, but is not considered feasible in rural areas with dispersed populations and weak institutions for maintenance. Community interventions, such as spring improvement or communal wells, have not produced strong results, and policy makers are increasingly interested in household and point of use treatments. However, the effectiveness of such treatments in rural environments, the role of education and marketing to encourage use, and how to expand access with limited resources remain largely unknown.
Context of the Evaluation:
Diarrheal diseases account for 12% of childhood deaths in Ghana, and are the third largest cause of death for children under the age of 5. These diseases are caused by the ingestion of water contaminated by fecal matter, and 20% of Ghana’s population does not use an improved water source. The sparsely populated northern region of Ghana is one of the least developed parts of the country, and has even less access to clean water than the national statistics would suggest. The majority of its residents make their living in agriculture, living far away from one another. This low population density makes any state- or community-wide water treatment intervention costly and impractical.
Details of the Intervention:
This study will evaluate the demand, use, and impacts of one household level water treatment technology. The Kosim filter is a ceramic filter marketed and sold by Pure Home Water, a Ghana-based NGO. This simple product has been proven to be highly effective at improving water quality and is appropriate for the region, since it removes particles and pathogens from water without the use of chemicals or electricity which require some form of delivery.
Researchers are measuring the willingness to pay of households for the Kosim filter by offering a random selection of households the opportunity to purchase the filter through door-to-door sales. Households will also be offered a randomized price for the filter, to determine price effects and willingness to pay for preventive health technologies.
Researchers will collect data from 1,500 households on water quality, education, income, consumption, health, diarrhea disease knowledge and water treatment and storage practices to see how these variables affect the willingness to pay for a filter. The randomized offer price provides a means to estimate the filter’s health impact and health spillovers among neighbors, without letting a set price screen out households who have a lower value for clean water. Thus, researchers can evaluate different techniques for creating behavioral change, such as the adoption of new water treatment technologies and storage techniques, and the propensity of individuals to drink treated water and provide treated water to their children.
By offering means-tested secondary school scholarships to youth in Ghana, and comparing school enrollment and longer-term outcomes in health and employment between scholarship winners and a similar group of youth not offered a scholarship, this study aims to provide evidence on the barriers to enrollment and estimate the longer-run returns to secondary education.
By offering means-tested secondary school scholarships to youth in Ghana, and comparing school enrollment and longer-term outcomes in health and employment between scholarship winners and a similar group of youth not offered a scholarship, this study aims to provide evidence on the barriers to enrollment and estimate the longer-run returns to secondary education. Preliminary evidence suggests that the secondary school completion rate will be at least 30 percentage points higher among scholarship recipients, suggesting substantial financial barriers for Ghanaian youth who gain admission into secondary school but fail to enroll.
Over the past decade, many developing countries have expanded primary school access, energized by initiatives such as the United Nations Millennium Development Goals, which call for achieving universal primary education by 2015. As some progress has been made towards this goal, an important question for policy-makers is emerging: how quickly should access to secondary education expand? Although human capital is considered to be an important driver of growth and development, and the role of primary education has been well studied and understood, there is very little evidence of the benefits of secondary education. It is sometimes hypothesized that secondary education could have a much larger impact than primary education on long-run earnings, health, fertility, gender equality, and civic and political participation. However, expanding secondary education is significantly more expensive than providing free primary education.
While primary school completion rates have boomed in recent years, secondary school enrollment across sub-Saharan Africa has remained low, at 34% in 2007 according to UNESCO1. The direct costs of fees and materials (around US$350 over four years in Ghana) as well as the opportunity costs to families of taking youth out of the workforce may be contributing factors to low secondary school enrollment.
Description of the Intervention:
The sample for this long-term research consists of a cohort of 2,068 students (evenly split between males and females) who earned admission into a 4-year secondary school (“senior high school”) but had not enrolled by the Fall 2008 due to financial constraints. Out of these 2,068 students, 682 students were selected (by lottery) to receive a scholarship that covered 100% of the tuition and fees at a local public senior high school. The scholarships were announced during the 2008/2009 academic year and over 75% of scholarship winners enrolled in senior high school that year. Most of them are expected to graduate in June 2012. The goal is to compare the outcomes of those offered the scholarship (the treatment group) with those who did not win the lottery (the comparison group) for at least 10 years in order to estimate the impacts of lowering the financial barriers to secondary school enrollment and the returns to secondary education.
