In Sub-Saharan Africa, about 1.8 million people became infected with the HIV virus in 2011, with the majority of new cases attributed to unprotected sex. This study tested whether providing sexual health information through SMS messaging could lower rates of risky behavior. Through a partnership with a telecommunications provider, Google, and the Grameen Foundation, a new service was marketed to randomly chosen villages which allowed people to query a database by texting sexual health questions to a phone number. Follow-up quantitative surveys using new methodologies for asking sensitive questions found an increase in self-reported infidelity. Among some men, numbers of reported sexual partners went up, while more women reported abstinence. Qualitative interviews suggest a possible explanation for this gender difference.
The rapid adoption of mobile phones in developing countries has created new opportunities for disseminating information to large populations at a low cost. Recently many public health organizations have designed projects that use mobile technology to support health services and health education. In contexts where knowledge about a particular health topic is low, people often lack adequate information to make decisions that will maintain or improve their health. This lack of information can lead them to underestimate the specific health risks they face and engage in risker behavior than they otherwise would have chosen.
In Sub-Saharan Africa, about 1.8 million people became infected with the HIV virus in 2011, with the majority of new cases attributed to unprotected sex. One potential way to reduce the rate of unprotected sex and STI infection could be to improve access to sexual health information. Can providing mobile phone users with sexual and reproductive health information via text message improve their knowledge of safe and unsafe sexual behaviors and ultimately lead to reductions in risky sexual behavior?
Context of the Evaluation:
Uganda has several features that make it a prime candidate for a technological intervention focused on sexual health. HIV prevalence is high: UNAIDS estimated HIV prevalence to be 6.5 percent among adults aged 15–49 in 2009. In addition, UNAIDS reports that knowledge regarding sexual health and HIV/AIDS is low and risky sexual practices, like low condom use, are prevalent. Misconceptions about sexual and reproductive health are widespread and access to reliable information or sexual education is limited. At the same time, three quarters of the adult population are literate and there has been a rapid increase in mobile phone ownership. In 2002, less than 3 percent of the population owned a mobile phone, but by 2010 over one third of the Ugandan population owned one.
Description of Intervention:
Researchers conducted a randomized evaluation to test the impact of improving access to sexual and reproductive health information via SMS message service on health knowledge, attitudes, and risky sexual behavior. From a sample of 60 villages in Masaka, Mpigi, Mityana, and Mubende districts in Central Uganda, researchers randomly assigned villages to receive encouragement to use a new mobile phone-based sexual and reproductive health information service, or to serve as part of the comparison group.
The sexual and reproductive health information service, called 6001 (the phone number to which users send a text message), was developed by Google.org, Google, Grameen Foundation, and MTN, Uganda’s largest mobile phone service provider. It allows mobile phone users to text questions on sexual and reproductive health to a server and to receive pre-prepared advice from a database of responses about HIV/AIDS, other STIs, maternal and neonatal health, body changes and sexuality, and family planning. The database has approximately 500 unique messages. Messages are about 500 characters long, consist of factual information presented in simple language, and often include an encouragement to use condoms or get tested for HIV. For example, in response to the question, “What does HIV reinfection mean?” users received the following SMS message:
“There are different types (strains) of HIV/AIDS so even if you are already infected you can catch another type of the virus which can make you more sick. HIV reinfection is when somebody who already has HIV gets the virus again by having sex without a condom with an infected person or if infected fluid gets into their body through cuts/unsterilized sharp instruments. Use condoms EVERY TIME to protect yourself + others.”
Users can send queries in English or Luganda and receive responses in the respective language. They can also send in the name of a particular health issue and their location to receive contact and service information for the nearest health facilities.
In villages that received encouragement to use the 6001 service, marketing teams visited trading centers three to six times in August 2009, depending on population size, and each time spent a full day promoting the service through demonstrations and flyers and posters in both English and Luganda. Comparison villages did not receive this extra marketing encouragement, but they could still use the 6001 service.
One year after conducting the baseline survey, researchers conducted a follow up survey with over 2,400 respondents in treatment and comparison villages in February 2010. They complemented the quantitative data with qualitative data from eight focus groups and 39 in-depth interviews that covered perceptions of the 6001 service, usage behavior, and perceived sexual health knowledge, behavior, and attitude changes.
To get more truthful answers on sensitive topics like condom use and number of sexual partners, researchers used a survey technique called list randomization. List randomization enables respondents to report on sensitive behavior without allowing the researcher to identify their individual response. Half the participants are randomly selected to receive a short list of activities and asked how many they have engaged in, but they do not have to state which ones. The other respondents see the same list of activities, but a key sensitive activity of interest to researchers, like condom use, is added. The difference in the average number of activities done in the two groups lets the researchers estimate the proportion of respondents who engage in the sensitive behavior. In addition, differences in the difference between answers elicited through direct and indirect methods allow researchers to estimate whether the intervention had an impact on social desirability bias.
