Graduating the Ultra-Poor in Peru

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, in six countries researchers evaluated a multi-faceted approach aimed at “graduating” the ultra-poor from poverty. They found that generally the approach had long-lasting economic and self-employment impacts and that the long-run benefits outweighed their up-front costs. In Peru, the gains were smaller than in most other countries.

Policy Issue:

More than one fifth of the world’s population lives on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra-poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided ultra-poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers coordinated to conduct six randomized evaluations in Ethiopia,  GhanaHondurasIndiaPakistan, and Peru.

Context of the Evaluation:

In Peru, researchers partnered with implementing organizations Plan International-Peru and Asociación Arariwa. The study focused on households in the rural communities of Canas and Acomayo, located in the department of Cusco, which is among the poorest departments in Peru.[1] To select the poorest members of the communities, the project team conducted a Participatory Wealth Ranking, in which villagers collectively ranked households according to their wealth during a community meeting. Asociación Arariwa conducted a short survey afterwards to verify the results of the ranking.

Details of the Intervention:

Researchers conducted a randomized evaluation to test the impact of a two-year comprehensive livelihoods program (“the Graduation approach”) on the lives of the ultra-poor in Peru. The approach was first developed by the Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries.

In Peru, an initial sample of 2,284 households was spread out across 86 villages. In half of the villages, households were randomized to either receive the program or not. The households that did not receive the program but had neighbors that did, served as a sub-comparison group to measure “spillover” effects.  The remaining 43 villages were randomly selected to be pure comparison villages (no one in the village received the program). The program consisted of six complementary components, each designed to address specific constraints facing ultra-poor households:

1. Productive asset transfer:One-time transfer of a productive asset valued at 1,200 PEN (2014 PPP US$854). Most participants (64 percent) chose guinea pigs, a quarter picked hens, and small number picked cattle (4 percent). 

2. Technical skills training: Training on running a business and managing their chosen livelihood. For example, households who selected livestock were taught how to rear the livestock, including vaccinations, feed and treatment of diseases.

3. Consumption support: Regular food support is a component of the Graduation approach, but in this study it was not unique to the treatment group. A governmental cash transfer program called Juntos already existed prior to the program. Households not enrolled in the Juntos program received monthly cash transfers of 100 PEN  (2014 PPP US$72). Households enrolled in Juntos (in both treatment and comparison groups) received cash transfers of 200 PEN (2014 PPP US$143.33) every two months from Juntos.

4: Health education: Information about nutrition, healthy practices, and prenatal health (delivered during training sessions).

5. Savings account:Households were encouraged to open savings accounts with Banco de Nacion or deposit group savings with Arariwa Microfinance.

6. Households visits: Home visits by Arariwa staff every six weeks over 24 months to provide to provide accountability, coaching, and encouragement.

The Graduation program began in early 2011 and continued until mid-2013. Researchers conducted the first endline survey after the program ended, as well as a second endline survey one year later (mid-2014).

Results and Policy Lessons:

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs. However, for households that received the Graduation program in Peru, one year after the Graduation program ended the gains were smaller, compared to most other countries:

Economic impacts: Households that received the program saw an 8 percent increase in food consumption (to 2014 PPP US$82.05 a month on average), but no significant increases in non-food consumption or durable good expenditures. They did not experience a significant increase in assets or food security, though they saved 2014 PPP US$220.10 a month on average, 26 percent more than households in the comparison group.

Self-employment: Households that received the program earned 2014 PPP US$307.30 in revenue from livestock on average, a 16 percent increase relative to the comparison group, but they did not experience an increase in agricultural income. Nor did they spend any more time on productive activities than comparison group households.

Psychosocial wellbeing: Households in Peru reported being physically in better health and happier than households that did not receive the program.

Political Involvement:Households did not experience significant gains in political involvement or women’s empowerment in Peru relative to the comparison group. 

Cost-benefit analysis: Compared to less comprehensive interventions, the Graduation program had relatively high up-front costs. Researchers calculated total implementation and program costs to be US$2,604 per household in Peru (2014 PPP US$5,742). However, estimated benefits from consumption and assets growth amount to 2014 PPP US$8,380 per household, representing an overall 146 percent return.