At the beginning of the study, a baseline survey was administered to all participating youth and their guardians. At the time, the youth were 17 years old on average. Study participants were given a cell phone, and once a year, we attempt to reach all respondents over the phone in order to update their contact information and ask for their current schooling status and location. If they cannot be reached over the phone, we attempt to find them in person by going to their home area.
The first of three extensive follow-up surveys will be administered to the entire sample in the Fall 2012, when most study participants will be out of school. Subsequent follow-ups will be administered in 2015 and 2018. Follow-up surveys will include, among others, modules on labor market outcomes, health, marriage and fertility, time and risk preferences, technology adoption, civic participation, etc.
Preliminary Results and Policy Lessons:
As follow-up data has not yet been collected, lessons on the impact of increased access to secondary education cannot yet be made. Preliminary results concerning educational attainment are the following:
Among those who did not win a scholarship (the comparison group), 20% enrolled in senior high school in the school year 2008/2009. The enrollment rate among them had risen to 38% by the end of the 2010/2011 school year. This rate was higher among boys (44%) than girls (34%). Part of the lower enrollment rates among girls comes from the fact that a subset of girls in our study sample had been out of school for more than a year already at the time the study started.
Among scholarship winners (the treatment group), the enrollment rate was 75% in the school year 2008/2009, almost four times that in the comparison group. Three years later, the enrollment rate was still twice as high among those that received scholarship compared to those who did not, at 73% overall (81% among boys and 64% among girls).
Savings are crucial for managing irregular and unpredictable cash flows in order to meet daily needs, finance lumpy expenditures, and deal with emergencies. For poor households, informal tools like credit from moneylenders are often less efficient than savings mechanisms as they require high interest rates to finance predictable and recurring expenses. Evidence suggests that these households often have excess financial capital after covering subsistence expenses that could be used for savings. Access to and utilization of financial products that help the poor save funds for the future may have substantial welfare consequences.
The recognition of this need has led to the creation of greater financial access throughout the developing world. Banks, for instance, have increased their reach over the past decade in Sub-Saharan Africa, offering savings accounts with minimal fees and opening requirements. Take-up of formal savings accounts among the poor, however, remains low. Why do poor individuals fail to take advantage of the lower-risk, lower-cost vehicle for saving that bank accounts offer? This study evaluates the relative importance of individual beliefs, psychological factors, and transactional barriers to opening accounts.
Context of the Evaluation:
Tamale, located in the Northern Region of Ghana, is the third largest city in the country. It has a quickly growing economy and has recently experienced a financial services boom: approximately three banks had opened new branches within the three-year period preceding this study. These banks have also made efforts to design accounts with minimal requirements and fees to be accessible to the poor. The take-up of these products among poorer demographics, however, has been low. During the study, Zenith Bank, which opened its branch in Tamale in 2009, offered savings accounts with no requirement for an opening balance and no fees. Innovations for Poverty Action conducted this study in collaboration with Zenith Bank to provide access to formal saving accounts to individuals who face specific expenditure opportunities that might otherwise be financed with credit. This study aims to determine which of several treatments is most effective in encouraging individuals to open a formal savings account.
Details of the Intervention:
The sample in this study includes 1831 market vendors who had businesses in the Central Market of Tamale. These vendors were mostly female and illiterate and owned businesses that sold a wide variety of products including rice, tailored clothing, household items, and produce. This demographic was ideal for the study because: (1) Market vendors earned a steady source of revenue from their businesses and thus had funds they could potentially save; (2) These vendors often relied on informal credit to finance major expenditures, such as school fees, business inventory, and rent; and (3) The market was close to several local banks, including Zenith Bank, the partner for this study.