Results and Policy Lessons:
Impact on take-up and use: Forty percent of respondents living in villages that received the marketing encouragement sent in at least one SMS message to the 6001 service in the following year, relative to 7 percent in comparison villages. Between December 2009 and April 2010, the average total number of text messages sent per day from all phones associated with treatment villages was 4.0, compared to an average of 1.5 messages per day from all phones associated with comparison villages. While respondents in treatment villages continued to use 6001 significantly more than respondents in comparison villages, use in treatment villages dropped dramatically after the marketing firm stopped promoting the service in trading centers. In qualitative interviews, respondents in treatment villages said they would have liked to be reminded about the existence of the service for a longer time period. Overall, 6001 users were more likely to be male, young, married, to own a personal phone, and have slightly higher education levels.
Impact on knowledge and risky sexual behavior: Increased access to information through the 6001 service did not increase sexual and reproductive health knowledge and led to an increase in self-reported promiscuity for some and abstinence for others. Researchers found no significant increases in knowledge about possible modes of HIV transmission or effective contraception methods and use in treatment villages relative to comparison villages, but found a higher incidence of risky sexual behavior and increased self-reported promiscuity, particularly among men. They also found increased abstinence as well, particularly among women, who were 6.3 percentage points less likely to have had sex in the past year. Self-reported infidelity (defined as reporting having been unfaithful to one’s current partner in the past three months) increased from 12 percent to 27 percent, as did the number of sexual partners for men. Overall, individuals in treatment villages did perceive their sexual behavior as being riskier, which could be an indication that 6001 led them to more accurately assess the health risks they face. However this change could also be the result of their riskier self-reported behaviors and possibly a desire to answer the surveyor in a particular way.
Qualitative interviews shed light on the possible reasons why the 6001 service had this mixed impact. For information provision to result in behavior change and improved health outcomes, people must use the service, obtain useful information from it, and be able to act on it. Since risky sexual behavior inherently involves more than one person, respondents may not have been able to stop engaging in risky practices due to the power balance in their relationship. Both male and female respondents reported that married women learned from the service about the risks associated with having an unfaithful partner and as a result insisted that their husbands be faithful and go for STI testing with them. According to qualitative reports some husbands complied while others did not, leading women to deny them sex and men to seek it from other partners instead.
The results of this study suggest that introducing an information technology that is left to individuals to self-direct their use may not be enough to lead to the desired behavior change. Since sexual behavior change requires two people to agree to adopt less risky behaviors, easing access to health information may not be enough to convince both partners to adopt less risky behaviors, and can potentially directly or indirectly lead them to make riskier choices.
Even when there are no official school fees, the financial burden of purchasing uniforms, books, and other school supplies prevents low-income students from remaining in school. In Uganda, researchers tested whether a school-based savings program reduced dropout rates by enabling students and their families to save for school-related expenses. A version of the program that labeled savings for educational purposes, rather than fully committing money to educational expenses, increased the amount students saved, expenditures on educational supplies, and test scores.
Although many countries in Sub-Saharan Africa have close to universal primary school enrollment, many students drop out before completing primary school or fail to continue to secondary school. While children drop out for a number of reasons, financial concerns are often an important factor. Even when governments eliminate school fees, there are still many costs associated with attending school. Providing materials such as uniforms, food, pens, pencils, and workbooks is often a significant challenge for low-income families. Furthermore, these families may lack access to formal savings services, making it difficult to set aside money for education. Even when families do have some savings, there is no guarantee they will use the money for educational expenditures. This evaluation assesses the impact of a school-based savings program that aims to encourage students and their parents to save for school expenses.
Context of the Evaluation:
Uganda’s primary school enrollment rates have greatly increased since the government began providing free universal primary education. This policy has eliminated most, though not all, costs of attending school. Gross primary school enrollment rose from 87 percent of primary school-age children in the early 1990s to 123 percent in 1997.1 Retaining pupils, however, is more difficult and as few as 32 percent of children entering primary school complete all seven grades. While the government covers the cost of teachers and schools, many schools require uniforms, and families are responsible for providing school supplies such as paper, writing instruments, and workbooks. Official policy prohibits preventing a child from enrolling due to an inability to pay, but the majority of dropouts cite financial strain.
Description of the Intervention:
Researchers partnered with the Private Education Development Network (PEDN) and FINCA Uganda to implement and test the “Super Savers” program in public primary schools. Children in grades five through seven, the final three years of primary school, were given the opportunity to deposit money into lockboxes on a daily or weekly basis. The money was deposited into the school’s bank account at the end of each trimester. The bank accounts did not earn interest. At the beginning of the next trimester, bank representatives returned to the school to disperse the funds. On the day the funds were paid out, PEDN organized a small market at each school where students could purchase school supplies or school services such as practice exams or tutoring sessions.
Schools were randomly assigned to return students’ deposits in one of two ways:
o Cash payout: students received their savings in cash, which meant they could spend the funds as they wished.
o Voucher payout: students received their savings in the form of a voucher that could only be used to buy supplies or school services at the market set up at the school. This created a binding commitment to spend any savings on educational expenditures.
There were 39 schools in each group, and an additional 58 schools served as a comparison group receiving no savings account.
Half of the schools with each type of savings account were also randomly assigned to receive parent outreach, in which workers from PEDN hosted a meeting for sixth- and seventh-grade parents to describe the various ways they could support their children’s education and to promote the savings program as a tool to help families finance school expenditures.