[1] “Descriptive Statistics from the Extreme Poverty Graduation Program Baseline in Cusco, Peru.” October 2011. Accessed at: http://www.microfinancegateway.org/sites/default/files/publication_files/tup_peru-baseline_report_pdf.pdf

Graduating the Ultra-Poor in Honduras

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, researchers evaluated a globally implemented “Graduation” approach to measure its impact on the lives of the ultra-poor. They found that the approach had long-lasting economic and self-employment impacts and that the long-run benefits, measured in terms of household expenditures, outweighed their up-front costs. Honduras was the only country where long-run benefits did not outweigh their up-front costs.

Policy Issue:

More than one fifth of the world’s population lives on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra-poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided ultra-poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers coordinated to conduct six randomized evaluations in Ethiopia,  Ghana, Honduras, IndiaPakistan, and Peru.

Context of the Evaluation:

In Honduras, researchers partnered with PLAN International Honduras and Organización de Desarollo Empresarial Feminino Social (ODEF), a local microfinance institution. The study focused on poor households with children who were not generally receiving microcredit or development assistance. Those ultimately selected to participate were identified as the poorest members of the community through a participatory wealth ranking process. Within the sample, the median daily per capita consumption was 2014 PPP US$1.32, with 60 percent of households consuming less than US$1.25 per person per day. At the start of the study, around 40 percent of households reported that some adults sometimes had to skip meals, and 20 percent reported the same for children.

Details of the Intervention:

In partnership with PLAN International Honduras and ODEF, researchers conducted a randomized evaluation to test the impact of a two-year comprehensive livelihoods program (called the "Graduation approach”) on the lives of the ultra-poor. This approach was first developed by Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries. From a sample of 2,403 households, researchers randomly assigned one-third to the treatment group, and two-thirds to the comparison group, which would not receive the program.

The intervention consisted of six complementary components, each designed to address specific constraints facing ultra-poor households:

1. Productive asset transfer: Participants received a one-time transfer of a productive asset valued at 4,750 Honduran Lempiras (2014 PPP US$537). Most (83 percent) participants chose chickens, while 6 percent selected pigs and 5 percent selected fish.

2. Technical skills training: Household were trained in running a business and managing their chosen livelihood. For example, households who selected chickens were taught how to care for them, including feed and shelter requirements.

3. Consumption support: Households received a one-time food transfer worth 1,920 Honduran Lempiras (2014 PPP US$217) intended to cover the six-month lean season. This differed from most other countries, where participants received weekly or monthly cash stipends.

4. Savings: Households were required to open an ODEF savings account and received either savings matches or direct savings transfers.

5. Home visits: Program staff conducted weekly home visits to provide accountability, coaching, and encouragement.

6. Health: Households attended health, nutrition, and hygiene trainings.

The program began in 2009 and continued until 2011. Researchers conducted a first endline survey immediately after the program concluded,as well as a second endline survey around one year later.

Results and Policy Lessons:

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs.

General results: In Honduras, results varied significantly from overall findings: although livestock revenues increased, total and food consumption did not change, and asset ownership declined. Researchers believe this was primarily due to the fact that a large fraction of chickens, which most households received as their productive asset, died due to illness. At both the first and second endline surveys, treatment households reported an increase in revenue coming from chickens. However, most of the chickens had died by the time of the second endline survey, leading to a decline in overall assets owned relative to the comparison group, and there was no difference in consumption among households who participated in the Graduation program and those that did not.

Cost-benefit analysis: As the program did not have lasting positive impacts on consumption and asset holdings, Honduras was the only evaluated country in which the program’s costs outweighed participant benefits. Researchers calculated total implementation and program costs to be US$1,335 per household (2014 PPP US$3,090). Estimated (lack of) benefits for four years of consumption and assets declines amounted to a loss of 2014 PPP US$6,118 per household, representing an overall negative return of 198 percent.

The Impact of Consulting Services on MSMEs in Mexico

Many public and private programs exist with the goal of helping MSMEs succeed and become more productive and competitive. However, there is little rigorous evidence of the impact of these programs. IPA is collaborating with the Institute for the Competitiveness and Productivity of Puebla (IPPC), an independent state government agency, to evaluate their MSME mentoring program.