A baseline survey was administered to the market vendors to collect data on businesses, common expenditures, savings and loan behavior, and financial attitudes. Afterward, representatives of Zenith Bank came to the market to offer savings accounts to those who had received the baseline survey. All savings accounts included weekly reminders to save via text message. Participants received three types of treatments randomly assigned before the account-offering:
Framing Condition: Individuals were randomly assigned into one of three groups. Those in the Comparison Group received no treatment. Those in the Information Group were provided with specific information from previous studies about how much more individuals save when they receive reminders to save. Those in the Emotion Group were asked to tell a story that generates positive and hopeful emotional feelings.
Cost Condition:Individuals were randomly assigned to one of two groups. Those in the Zero Cost Group were encouraged to open an account and could do so without ever visiting the bank. Those in the Transaction Costs Group were encouraged to open an account but had to visit the bank to do so.
Savings Tools:Individuals were randomly assigned to one of three groups. Those in the Comparison Group received no tools with their account. Those in the Financial Plan Group received a customized simple savings plan to finance a specific expenditure.
The primary study outcomes were a) willingness to open a formal bank account with Zenith band and b) savings deposit behavior after opening accounts.
The strongest treatment effect came from removing all transaction costs for opening a bank account. Individuals were more than ten times more likely to open an account when they could open accounts directly at their place of business. Convenience seems to be a primary motivating factor in decision-making about interacting with formal banking.
Specific information did not increase the likelihood of opening an account or making savings deposits. If anything, specific information about the benefits of saving with regular reminders decreased the willingness to open an account unless that information was highly positive. Emotional framing also had no statistically significant effect on account opening.
While many individuals opened accounts, relatively few individuals continued making deposits over a long-run horizon. Six months after the study the majority of account holders were not making regular deposits (no individuals in the high transaction cost group continued to make deposits while 2.5% of individuals who could open accounts in the field continued to make deposits). For this reason, we see no impact of specific savings tools on the level of savings.
Surveys on financial knowledge and behavior have revealed that individuals in both developed and developing countries around the world lack adequate knowledge to make informed financial decisions. Empirical evidence demonstrating correlations between financial literacy and various measures of well-being has directed service providers, donors, and policymakers to include financial training and business education programs as part of broader anti-poverty strategies. Financial education, especially when provided in the early stages of life, has the potential to create long-lasting impacts. Intuitively, financial education provides useful tools to people of all ages, yet empirical evidence for this impact is thin and often mixed. This project tests two financial education curricula for primary school students. Specifically, it measures the impact of financial education on student behavior attitudes, and outcomes.
Context of the Evaluation:
Saving and finances are part of daily life for many youth, yet traditional school curricula often overlook the specific issues and challenges students encounter with money. This curricular gap represents a missed opportunity for students and teachers. Aflatoun, a Dutch non-governmental organization providing social and financial education to 540,000 children in 33 countries,operates a voluntary after school club in Ghana for primary and junior high schools. Aflatoun uses a uniquely designed “social and financial education curriculum” to improve children’s saving habits as well as financial attitudes and self-esteem. Aflatoun’s training on handling money, saving on a regular basis, and spending responsibly aims to teach children, at a young age, lessons and behaviors that they will carry with them throughout their lives.
Aflatoun operates in collaboration with local partners to implement its programs. Two project partners in Ghana - the Women and Development Project (WADEP) and the Netherlands Development Organization (SNV) - trained instructors and managed program implementation. SNV Ghana worked with three other implementing partners in two regions to train teachers and monitor the implementation of clubs: Berea Social Foundation (Western Region), Support for Community Mobilization Projects and Programs (Western Region), and Ask Mama Development Organization (Greater Accra Region).
Details of the Intervention:
The study included 5,000 primary school students aged 9 - 14 in 135 public schools in semi-urban and rural Ghana, including 30 schools in Greater Accra, 60 in Volta, and 45 in Western District. One-third of the schools in each region were randomly assigned to each of three different groups: the Aflatoun program, Honest Money Box (HMB) intervention, or a comparison group without treatment.