Results and Policy Lessons:
Researchers found that students deposited significantly more in the less restrictive savings accounts, which returned deposits in cash. On average, students in schools that received cash payouts deposited 2,267 Ugandan shillings, while the average student who received voucher payouts deposited 1,147 shillings.
When combined with parent outreach, students in the cash treatment were significantly more likely to have a complete set of school supplies, including uniforms, notebooks, math workbooks, and shoes. They also had test scores that were 0.11 standard deviations higher than the comparison group. There were no significant effects on school supplies or test scores among students who received cash payouts without parent outreach or among students who received vouchers, with or without parent outreach. These results suggest that it was necessary to combine providing a savings account, which made funds available, with parental outreach, which led households to use the saved money on education, for the program to lead to improvements in educational spending, and later, student learning.
The purpose of the voucher payouts was to restrict students to spend savings on educational expenses. However, in this context, the severe limits deterred students from saving at school. Instead, the weaker, rather than the stronger, commitment was more effective at increasing savings and, when combined with parental involvement, lead students to spend savings on items that helped improve learning.
1The gross primary enrollment ratio is a ratio of the number of enrolled primary school children, regardless of age, to the total number of primary school-aged children in the population. It can be greater than 100 percent if older children are enrolled in primary school.
Does financial literacy education improve people’s ability to save? Little is known about the impact of such programs and how they compare to other means of promoting savings. This evaluation in Uganda assesses the impact of a financial literacy education program and compares it to a group savings account program that leverages peer pressure.
Programs promoting financial literacy and savings among the poor have become popular in recent years, in hopes that they may enable individuals and families to meet their financial demands. Developing a financially educated population may help promote large-scale change in a country’s economic situation by increasing the savings rate and thereby smoothing individual consumption and increasing investment in productive resources. At this point, however, very little information exists as to whether or not financial education significantly improves savings behavior. Particularly, the impact which financial literacy programs can have relative to other means of promoting savings, such as designing group savings accounts that leverage peer pressure, is not known. Quantifying this impact can help researchers understand what drives financial decisions, and enable policymakers to fund programs that will have the largest impact on savings behavior.
Context of evaluation:
The population of Uganda is disproportionately young: 52 percent of Uganda’s population is under 15 years of age and 29 percent of the country’s adult population is between 15 and 34 years of age. In addition to being very young, the population of Uganda has extremely low savings rates, even relative to its sub-Saharan neighbors, which on average have the lowest savings rates in the developing world. Between 2001 and 2003, for example, Uganda’s average savings rate was 5.2 percent. Its neighbor Kenya, by comparison, had an average rate of 12.7 percent for the same period. Uganda’s current savings rate remains alarmingly low, at 10 percent.
Founded in 1984, the Foundation for International Community Assistance (FINCA)International’s mission is to provide financial services to the world’s lowest-income entrepreneurs . FINCA Uganda was founded in 1992, and hasexperience and expertise in providing financial assets, as well as, youth-oriented savings products to the world’s lowest-income entrepreneurs.
Description of the Intervention:
The Church of Uganda maintains a large network of youth fellowship groups, based out of village churches around the country. These groups were targeted for this intervention because they offer a high level of trust among members, as well as, a high degree of consistency across the different groups, relative to other youth group structures in Uganda. Each group has an average of 25 members with a well balanced mix of genders and occupations.
This evaluation examines two interventions: a financial education curriculum (a knowledge-based intervention) and a specially-designed youth group savings account (an access-based intervention). The curriculum was developed in partnership with Straight Talk Foundation – a highly successful Ugandan organization specializing in communication to youth – based on the Your Future, Your Moneycurriculum from the Global Financial Education Program and materials from Binti Pamoja, an organization that promotes the rights of teenage girls.
The ten-session, fifteen-hour curriculum focused primarily on teaching concepts and skills for improving savings behavior, ranging from role-playing the differences between saving and borrowing to achieve a goal, to how to keep a budget, to strategies for successfully discussing sensitive topics around money.
The group savings account was designed without fees and with simple account-opening procedures to minimize the barriers that were found in focus group discussions to most discourage young Ugandans from opening accounts.
Two hundred forty church groups, representative of all of Uganda’s regions, were selected based on their level of activity and access to district capitals. The sample population was randomly assigned into four groups, including one group which received neither intervention and served as the comparison group:
Offered/encouraged to open youth group savings account
No account offered
Financial literacy training
Treatment Group A
Treatment Group C
No financial literacy training
Treatment Group B
Comparison Group (Group D)
In total 120 groups were offered the financial education program by FINCA-hired and IPA-managed financial educators and 120 groups were offered the group savings account.
Results and Policy Lessons:
 Uganda Bureau of Statistics (UBOS) and Macro International Inc. 2007. Uganda Demographic and Health Survey 2006. Calverton, Maryland, USA: UBOS and Macro International Inc. Page 11.
 Bank of Uganda research department, Sept. 14, 2005. Found in “Savings Habits, Needs and Priorities in Rural Uganda.” Prepared by Richard Pelrine, Olive Kabatalya. Rural SPEED and Chemonics International. Produced by USAID, September, 2005.