Policy Issue: 

Microfinance has provided many businesses with access to investment capital, but few microenterprises make the jump to a small or medium size operation, and begin providing jobs for other laborers.  While much of the discussion surrounding access to finance has centered on providing services to microenterprises, SMEs are often seen as the “missing middle” in developing economies.  They are likely too large to be interested in typical microfinance loans, but may be too small to access other sources of capital. SMEs also face competition from larger enterprises, and may lack the management capacity to take advantage of market opportunities.  Addressing the factors that constrain SME growth could have important effects on long-run economic growth and employment.  Many public and private programs already exist with the goal of helping SMEs succeed and become more productive and competitive but little is known about the impact of such mentoring programs on employment generation, firm productivity, and profitability.

Context of the Evaluation: 

This study takes place in the state of Puebla, Mexico, which is made up of urban Puebla City and other semi-urban and semi-rural surrounding areas to the east of Mexico City. While Puebla is home to some larger scale industry, a great majority of the economic entities there can be categorized as small and medium enterprises, engaging in small scale manufacturing or the provision of services.

Details of the Intervention: 

Researchers collaborated with the Institute for the Competitiveness and Productivity of Puebla (IPPC), a state agency that works with small and medium-sized enterprises to provide training and mentoring services, to identify beneficiaries of the program. The study included 450 owners of small and medium-sized businesses in the Puebla area who showed interest in obtaining mentoring services. Of the 450 sample firms, 150 were randomly selected to receive consulting and mentoring services offered through the IPPC, as well as a subsidy intended to support business operations. Mentors worked with the firms, consulting on a variety of topics relevant to business development.  Though the interactions between mentors and firms was unscripted and varied based on the needs of individual businesses, mentors provided guidance and support with respect to goal planning, business strategy, human resources solutions, and market analysis, in addition to discussing other strategies for how to increase profitability.

Results: 

Results forthcoming.

Returns to Capital and MSE Management Consulting in Ghana

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. 
 
Policy Issue:
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[1].  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:
Results forthcoming.
 

[1]Kozak, Marta “Micro, Small, and Medium Enterprises: A Collection of Published Data,” http://rru.worldbank.org/Documents/other/MSMEdatabase/msme_database.htm.

Impact of Malaria Education on the Health of Microfinance Clients in Benin

In countries like Benin, where the rural population suffers from poor health, health education is often viewed as a needed compliment to microcredit, as illness can prevent borrowers from repaying their loans. In this study, researchers partner with non-profit Freedom from Hunger and a microfinance institution in Benin to evaluate the impact on health and social outcomes of integrating health education into female only or mixed-gender group microcredit meetings.

Policy Issue:
Just as illness can keep a person from working or going to school, it can also cause microfinance recipients to fall back or default on loan payments. In some cases loan defaults are linked to illness, which consumes available cash and makes the victim unable to work. Community organizations and policy makers have therefore proposed including health education alongside microfinance services. As a complement to microfinance services, health education could potentially increase repayment rates for the microfinance institution (MFI), while also improving the lives of clients. Health education increases costs for MFIs, who must direct resources towards training loan officers as educators, and increase the time that loan officers spend at each village banking meeting where training is given. There is potential for benefit on measures of both health and microfinance outcomes, but if the additional trainings are ineffective, they could be drawing away an MFI’s resources away from its core activities.
 
 
Context of evaluation:
Located in West Africa, Benin’s economy is based primarily on agriculture and regional trade. The rural population in Benin suffers from very poor health. Although WHO estimates suggest that 20% of children in Benin under the age of 5 sleep under insecticide treated bed nets – a proven defense against malaria contraction -  27% of deaths in children under 5 are nonetheless attributed to malaria.  There are a number of MFIs in Benin, and PADME represents a significant share of the market, serving approximately 44,000 borrowers out of an estimated 140,000 in the entire country.[1]

 
Description of Intervention:
In 2006, Freedom from Hunger launched the Microfinance and Health Protection (MAHP) initiative in rural Benin to help local MFI partners create and sustain key health services that complement their credit offering. This evaluation seeks to test the impact of providing credit with education on health and microfinance indicators, as well as the impact of combining education with the provision of health care products, and the specific aspects of the solidarity lending design.
 