The Aflatoun curriculum includes lessons about planning, budgeting, saving, proper spending, as well as self-esteem building exercises. It uses songs, games, and worksheets, which put children at the center of the learning process. Aflatoun also adapts its messages and activities to the context of the countries in which it operates, focusing on cultural heritage and community in order to foster a collective sense of empowerment among participant children. The HMB intervention, in contrast, is solely focused on financial education and is designed to provide a comparison for Aflatoun’s unique social and attitudinal curriculum. IPA developed the HMB intervention as a group savings scheme with a financial literacy curriculum. Some of the topics covered in the curriculum include: What is Money?, Saving and Spending, Planning and Budgeting, and Entrepreneurship, as well as lessons in how to use the Money Box, a lockbox that stores group savings.
To implement the two programs, local partner organizations trained approximately 200 teachers (two teachers in each selected school). Teachers instructed two multi-grade clubs, with an average of 54 students per club, and delivered the assigned curriculum, in addition to providing a secure storage space for the money saved, generally in the teacher’s locked office. Clubs met, on average, once a week after school at a time decided by the members. Students saved money from their pocket change and recorded transactions on individual passbooks. IPA and partner organizations monitored the teachers to ensure that implementation met pre-determined standards.
The evaluation was conducted over the course of one school year. Between 20 and 40 children per school were chosen to be surveyed.. The baseline survey was conducted in September 2010 and the endline in August 2011. The surveys collected data on financial well-being of students and their families, cognitive function, and perspectives on savings and time and risk preference. The endline survey captured the same information as the baseline, in addition to a financial education endline assessmentand a psychosocial module to understand students’ outlooks and levels of self-control.
Risk, rather than a lack of capital, appears to drive underinvestment in agriculture in Northern Ghana, but when farmers were provided with weather insurance they spent more on inputs such as chemicals, land preparation, and labor.
Underinvestment in agricultural inputs such as fertilizer, hybrid seeds, or labor is thought to drive low crop yields in Africa and other parts of the developing world. Several factors may help explain why farmers fail to invest in such potentially profitable inputs. It is possible that they are wary of the riskiness of adopting new agricultural methods or tools—if they invest and their crops still fail, they will have even less money than if they had not invested at all. Farmers may also lack the capital necessary to purchase these inputs, and be unable to obtain credit to finance investment in their farms. Because the returns to using new technologies can be so high, encouraging use among farmers has the potential to greatly improve their welfare, but financial institutions and policymakers need to first understand what factors are truly driving underinvestment in agriculture.
The climate of northern Ghana’s savannah region has a single short wet season, with high annual variation in rainfall. This kind of weather pattern creates great risk for farmers who depend on the weather for their livelihood, particularly when agriculture is primarily rain-fed, as it is in this area. There is strong evidence that shocks in the amount of rainfall translate directly into consumption fluctuations for farmers, and so investment in new agricultural technologies or methods has the potential to significantly affect welfare. Throughout Ghana, the average farmer uses only 7.4 kg of fertilizer per hectare, while in South Asia fertilizer use averages more than 100 kg per hectare. Initial surveys in northern Ghana revealed that the median farmer participating in this study did not use any chemical inputs on their crops, often citing lack of money or concerns regarding weather risk as key obstacles preventing investment.
Description of the Intervention:
In the first year of the study, researchers tested the relative importance of capital and risk in driving farmers’ investment behavior. From a total of 502 households, 117 were randomly selected to receive a cash grant to fund agricultural inputs; these farmers received GHC 60 (approximately US$45) per acre for up to 15 acres, delivered at a time of their choosing. Another 135 randomly selected households received a grant for an insurance scheme that paid roughly GHC 100 (US$75) per acre of maize if rainfall at a local weather station went above or below specified thresholds. Ninety-five households received both the cash grant and the insurance grant, while 155 households received no additional services and formed the comparison group.
In the second year, researchers tested different prices for rainfall insurance among the original sample households, plus households in an additional twelve communities. Households were visited up to four times by marketers: during the first visit they were informed about the product, during the second visit they were asked to sign the contract and pay premiums, during the third visit the marketer issued a policyholder certificate, and during a fourth visit an auditor verified their understanding of the product. The price that people were offered for insurance was randomly assigned at the community level: households in the original sample would be offered rainfall insurance at a cost of either 1 GHC or 4 GHC (approximately US$0.75 or US$3), while in the newly added communities, households would be offered insurance at either the market price of GHC 12-14, or the actuarially fair price of GHC 8-9.5.