 Dovi, Efam, “Africa: Boosting Domestic Savings on the Continent.”
Accessing safe drinking water is a major challenge in many developing countries. In order to improve access to safe drinking water, Relief International (RI) has developed a rainwater storage device (RSD), which consists of a rubber bag approximately 1.5m across and 1.5m tall when full. Researchers are evaluating this new technology in Kamwenge district in Uganda.
In many developing countries, poor access to safe drinking is an acute problem, with both health and social repercussions. Lack of safe water for drinking, bathing, and other household tasks is the primary cause of diarrheal diseases, which account for 15 percent of deaths among children under five years of age. Poor access to water also entails large time costs associated with gathering water. In some parts of Africa, women spend up to eight hours per day collecting water. New technologies, such as rainwater storage devices, could improve access to safe drinking water and decrease the time needed for water collection. However, such new technologies are only useful to the extent that they are affordable and acceptable to the intended beneficiaries. Before any large investments are made in the development and distribution of a technology, it is necessary to determine the potential size of the market, the most effective marketing strategies to promote adoption, and the potential impacts it could have on the lives of the poor.
Context of the Evaluation:
In order to improve access to safe drinking water, Relief International (RI) has developed a rainwater storage device (RSD), which consists of a rubber bag approximately 1.5m across and 1.5m tall when full. The bag is held up by a simple earthen foundation and is fed by a series of gutters. It can hold up to 1000 liters of water, which is estimated to meet the basic needs of a family of five for ten days.
Researchers are evaluating this new technology in Kamwenge district in Uganda. Residents of Kamwenge are particularly likely to benefit from a rainwater storage device, as the district receives substantial rainfall during the two rainy seasons – the first and smaller of the two lasts from the end of February to the end of April, while the second and longer season lasts from mid-September to the beginning of December.
Details of the Intervention:
This study will assess the demand for rainwater storage devices and determine potential marketing strategies. Specifically, researchers will randomly vary the incentives and marketing conditions associated with the sale of rainwater storage devices to different households. Researchers will experimentally vary the price for the device by offering discount vouchers to random subsets of households.
Researchers will also randomly apply two different marketing schemes across villages. In the first scheme, a product ambassador will be chosen from each village and given training and materials to promote the device within the village. In the second marketing scheme, the first household within each village that purchases the device at full price will receive free installation. Both marketing schemes are intended to increase locally available information about the device and promote take-up by others in the village.
The intervention will be implemented in two distinct waves spread 6 months apart, in order to study the importance of information transmission in generating demand for the new technology. For instance, it may be the case that second-wave households would have had some indirect experience with the new technology through their friends who adopted in the first wave, affecting their likelihood of adoption. The two-wave strategy also creates the opportunity to examine whether the overall level of demand changes once society becomes more familiar with the product and its price is anchored.
A follow-up survey will measure women’s participation in the workforce, child school attendance, and changes in household economic activity among adopters and non-adopters.
Identifying the determinants of entrepreneurship is an important research and policy goal, especially in emerging market economies where lack of capital and supporting infrastructure often imposes stringent constraints on business growth. However, businesses do not develop in a vacuum. Evidence from previous studies shows how businesses interact with neighboring businesses, with close associates operating in other areas, and with businesses above and below in the supply chain. Many businesses are also part of larger networks, some of which make joint sales decisions, share costs, revenues, working capital, and production information. The objective of this study is to increase knowledge on how business networks form and operate and test whether business and financial knowledge spreads across networks in a competitive market of informal small-scale industrial producers.
The study is an impact evaluation of a comprehensive technical and business training program for informal small-scale industrial producers such as metal fabricators, shoe makers, caterers, and the like operating in the outskirts of Kampala, Uganda. Owing to the physical clustering of workshops, the trainings will be delivered at the cluster rather than individual level. Randomization will also be at the cluster level to avoid spillovers to immediate neighbors who might be in the control group while allowing us to capture spillovers across business networks. This study design enables us to test two competing hypotheses regarding information sharing in networks to see if network members are collaborators that freely share information learned during the training sessions, or if network members are competitors and therefore withhold information from each other to gain a competitive edge.
This project received funding from the SME Initiative Competitive Fund for Entrepreneurship and SME Growth. For additional information on current SME Initiative projects, click here.
This study of the impact of entrepreneurship training and mentoring in Uganda evaluates a program which aims to help women entrepreneurs develop the skills they need to run thriving businesses. In addition to testing the overall impact of the program on participating entrepreneurs and the businesses with whom they compete or collaborate, the study will demonstrate the relative cost-effectiveness of intensive, personalized training versus a less intensive, standardized approach. The program will be advertised to female business owners in urban Central Uganda. As the training is expected to be oversubscribed, entrepreneurs who meet basic eligibility criteria will be randomly assigned to receive high-intensity personalized training, low-intensity standardized training, or no training (the comparison group). The randomized design allows systematic differences in outcomes to be attributed to differences between the treatment and control groups, and thus allow researchers to learn more about the impact of business skills training on profits, business size, and other outcomes for female entrepreneurs.