In Benin, researchers will work with PADME to introduce the health education intervention to half of the villages they serve.  PADME typically markets their services by reaching out both to community leaders and individuals who may be interested in taking out loans, which vary in size with an average amount of nearly $1000 US.[2]  In the villages randomly assigned to receive the intervention, clients will be offered access to credit as well as health education.  In the comparison villages, potential clients will only be offered access to credit.  . The health education will consist of three modules: malaria education, integrated management of childhood diseases, and HIV/AIDS planning. An additional component of the study seeks to better understand the role of gender in microfinance.  In addition to the random assignment of health education services, researchers will also designate villages according to the gender composition of new borrowing groups.   In a random subset of villages, microfinance groups will be mixed-gender, while others will be female only.
 
Results and Policy Lessons:
Results forthcoming.


[2] http://www.accion.org/Page.aspx?pid=659

Health Education for Microcredit Clients in Peru

Policy Issue:

Health and education are areas affected by poverty.  Households with limited resources face barriers affording quality education and seeking access to health information.  As microfinance has become a popular development tool, its services have expanded to address other issues associated with poverty.   Credit with Education is one model that provides microfinance clients with training services. By simultaneously addressing needs for financial services and health information, these programs attempt to create synergistic positive effects on clients and their families.

Context:

Peru is a developing country rife with healthcare challenges. According to the World Health Organization, children have a 25% chance of dying before reaching the age of 5[1]. A lack of knowledge about preventable illness like diarrhea and access to immunization contributes to poor health status of vulnerable families.

PRISMA,  a microfinance institution lending to over 20,000 clients, partnered with IPA to provide microfinance with health education[2].  Freedom from Hunger, an NGO that provides supportive services for the poor, provided guidance to PRISMA in developing an education program based on its worldwide Credit with Education module.

Description of the Intervention:

PRISMA village banks were randomly assigned to either a treatment or comparison group. During eight monthly bank meetings, villagers belonging to treatment banks received health education trainings from loan officers, trained by Freedom from Hunger and PRISMA.  The trainings included the following topics focusing on child and maternal health: common childhood illnesses, four danger signals (e.g. diarrhea, cough, fever), medical exams, indicators of quality medical visits, and care for sick children. Surveys administered before and after the trainings collected data on height, weight and hemoglobin ( to measure anemia), days absent from work due to illness, and child nutrition patterns. Institutional outcomes like client retention and repayment rates were also measured.

Results and Policy Lessons:

Adults who received the health education training had significantly higher levels of knowledge of module content than those in the comparison group.   There was no impact on health outcomes for children or institutional outcomes.



[1]World Health Organization, “Peru,” http://www.who.int/countries/per/en/.

[2]Prisma, “Microfinanzas, ” http://www.prisma.org.pe/#cabecera.

Business Education for Microcredit Clients in Peru

 
Policy Issue:

Microfinance has generated worldwide enthusiasm as a potential answer to economic development and poverty reduction. But high default risk and unproductive use of loaned funds plagues many programs. A significant debate exists within the microfinance community as to whether lenders should focus solely on the lending business, or whether they should take advantage of the frequent meetings to integrate various types of training and improve microfinance outcomes. Integrating trainings on health or good business practices with group meetings poses a unique opportunity to deliver these services at minimal cost, but requires clients to spend more time at regular meetings, potentially leading to a higher dropout rate.

 
Context of the Evaluation: 

Of Peru’s 29 million people, almost half live in poverty,1 and microfinance institutions (MFIs) hope to improve the socio-economic situation of this population through the promotion of village banking. FINCA Peru, a small, non-profit, but financially sustainable MFI that has been operating in Peru since 1993 creates village banks for poor, female microentrepreneurs, giving them access to formal financial services. Their clients are relatively young, have little formal education and often have families to support. All clients have microenterprises, which may include selling food or handicrafts, or small scale agriculture. FINCA clients each hold, on average, $233 in savings and their average loan is US$203, with a recovery rate of 99%.