In year three, the pricing experiment continued in collaboration with the Ghana Agricultural Insurance Programme (GAIP), to market their drought-indexed insurance. Because this product was more complex, scripts used at the four marketing visits were updated to make it more understandable. Pricing of the insurance was again randomized at the community level, with 23 communities receiving the market price, 23 communities receiving the actuarially fair price, and 26 communities receiving a subsidized price.
Importance of Capital vs. Risk: Results from the first year suggest that risk, rather than capital, was the major constraint on investment among farmers in this sample. Farmers who received the insurance grant increased their expenditure on farm chemicals, and also brought more acres of land under cultivation. If the primary constraint on investment was a lack of capital, then the insurance product, which offered no up-front payouts, would not have affected their ability to purchase materials. Many farmers appeared to recognize the value of the insurance product, with a significant proportion choosing to purchase insurance in years two and three. Take-up of the insurance product did not change when a token price of GHC 1 per acre was charged, and even at the actuarially fair price of almost GHC 10 per acre, 40-50 percent of farmers purchased insurance.
Impacts of Weather Insurance: Farmers with weather insurance invested more in agricultural inputs, particularly in chemicals, land preparation, and hired labor. Total cultivation expenditures were more than GHC 250 (US$188) higher for farmers with insurance, representing a 33 percent increase relative to the comparison group. These impacts were even larger among farmers who received both insurance and a capital grant. Despite the increases in production, it is not clear that investments were actually profitable for farmers: the additional expenditures may have increased by more than the value of the additional output, depending on how household labor is valued.
Trustworthiness of Insurance: Results suggest that how much farmers trust the insurance scheme has a large impact on their take-up and response to rainfall insurance. Take-up of insurance was considerably higher among farmers who also received a capital grant, but it was not higher among households who were wealthier. This suggests that farmers might not have been entirely confident that the promised insurance payouts would be made when trigger events occurred, and so they were more willing to take the risk of purchasing when they had been given extra cash. Similarly, individuals who were familiar with others who had received insurance payouts in previous years were significantly more likely to take-up insurance themselves.
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.
Households well below the poverty-line face an interrelated set of challenges, each of which colludes to keep families in extreme poverty. These families are food insecure, do not have access to financial services, have few assets, savings, and inadequate access to healthcare, and often cannot afford education for children or need children to work. Without many opportunities or tools with which to change their situation, these households are vulnerable to shocks, such as bad harvests, and often dependent on charitable or government services for basic food support during lean seasons.
Graduating from Ultra Poverty (GUP) uses the Ultra Poor Graduation model, developed by BRAC as part of its Targeting the Ultra Poor Program in Bangladesh, to confront extreme poverty by offering a holistic set of services. The model addresses the varied needs of households in extreme poverty by providinga sequenced set of services, including consumption support, productive asset transfer, livelihood training, savings services, and healthcare. This approach is based on the premise that beneficiaries require intensive support, beyond financial services, to make a sustainable change out of extreme poverty. In Ghana, the GUP evaluation provides an opportunity to measure the impact of the savings component of this program.
Making weekly visits and providing a holistic bundle of services is costly. Evidence suggests that poor households, who are resource constrained, may be able to improve their economic welfare with improved financial products like savings accounts. The Savings Out of Ultra Poverty (SOUP) program in northern Ghana provides households with the opportunity to save money in a secure account through a weekly Susu collection program to build capital for future expenses, providing an opportunity to learn whether savings alone can make a difference for households in extreme poverty.
By comparing the impact of the GUP and SOUP interventions, this study will help determine the impact of savings alone as well as savings when combined with a holistic package of services and which approach is more cost effective in improving household economic and social outcomes in the short and medium term.
Context of the Evaluation:
In Ghana, the GUP and SOUP programs are being implemented in 155 communities in the districts of Tamale Metro, East Mamprusi, and Bulsa in the Northern and Upper East Regions. Presbyterian Agricultural Services (PAS), a local organization with experience delivering a wide range of services relating to agriculture, health, and saving, is implementing both programs with the support of IPA and in partnership with local rural banks. IPA is also conducting the impact evaluation.