For additional information on current SME Initiative projects, click here.
Small and medium enterprises (SMEs) are often viewed as potential engines for innovation, employment, and social mobility, and promoted as vehicles for economic growth. In many developing countries, SMEs make up a particularly large part of the economy, yet data suggest that very few grow into larger businesses. If SMEs have such growth potential, what prevents them from expanding?
Human capital constraints may be key, especially if having adequate managerial skills in place is a prerequisite for accessing other resources, such as financial services. Many “business development services” and “entrepreneurship training” programs target SMEs in developing countries, but there is almost no systematic evidence on the effectiveness of such programs. This project evaluates a training and mentoring program in Uganda aimed at helping female entrepreneurs develop the skills they need to run thriving businesses. The objective of the evaluation is to measure the impact of an increase in “managerial human capital” on business outcomes for entrepreneurs who receive training, as well as the spillover impact of such an intervention on competing and collaborating businesses. It also compares the relative cost-effectiveness of skill transfer through a more personalized, time- and resource-intensive training approach, versus a standardized, less intensive one.
Context of the Intervention:
TechnoServe, an international non-profit business development organization, implements a business training program called Women Mean Business (WMB) in four cities in Central Uganda—Kampala, Entebbe, Jinja and Mukono. Since 2008, almost 600 women have received business skills training through the WMB program. A market survey of SMEs in these four cities, conducted by IPA, revealed that approximately 54% of all businesses interviewed were owned or managed by women. However, owners of small businesses – and especially female entrepreneurs – may lack management skills and information about how to access financial services and other resources, limiting their ability to improve and grow their businesses. For example, although women own nearly 40% of businesses with registered premises, they obtain only 9% of all credit disbursed.The WMB program aims to provide female entrepreneurs with tools and training to better manage and grow their businesses.
Details of the Intervention:
Eligible entrepreneurs will be randomly assigned to one of three groups: In Depth training, Light Touch training, or a comparison group. Program activities for both tracks will take place over the course of a year, and will be implemented by TechnoServe staff or outside consultants and mentors trained and supervised by TechnoServe.
In the first year of the program, Light Touch track participants attend classroom training sessions on topics such as financial management, sales/marketing, customer relations and human resource management. Each topic will be covered in a two-day training session, with one session each month. Participants will also be placed in sector working groups (e.g. manufacturing, retail, services), which will meet for additional, targeted training lessons and field activities. In the second year of the program, refresher training sessions will be held to provide more clarity on the topics and address any specific issues faced by the participating businesses. Finally, Light Touch participants will receive individual visits from a TechnoServe counselor to discuss any business-specific challenges they face.
Women in the In Depth track will receive all of the services offered to the Light Touch group, and in addition, will be matched with student coaches selected from local business schools. These coaches will work with the women for eight weeks in the first year of the program to develop a five year business plan. In the second year, the women will be matched one-on-one with mentors, who they will work with over three months to implement the business plan and adopt the lessons from the various training activities.
Before the start of the WMB program, a baseline survey will gather information on each business's operations, products and sales, employment, and finances, as well as background information on the owner/manager. Eight to twelve rolling follow-ups surveys will be conducted over the course of two years to gather data on business performance during and after the one-year WMB training program. A final endline survey will be conducted two years after the baseline survey and one year after the WMB program ends.
Financial markets in developing countries can be hampered by a lack of basic financial infrastructure such as functioning credit bureaus, uniform disclosure rules or the ability to use collateral. These limitations can substantially increase the cost of lending for many banks since there is much less information about the overall applicant pool and enforcement of loans is more difficult. The lack of functioning financial systems can impede any enforcement or screening mechanism that operates through negative incentives, if borrowers who have defaulted on one bank can easily access other lenders. To ensure timely repayment, banks therefore have to rely on more innovative positive incentive schemes.
Context of the Evaluation:
Uganda Microfinance Limited (UML) is a microfinance institution, which primarily lends to small businesses through its 27 branches located across Uganda. In 2008, UML (now called Equity Uganda) had over 25,000 borrowers, a loan portfolio of US$24 million, and a default rate of 4 percent. Although all UML borrowers must have some form of collateral to cover at least 80 percent of the principal loan amount, it is very hard to actually seize the assets if a customer defaults. As Uganda did not have a credit bureau at the time of the study, UML did not have the ability to incentivize timely repayment based on the threat of affecting a borrower’s credit history.
Details of the Intervention:
In collaboration with UML, researchers evaluated the effectiveness of three positive incentive schemes designed to help to reduce late loan payments among small business owners.
In 2008, all UML customers who had been approved for a business loan were randomly assigned to one of the three treatment groups or a comparison group. In the first treatment - “Cash Back” - which provided incentives for on-time repayment, borrowers received a cash back payment equivalent to a 25 percent reduction of the interest rate if they made all their monthly payments on time. However, fast-growing firms with significant investment opportunities might be willing to forgo the cash back payment if the returns from investing are higher than the benefit of paying on time. In attempt to isolate the incentive effect for such fast growing firms, the second treatment – “Future Interest Rate Reduction” - gave customers a 25 percent reduction in the interest rate of their next loan, if current loan payments were all made in time. In the third treatment – “SMS Reminders” - borrowers received SMS reminders every month three days before the payments are due.