 
Details of the Intervention:

Researchers worked with FINCA in Ica and Ayacucho, Peru to measure the marginal impact of adding business training to a group lending program. FINCA sponsored 273 village banks with a total of 6,429 clients, most of whom were women. These banks were divided into treatment groups and comparison groups, with 104 mandatorily participating, 34 voluntarily participating, and 101 as the comparison.

Individuals who held accounts at treatment banks received 22 entrepreneurship training sessions and materials during their normal weekly or monthly banking meeting. Training materials were developed through a collaborative effort between FINCA, Atinchik and Freedom from Hunger and had been used in past projects. Sessions included exercises and discussion with the clients, and a lecture which aimed to improve basic business practices such as how to treat clients, how to use profits, where to sell, and the use of special discounts and credit sales. For example, in one lesson the trainers had each microentrepreneur write out a budget for their enterprise. Comparison groups remained as they were before, meeting with the same frequency to make loan and savings payments. Data was collected on dropout rates, repayment rates, loan size, savings, business size and income to asses the impact of the training.

 
Results and Policy Lessons:

Impact on Business Practices: There was weak evidence that the training may have helped clients identify strategies to increase sales and reduce downward fluctuations: for clients in the treatment group, sales in the month prior to the follow up surveys were 15 percent higher than in the comparison group, and returns were an average 26 percent higher in "bad months" when they would have expected downward fluctuations in their sales. Clients who received business training were significantly more likely to keep records of their account withdrawals, and had better knowledge about business and how to use profits for business growth and innovation. Interestingly, there were actually larger effects for those individuals that expressed less interest in training at the outset of the program. This result implies that demand-driven market solutions may not be as simple as charging for the cost of the services. It is possible that after a free trial, clients with low prior demand would subsequently appreciate its value and demand the service.

Impact on Business Outcomes: This study found little or no evidence of changes in key business outcomes such as business revenue, profits or employment.. For example, the business training had no effect on the number of workers employed at family businesses, did not change the profit margin of the most common products sold at retail businesses, did not increase the number of sales locations, and did not induce entrepreneurs to start new businesses. 

Impact on Institutional Outcomes: Business trainings had effects on some institutional outcomes such as client retention, but not on others such as loan size or accumulated savings. Perfect repayment among treatment groups was three percentage points higher than among comparison groups. Treatment group clients were four percentage points less likely to drop out of the program (either permanently or temporarily) than were comparison group clients, although the proportion of client dropout still remained high in the treatment group, where 59 percent of clients left their banks at some point during the intervention, compared to 63 percent in the comparison group. The training is costly to run, as it requires labor costs for the organization to train their staff and acquire materials. This constituted a 10 percent increase in FINCA’s costs. However, the improved client retention rate generated significantly more increased net revenue than the marginal cost of providing the training, and so all in all providing business trainings was still a profitable undertaking for FINCA.

1 CIA World Factbook, “Peru,” https://www.cia.gov/library/publications/the-world-factbook/geos/pe.html.

 
Selected Media Coverage:

Enterprises for Ultra-poor Women After War: The WINGS Program in Northern Uganda

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)
 
Policy Issue:
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.
 
Evaluation Context:
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.
 
Evaluation Design:
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.
 
Results:
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.

Ex-combatant Reintegration in Liberia

For post-conflict societies, the challenges of reintegrating ex-combatants and war-affected youth are likely to far outlast and outsize the formal demobilization, disarmament and reintegration (DDR) of ex-combatants. These programs, conducted in war’s immediate aftermath, form an important part of a policymaker’s post-conflict toolkit. While ex-combatants receive special policy attention, poor and underemployed men are also widely considered a threat to political stability.

Find a more detailed policy brief here (PDF) and the full paper here.
 