The GUP and SOUP programs serve women in the poorest households of selected communities. At the time of the baseline 84 percent of these women were illiterate, 18 percent had a household member with access to some sort of paid work, 66 percent lived in houses with mud or sand flooring, 93 percent had houses with thatched roofs and nearly all households relied primarily on subsistence farming.
Description of Intervention & Evaluation:
Households in selected communities were identified using a Participatory Wealth Ranking (PWR) process where villagers were asked to collectively rank the economic status of their community members. Field officers confirmed the poverty status of eligible families and households. Communities were then randomly assigned to receive GUP, SOUP or to serve as comparison group with no intervention. Half of the eligible GUP households were also randomly assigned to receive weekly Susu collection as part of the package of services, and half of the SOUP households received a 50 percent match on any savings deposits made. GUP and SOUP household receiving savings services are visited weekly by PAS field agents like “Susu” or “small small moneys” agents who collect savings for safe keeping. PAS field agents deposit savings in household bank accounts and do not charge additional fees. Transactions are recorded for each household in a passbook provided by the bank. Clients can withdraw money at any time by visiting a local bank branch.
GUP households receive consumption support during the lean season, an asset to jump-start a new entrepreneurial venture, membership to the National Health Insurance Scheme and weekly training with support from field staff throughout the 2-year program. Households are also supported by community support committees, connected to health services, and receive assistance in opening an account a local bank.
Households selected to receive the SOUP program receive savings accounts and weekly Susu collection services only – without all of the other components of the original Ultra Poor Graduation program. Half of the SOUP participants also receive a 50 percent match of all weekly savings deposits up to GHS 1.50 ($0.88 US) per week. There is no minimum or maximum to the amount that clients can save each week.
By disaggregating the savings component from the rest of GUP program both by randomly offering savings accounts with the original model and creating a savings-only program, researchers will be able to examine the overall importance of savings accounts in assisting ultra poor households. Furthermore, the matched savings intervention will allow analysis of the incentives on participant savings. Specifically, researchers will be able to determine whether households are already saving the maximum amount possible, or if incentivizing savings can further increase deposits.
For additional information on the Ultra Poor Graduation Pilots, clickhere.
This project uses a business plan competition to judge the growth potential of micro business owners, and then evaluates if business training for entrepreneurs can improve the managerial capacity of owners with different levels of growth potential.
Entrepreneurship and small businesses are widely promoted as vehicles for economic growth. However, little rigorous research has been done to support this premise or answer the critical question of what factors constrain small and medium enterprises (SMEs). Managerial capital or training may be one factor limiting the efficiency and growth of firms. This evaluation measures the impact of business training on targeted businesses to determine whether it has the intended multiplier effects for economic welfare by leading to job creation, faster firm growth and stronger supplier or customer networks.
For additional information on current SME Initiative projects, click here.
Context of the Evaluation:
This project targets self-employed small business owners in urban Accra-Tema and Kumasi with modest levels of formal schooling and substantial experience running businesses. Rather than focusing on a few large businesses, the project aims to identify a greater number of self-employed entrepreneurs, each with the potential to create a small number of new jobs. These individuals are not likely to be operating cutting-edge businesses but are great in number and provide products and services that are fundamental to the functioning of the local economy.
To implement the business training, the researchers partnered with CDC Consult Limited, an Accra-based consulting company, and the National Board for Small-Scale Industries (NBSSI).
Description of Intervention:
A sample was identified through the publication of a business plan competition by radio, newspaper, and door-to-door marketing in neighborhoods containing large numbers of small businesses (as determined from census data). To participate in the competition, applicants submitted a form gathering basic information to ensure compliance with eligibility criteria. Eligible entrepreneurs had to be between the ages of 20 and 55 years and be owners of a business that had been in operation for at least one year with two to 20 employees.