If small businesses strategically delay repayment since they know that lenders have only limited enforcement mechanisms, then the provision of incentives for on-time payments should increase repayment by reducing the benefits of this behavior, while sending SMS reminders should not have any impact. In contrast, if late payments were predominantly a function of the inability of small business to manage their finances, steeper incentives would not help, since payment failures are simply a function of their inability to manage the finances of the business. SMS reminders, on the other hand, might help prevent firms missing payment due to oversight.
Monthly loan repayment information was collected from the bank between March 2008 and June 2009. This data was complemented by personal and business characteristics obtained from the loan application and loan appraisal forms.
Results and Policy Lessons:
Impact on Loan Repayment: The three treatments had similar effects on borrower repayment behavior. Borrowers in the “Cash Back” incentive group were 8.6 percent more likely to make all payments on time than the control group. The offer of a “Future Interest Rate Reduction” increased the probability of paying on time by 7.3 percent, relative to the control group. Perhaps most interestingly, borrowers in the “SMS Reminder” group, which was almost costless for the bank to implement, were 9 percent more likely to pay every installment on time.
Heterogeneous Treatment Effects: The effect of the treatments varied significantly across different subgroups of borrowers. The impact of “Cash Back” incentives were stronger for customers with smaller loans and less banking experience, the “Future Interest Rate Reduction” seemed to be most effective for customers with larger loans, while the “SMS Reminders” were particularly effective for younger customers.
Evidence supports the hypothesis that small businesses in developing countries pay late not because of strategic reasons but because they suffer from a lack of financial management, which affects their ability to make payments on time. This has broader implications for the design of credit products. The repayment behavior of a borrower may be partly driven by simple product details, such as the ease with which the borrower can pay the loan. Thus, loan programs that facilitate easy repayment or frequent reminders may improve loan repayment behavior and reduce the cost of lending.
Youth unemployment is a persistent problem in the developing world, particularly in post-conflict settings, posing both economic and security issues. In growing, stable economies such as Uganda, what holds back youth from reaching their potential? One theory suggests that youth unemployment is due primarily to the lack of sufficient capital to support entrepreneurship. If this is true, cash transfers or cheap credit could lead to a burst of self-employment. Evidence from other areas, such as studies on microcredit, suggests that alleviating these constraints with loans has little effect on earnings. In Northern Uganda, which is returning to peace after twenty years of war, the government’s Youth Opportunities Program offered cash transfers to groups of youth to increase employment and reduce conflict. Follow-up surveys two and four years later found a shift from agricultural work towards skilled trades and strong increases in income. Women in particular benefited from the cash transfers, with incomes of those in the program 84% higher than women who were not. There were no differences, however, in social outcomes such as community participation, aggression, and social cohesion.
See the full paper here, a policy note for the World Bank here, and Chris Blattman’s blog discussion here.
In developing countries, high unemployment - particularly among youth - is a pressing concern. Jobs, particularly higher-skilled labor and productive small enterprise, provide incomes and reduce poverty. For governments, transitioning from an economy based on small-scale agriculture to one based on entrepreneurship and production is critical for long-term growth. Employment is also seen as important for building social stability and political engagement in communities uprooted by long-term conflict.
One form of intervention offers cash in the hopes that youth will invest it in the training and assets to learn a trade or form a business. In the development community, anxiety persists over whether this is an effective approach: will youth with little or no financial or business training be able to direct the money towards successful long-term entrepreneurship? Previous research also raises questions about the ability of women in particular to invest aid into increasing lifetime earnings, given occupational constraints and pressure to share windfalls.1
Uganda’s largest employment program sought to test if an intervention as simple as giving cash could help accomplish the country’s long-term economic and social goals for its youth.
Context of the Evaluation:
Twenty years of insurgency, instability and conflict led to high rates of poverty and unemployment in northern Uganda, but by 2005 a measure of peace and stability had returned to the region. The centerpiece of the post-conflict recovery plan was a decentralized development program, the Northern Uganda Social Action Fund (NUSAF). In 2006, to stimulate employment growth through self-employment, the government launched a new NUSAF component: the Youth Opportunities Program (YOP), which provided cash transfers to groups of young adults with the goal of encouraging trade-based self-employment.
Description of the Intervention:
The YOP intervention had two official aims: to raise youth incomes and employment and to improve community reconciliation and reduce conflict. The program, targeted at youth from ages 16 to 35, required young adults from the same town or village to organize into groups and submit a proposal for a cash transfer to pay for: (i) fees at a local technical or vocational training institute of their choosing, and (ii) tools and materials for practicing a craft.
The average applicant group had 22 members. Group cash transfers averaged nearly UGX 12.8 million (US$7,108), and varied by both group size and group request. The average transfer size per member was UGX 673,026 (US$374) – more than 20 times the average monthly income of the youth at the time of the baseline survey.
Due to vast oversubscription, the 535 eligible groups were selected at random, using a lottery, to either receive the YOP program or be part of the comparison group. A baseline survey was conducted with 2601 individuals in 2008, and 87 percent were successfully followed and interviewed in the endline surveys two and four years later.