Context of the Evaluation:

In Liberia, where the bulk of the population is young, poor, and underemployed, many rural youth continue to make their living through unlawful activities, including unlicensed mining, rubber tapping, or logging. Many of them are ex-combatants, and some remain in loose armed group structures, doing the bidding of their wartime commanders. While the security situation has steadily improved since 2003, the government, the UN, and NGOs fear that these youth are a possible source of instability, particularly in hotspot regions where mining, rubber tapping, or logging and the allure of “fast money” attract young men from around the country. These youth may also be recruited into regional conflicts as mercenaries. Agriculture is and will continue to be a major source of employment and income for rural Liberians. The international NGO Landmine Action (LMA, now known as Action on Armed Violence) runs an innovative and intensive agricultural training program, targeting ex-combatants and other high-risk youth in rural hotspots.

Description of the Intervention:

The LMA program is broader and more intensive than most ex-combatant reintegration programs, and is designed to rectify some of the main failings of prior demobilization programs: it is oriented towards agriculture (the largest source of employment in Liberia); it provides both human and physical capital; and it integrates economic with psychosocial assistance. It also targets youth at natural resource hotspots that presented the most immediate security concerns.

LMA took youth selected for the program to residential agricultural training campuses, where they received 3-4 months of coursework and practical training in agriculture, basic literacy and numeracy training, psychosocial counseling; along with meals, clothing, basic medical care, and personal items. After the training, counselors facilitated graduates' re-entry with access to land in any community of their choice.  Graduates received a package of agricultural tools and supplies, valued at approximately US$200. The program's total cost is approximately $1,250 per youth, excluding the cost of constructing the campuses. The program was designed to give youth a sustainable and legal alternative to illegal resource extraction, ease their reintegration into society, reduce the risk of re-recruitment into crime and insurrection in the future, and to improve security in hotspot communities.

LMA recruited twice as many youth as it had space for in its programs, and researchers randomly assigned half of the youth to treatment (receiving the program), and half to a comparison group (not receiving the program). By comparing these two groups 18 months after the program, researchers can see the effect of the intervention on agricultural livelihoods, shifts from illicit to legal employment, poverty, social integration, aggression, and potential for future instability.  Despite massive migration, 93% of the youth were found at the time of the endline survey. The qualitative study included observation and a series of interviews with 50 of the youth.

Results and Policy Lessons:

Engagement in agriculture: More than a year after completion of the program, program participants are at least a quarter more likely than the control group to be engaged in agriculture, and 37% more likely to have sold crops. Interest in and positive attitudes toward farming are also significantly higher among program participants. 

Illicit activities:The program had little impact on rates of participation in illicit activities like mining, but those who participated in the program do spend fewer hours engaged in illicit activities, as agricultural hours seem to substitute somewhat for hours spent in illicit activities.

Income, expenditures, and wealth:  There was a sizable increase in average wealth from the program, especially in household durable assets, but no change in current income (last week and last month), savings or spending for the average program participant. Overall, the evidence suggests that cash cropping provides periodic windfalls from sales, and that these are mainly invested in durable assets (and not necessarily in agricultural inputs or equipment).  Qualitative observations also suggest that access to markets may have been an important constraint on success.

Social engagement, citizenship, and stability:  There were small but positive improvements across most measures of social engagement, citizenship, and stability. While not all of the estimated impacts are large enough to be statistically significant, they nevertheless suggest a small but broad-based reduction in alienation and some gains in stability. The evidence on aggression and crime, however, does not point to a significant reduction in illegal or aggressive behaviors among program participants.

Interest and mobilization into the election violence in Cote d’Ivoire:Conflict broke out in Cote d’Ivoire shortly before the launch of the program evaluation.  Self reported rates of interest in the violence and mobilization were fairly low among the sample population, but they were especially low among program participants – they tended to report a third less interest in or links to recruiters and recruitment activities. Given the difficulty of shifting such behaviors, these impacts of the program are regarded as extremely promising.

More information can be found in the policy brief here (PDF) and full paper here.

Northern Uganda Social Action Fund – Youth Opportunities Program

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 herea policy note for the World Bank here, and Chris Blattman’s blog discussion here.

Policy Question:
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. 
 
Read the full paper here.
 
A midterm policy report here and policy note by the World Bank here were based on the initial 2-year follow up data.
 
[1] 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.

Graduating the Ultra Poor in Pakistan

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, in six countries researchers evaluated a multi-faceted approach aimed at improving long term income of the ultra poor. They found that the approach had long-lasting economic and self-employment impacts and that the long-run benefits, measured in terms of household expenditures, outweighed their up-front costs. Here we summarize the Pakistan site, which had similar effects as the other successful sites.