Three hundred thirty five applicants were invited to participate in a three day program, offered by CDC Consulting Limited, designed to guide them in writing a basic business plan. The 141 entrepreneurs who completed the training were asked to submit a business plan and then were invited to present it to a panel of four successful entrepreneurs. The panelists reviewed the business plans and interviewed each entrepreneur, rating each candidate. Based on the panel ranking, each entrepreneur was assigned a probability of being provided with further, more extensive group training and individualized consulting. Half of the ranked entrepreneurs were chosen to receive more intensive follow-on training. The selection was random with probabilities increasing with the panel ranking. This second round of training by NBSSI consisted of a six-day group course based on the International Labor Organization‘s (ILO) “Improve Your Business” model. CDC Consult Limited provided individual consulting advice after this course.
A baseline survey was conducted before the initial three-day business plan training course. The baseline gathered information on the history of the business and the owner and enterprise-level data on assets, sales and revenues, as well as current employees, including apprentices and unpaid family workers. The survey also included measurements of risk aversion, numeracy, logical skills, personality diagnostics, and other measures from the entrepreneurial psychology literature. These measures allow us to identify the characteristics of the entrepreneurs rated most highly by the panel members. After the completion of the group training and individualized consulting, a follow-up survey was conducted to track changes in the business. At least one further follow-up survey was conducted in 2012.
"Brain drain", or the emigration of skilled workers, is one of the most common concerns African countries have about migration. Yet migration, broadly speaking, plays a significant role in economic development in the form of remittances and continued interaction of migrants with their home countries.
In order to provide more empirical evidence on the determinants and effects of skilled workers' migration, we propose to collect primary data on 1976-2004 cohorts of top high (secondary) school students in Ghana.
The project will analyze various aspects of the "brain drain" issue, including the reasons for migration of the highly skilled and the channels through which highly skilled migration affects the sending country (such as whether there is any evidence for involvement in trade facilitation, knowledge transfer, the level of remittances sent, etc.). The project will also provide insights into the optimal design of education policy when facing increasingly globalized labor markets.
Increasing the productivity of people lies at the core of the development process. Yet the drivers of worker productivity in developing countries remain largely unknown. Recent survey evidence shows that the most profitable and productive firms tend to adopt personnel policies that link pay to performance and that firms in less developed countries are less likely to do so. However, observational studies cannot establish causality, and rigorous field evidence on the effectiveness of pay for performance contracts is limited largely to the US and the UK. Whether pay for performance contracts can be effective at increasing productivity in developing countries remains an open question, the answer to which likely depends on how incentives interact with local cultural norms.
Context and Description of the Intervention:
Research on these topics typically faces a severe trade-off between precision and generality. At one end of the spectrum, cross-country surveys provide suggestive evidence on broad patterns but are unable to identify causality. At the other, field experiments run within one firm in one country identify precise causal mechanisms but are difficult to generalize. By implementing the same field experiment in several different contexts that differ systematically on the characteristic of interest, this project is the first to combinethe precision of field experiments with the breadth of macro studies.
This project aims to provide evidence on what drives worker productivity by implementing a series of identical, carefully controlled field experiments in a range of countries. By establishing identical firms in these countries and creating identical work tasks within those firms, the project is exploring the cultural determinants of worker productivity in the developing world. Exploring the interactions between culture and labor practices is a key step in understanding persistent productivity differences across countries and in providing practical, evidence-supported tools to help span the gap.
Increasing mobile phone ownership in developing countries presents exciting new opportunities for delivering public health and other social programs. Mobile phone subscriptions in developing countries increased from 7.9 per 100 inhabitants in 2001 to 78.8 per 100 inhabitants in 2011.
Increasing mobile phone ownership in developing countries presents exciting new opportunities for delivering public health and other social programs. Mobile phone subscriptions in developing countries increased from 7.9 per 100 inhabitants in 2001 to 78.8 per 100 inhabitants in 2011. Rigorous studies of health promotion efforts delivered by mobile phones and other technologies can inform effective and efficient health programs The impact of text message reminders on patient adherence to short-term treatments, such as that for malaria, remains largely unexplored. This study is a first attempt to evaluate the impact of text message reminders on patient adherence to malaria treatment through a randomized controlled trial in Tamale, Ghana, from May to October 2011.