Results and Policy Lessons:
Overall, the program seemed to have strong economic effects. Four years later, beneficiaries of the YOP program had 41% higher income and were 65% more likely to practice a skilled trade, such as carpentry, metalworking, tailoring, or hairstyling. Hours worked were 17% higher, nearly entirely accounted for by these new professions – while most still farmed part-time, hours spent in agriculture were not different. They were also 40% more likely to keep records, register their business, and pay taxes.
Within the sample, gains were highest for those who had the highest initial credit constraints, those with fewest initial assets and access to loans. The effects were particularly strong for women. Women who received the cash grants four years later had 84% higher incomes than women who did not, while men were earning 31% more than their counterparts in the comparison group. This gender difference may reflect particular capital constraints faced by women.
While employment programs including this one are often implemented by governments with the aim of reducing social instability or promoting cohesion, the data show no evidence for impacts in these domains. After four years there were no measurable differences in cohesion, aggression, or community and political participation between participants in the YOP program and those in the comparison group.
Overall, the data show that the poor used the money effectively; investing in training and tools needed to start businesses and experienced a significant growth in income, even after four years. Even though impacts in social domains were negligible, the economic outcomes show the potential of alleviating capital constraints for spurring economic growth among the poor.
A midterm policy reporthereand policy note by the World Bankherewere based on the initial 2-year follow up data.
 Fafchamps, M., McKenzie, D., Quinn, S., Woodruff, C., 2011. When is capital enough to get female microenterprises growing? Evidence from a randomized experiment in Ghana. Unpublished working paper.
Microfinance institutions have increased access to financial services over the last few decades, but provision in rural areas remains a major challenge. Traditional community methods of saving, such as ROSCAs can provide an opportunity to save, but do not allow savers to earn interest on their deposits as a formal account would, or provide a means for borrowing. Savings Groups attempt to address these shortcomings by forming groups of people who can pool their savings in order to have a source of lending funds.
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 Village Savings and Loans program in this study is implemented in rural communities across seven districts in Eastern, Western, and South-Western Uganda. Community members are predominantly engaged in farming or animal breeding depending on the region. With little access to formal financial institutions, these small farmers do not have the opportunity to invest in agricultural inputs like fertilizer that could increase their income.
Description of the Intervention:
Three hundred ninety-two villages were selected to participate in this study and randomly assigned to a treatment or comparison group. Half of the villages in the treatment group were introduced to the VSLA model by community-based trainers who received an orientation by CARE and its local implementing partners.
Community-based trainers present the model to villagers at public meetings. Those interested in participating are invited to form groups averaging about twenty and receive training. These groups, comprised mostly of women, meet on a regular basis, as decided by members, to make savings contributions to a common pool. At each meeting, members can request a loan from the group to be repaid with interest. This lending feature makes the VSLA a type of Accumulating Savings and Credit Association (ASCA) providing a group-based source of both credit and savings accumulation. CARE’s VSLA model also introduces an emergency fund, allowing members to borrow money for urgent expenses without having to sell productive assets or cut essential expenses such as meals.
This study will assess the impact of VSLA trainings and group membership on access to credit, savings and assets, income, food security, consumption education, and empowerment.
Results and Policy Lessons:
We are also working with CARE to evaluate their VSLA programs in Ghana and Malawi.
What’s holding back impoverished women? Can small grants programs help the most vulnerable women develop sustainable livelihoods? Do employment and poverty relief empower them and improve their lives? This evaluation assessed the impact of a program that gave cash grants and basic business skills training to the poorest and most excluded women in post-war northern Uganda. The program led to dramatic increases in business and reductions in poverty. Despite these economic gains, however, there was little change in social integration, physical or mental health, or empowerment.
Find a policy note with more detail here and a full in-depth policy report here (PDFs)
According to one view, women have the ability to run businesses and make profits, but they are held back by too few assets, too little access to loans, too few skills, and a host of social barriers. What happens, then, when these economic barriers are removed? This study evaluates a program that gives cash, business skills training, and ongoing advising to some of the poorest women in the world, in northern Uganda, to understand its effect on new business development and poverty.
Another view holds that for women, with economic success comes empowerment - more independence, more decision-making power in the household, and the freedom to leave abusive relationships. This study also tests whether an entrepreneurship program that reduces poverty also empowers the women in other aspects of life.
The study takes place in northern Uganda, which is emerging from twenty years of conflict and displacement. Young women and girls in particular suffered economically and educationally from the war. The women who participated in this study were displaced from their homes and lands for years, and are returning and rebuilding a life. Thus this study can inform strategies for post-war reconstruction for women and for the society in general.
In 2007, the NGO AVSI Uganda and two of the IPA Investigators surveyed more than 600 young females aged 14 to 35 affected by the conflict in northern Uganda, including more than 200 women formerly abducted by an armed group. The evidence from the survey, along with program experience among NGOs in northern Uganda, suggests that the development of new economic opportunities and building social capital will be crucial ingredients in reducing poverty and improving the health, education and psychosocial well-being of youth, especially young women.
AVSI and the investigators worked together to design a program that would relieve the most serious economic constraints on women: The Women’s Income Generating Support (WINGS) program.
Description of the Intervention:
AVSI identified the 15 poorest and most vulnerable women in 120 villages that they wanted to support - 1800 in all. To each, they delivered WINGS’ three core components:
1. Four days of business skills training (BST)
2. An individual start-up grant of roughly $150
3. Regular follow-up by trained community workers
Additional optional components of the program include group formation, training, and self-support; and spousal inclusion, training, and support. Based on records provided by AVSI, the total cost of the intervention is estimated at approximately $688 per person.
The evaluation combined a randomized design with qualitative data collection. AVSI could help no more than 900 people in 60 villages at first - serving 900 already required them to triple their usual capacity. Thus AVSI and IPA held public lotteries with village leaders. 60 villages were selected to participate immediately, while the remaining 60 participated 18 months later. This design allowed for assessing 18-month impacts by comparing women in participating villages to those just about to receive the program.
Economically, the program was transformative. For example:
Cash Earnings: Earnings nearly doubled. For the average WINGS beneficiary, monthly cash income increased by UGX 16,211 to 32,692 UGX, a 98% increase over controls. In absolute terms, an increase of UGX 16,211 does not seem large (about $6.50 a month at market exchange rates). However, relative to the average income in the control group, UGX 16,481 ($6.60), it is huge.
Consumption, Assets, and Savings: Participants in the WINGS program had a 33% increase in household spending, a value of UGX 11,741 ($4.72). There is also an increase in wealth, and the results imply that WINGS clients substantially increase their durable assets. Savings for program beneficiaries tripled on average, going from UGX 40,740 ($16.36) to UGX 169,862 ($68.22).
These economic gains, however, were not matched by gains in health or empowerment. In fact, there was almost no effect on non-economic measures. For instance:
Physical and mental health: There was no significant difference in psychological distress. Women in both the program and comparison groups reported a reduction in psychological distress over time, which is not surprising because the overall quality of life in northern Uganda improved after war and displacement. Women in the WINGS group did not improve more or faster, however. If anything, they were sick about a half a day more in the previous month.
Child investments: Woman are often targeted by anti-poverty programs because they are believed to be more likely than men to use the profits to benefit the household, especially children’s education and health. Women in the program spent slightly more on children’s health and education, but there was no corresponding improvement in children’s health status or school enrollment, at least after 18 months.
Empowerment: The conventional wisdom also assumes that lending to women will enhance their status in the household. Data from this study, however, showed no evidence of resulting empowerment for women in household decision-making, independence, gender attitudes, or rates of intimate partner violence. This pattern has been seen before, and is often referred to as the “impact-paradox.”
Overall, the WINGS program impacted women’s economic standing significantly, but the data show that translating these gains into improvements in psychological health, physical health, or empowerment is more complex.
For more, you can read a first person account of the project on the Freakonomics Blog.
The development of parasite resistance to Chloroquine was a major factor in the resurgence of malaria in Africa over the past two decades. Successive generations of antimalarials have become more expensive to produce and less able to withstand parasite resistance. Artemisinin Combination Therapies (ACTs) are currently the only remaining effective antimalarial and preserving the efficacy of these drugs is essential to controlling malaria mortality and morbidity. A major driver of parasite resistance is non-compliance with treatment (“non-adherence”). Pilot evidence from Uganda generated for this project suggests that only 55% of people purchasing ACTs over-the-counter complete the full treatment course. This is a distressingly low level of treatment compliance.
This study explores methods to improve treatment compliance through improved packaging and targeted messaging on over-the-counter ACTs. We explore both the content of messaging and the design and quality of the packaging, including pictorial instructions for illiterate consumers. We also test whether a confirmed diagnosis for malaria increases the rate at which people finish their medicine. This study will make recommendations to pharmaceutical manufacturers and African governments on cost-effective ways to increase compliance.
Malaria is one of the most common causes of illness in Sub-Saharan Africa. The standard first response to a suspected malaria episode is to purchase over-the-counter medication from a local pharmacy, bypassing the formal health care system altogether. Evidence is emerging that a large share of illnesses for which antimalarial medication is taken are not in fact malaria, but are rather bacterial or viral infections. A high rate of inappropriate treatment is problematic because it delays proper diagnosis and treatment for the true cause of illness, wastes precious resources (such as antimalarial subsidies) and possibly accelerates antimalarial drug resistance.
This study explores a method to increase access to affordable malaria diagnostics through retail sector drug shops. We investigate supplier incentives to sell and customer incentives to purchase rapid diagnostic tests (RDTs) for malaria in drug shops in Eastern Uganda. We sell heavily subsidized RDTs to drug shops and allow them to set the price, while simultaneously experimenting with methods to increase customer demand through behavior change communication messaging and social learning. The study also experimentally varies training modules for drug shop owners, in some cases emphasizing their role as primary health care providers in remote communities with poor access to the formal public health system. Finally, we exploit Uganda’s underlying variation in malaria endemicity to explore how financial incentives to sell RDTs are influenced by expected malaria positivity in an effort to understand the circumstances in which RDT subsidies can be most cost-effective.