Results from this study, which is still underway, along with those from studies in Uganda (here and here), Kenya, and Zambia conducted in partnership with the Clinton Health Access Initiative, will be used to inform global policy on malaria diagnosis and treatment.
Despite the massive international efforts made over the past decades, malaria continues to be one of the primary causes of under-5 mortality worldwide. An estimated 1.24 million malaria deaths occurred in 2010, more than half of which were among children. Of malaria deaths, 92% occurred in sub-Saharan Africa, where Plasmodium falciparum, the most virulent form of the malaria parasite, is most common. P. falciparum has developed widespread resistance to several classes of antimalarial drugs, leaving artemisinins as the only known class of antimalarials that are effective at the population level.
P. falciparum becomes resistant to antimalarial treatments when parasites develop rare, random genetic mutations that prevent drugs from being effective. Artemisinin-based combination therapies (ACTs) are the first line treatment recommended by the World Health Organization because combination therapies lessen the likelihood that P. falciparum will develop resistance; parasites that mutate to become resistant to one drug should be killed by the other drug and there is a substantially lower likelihood that random mutations will confer resistance to both treatments. Patients must complete the full dose of ACTs to most effectively prevent P. falciparum from developing resistance to artemisinins, but many patients do not finish their drugs. This study investigates the impact of text message reminders on adherence to ACT regimens.
Malaria is one of the predominant causes of illness in Ghana, especially among young children. Ghana is a pilot country for the Global Fund’s Affordable Medicines Facility – malaria (AMFm), which aims to expand access to ACTs by highly subsidizing their cost. Ghana has also been rolling out a National Health Insurance Scheme since 2004, which allows registered members to receive ACTs free of charge. This study took place in and around Tamale, the capital of Ghana’s Northern Region.
Description of the Intervention:
Data enumerators recruited respondents at public and private hospitals, clinics, pharmacies, licensed chemical sellers, and other vendors and followed up all patients that could be reached by motorcycle within 30 minutes of leaving the town center. Vendors identified individuals purchasing malaria medicine and gave them a flyer to enroll in a mobile malaria information system and directed them to data enumerators. Willing and eligible participants received baseline participation questionnaire soliciting the participant’s mobile number, directions to his/her home and possible times to locate the patient (or his/her primary caretaker) at home. Participants who enrolled in the text messaging system were randomized to a treatment group or a comparison group. Participants randomized to the treatment group received one reminder for each of the six doses of ACT over the course of 60 hours. Those assigned to the treatment group were randomized to receive a short message, “'Please take your MALARIA drugs!” or a long message, “'Please take your MALARIA drugs! Even if you feel better, you must take all the tablets to kill all the malaria.”
Data enumerators made home visits between 72 and 96 hours after the in-vendor recruitment, when the course of the ACT treatment was supposed to be completed. The main outcome of the study was adherence, which was assessed by detailed, per-dose self-report and by data enumerator observation of pill packets. Enumerators also asked respondents about malarial symptoms, care-seeking patterns, awareness of malaria and malaria medications. In cases when a home-visit could not be made in the requisite time frame, participants were followed-up over the phone.
 International Telecommunications Union. (2012). Mobile cellular subscriptions per 100 inhabitants. Retrieved from: http://www.itu.int/ITU-D/ict/statistics/.
 Murray, C., Rosenfeld, L., Lim, S., et al. (2012). Global malaria mortality between 1980 and 2010: A systematic analysis. Lancet, 379(9814): 413-431.
 Murray, C., Rosenfeld, L., Lim, S., et al. (2012). Global malaria mortality between 1980 and 2010: A systematic analysis. Lancet, 379(9814): 413-431.
A recent randomized experiment in Sri Lanka found very high returns to capital for male-owned microenterprises, but zero return to female microenterprises. We are replicating this experiment in Ghana, a country with high levels of female participation in self-employment, to see if the results generalize to a different cultural context. The project will also collect much more detailed information about gender roles and empowerment, and occupational choice to test between several explanations for low returns to female-owned enterprises.
The study is being conducted with 800 microenterprises, half male-owned and half female-owned. Half of these will be randomly given grants of 150 cedis (approximately $120), half in the form of cash grants and half as equipment for their enterprises.