Policy Issue:

More than a billion people live on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers conducted six randomized evaluations in Ethiopia,  GhanaHondurasIndia, Pakistan, and Peru.

Context of the Evaluation:

This study took place in the Coastal Sindh region of Pakistan. To implement the Graduation program, researchers partnered with Aga Khan Planning and Building Services Pakistan, Badin Rural Development Society, Indus Earth Trust, and Sindh Agricultural and Forestry Workers Coordinating Organization, who jointly implemented the Graduation program under the leadership and funding of Pakistan Poverty Alleviation Fund. To select the poorest members of the communities, the project team conducted a Participatory Wealth Ranking, in which villagers collectively ranked households according to their wealth during a community meeting. The ranking process was followed by a short survey to verify the results.

Details of the Intervention:

Researchers conducted a randomized evaluation to test the impact of a two-year comprehensive livelihoods program (“the Graduation approach”) on the lives of the ultra poor in Pakistan. The approach was first developed by the Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries. From a sample of 1,299 households, researchers randomly assigned half to the treatment group, and half to the comparison group, which was not be eligible to receive the program.

The Graduation program consisted of six complementary components, each designed to address specific constraints facing ultra-poor households.

1.     Productive asset transfer: One-time transfer of a productive asset valued at 15,000 Pakistan rupees (2014 PPP US$1043.33). More than half of the households picked goats as their asset, while 11 percent chose to open shops, and 10 percent picked hens.

2.     Technical skills training: Training on running a business and managing their chosen livelihood. For example, households who selected livestock were taught how to rear the livestock, including vaccinations, feed and treatment of diseases.

3.     Consumption support: Monthly cash transfers of 1,000 Pakistan rupees (2014 PPP US$69.56) for the first year in the program.

4.     Health: Female health visitors provided basic health services including checkups, health and hygiene training, and medicine. More difficult and serious cases were referred to the nearest doctor.

5.     5. Savings account: Encouragement to save money at home, in boxes, or with Rotating Savings and Credit Associations (ROSCAs)

6.     6. Households visits: Weekly visits by local NGO staff for 24 months to provide to provide accountability, coaching, and encouragement. In some cases, these visits were reduced to a bi-weekly or monthly basis.

Researchers conducted the first endline survey immediately after the two-year program ended, as well as a second endline survey approximately 12 months later, a year after all program activities ended.

Results and Policy Lessons:

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs. In Pakistan, households that received the Graduation program experienced positive impacts in most areas:

Economic impacts:Average total monthly consumption among treatment households was 2014 PPP US$91.08, a 7 percent increase compared to the comparison group, while food consumption did not increase significantly.Households saw a 29 percent increase in the value of their total assets on average (valued, on average, at 2014 PPP US$1,188 as compared to comparison households’ average asset value of 2014 PPP US$918.00). Unlike in any of the other countries, in Pakistan households in the program borrowed significantly less than households in the comparison group.

Self-employment: Households experienced a 62 percent increase in revenue from livestock (to 2014 PPP US$70.50 a month) on average, but they did not experience significant gains in agricultural income or non-farm income, nor did they report any significant changes in how they allocated their time.

Psychosocial wellbeing: Households that participated in the program did not report feeling significantly happier or in any better health than those who did not participate.

Political involvement: Political involvement increased by one measure among participants in Pakistan; they were 31 percent more likely to be a member of a political party one year after the program ended. Women in treatment households did not experience any significant, lasting gains in empowerment.

Cost-benefit analysis: Compared to less comprehensive interventions, the Graduation program had relatively high up-front costs.Researchers calculated total implementation and program costs to be US$864 per household in Pakistan (2014 PPP US$5,962). However, estimated benefits from consumption and assets growth amount to 2014 PPP US$10,678 per household, representing an overall 179 percent return.

 

The Impact of Exporting: Evidence from a Randomized Experiment in Egypt

This study evaluates a program that seeks to improve market access by matching Egyptian carpet making SMEs with buyers in western markets.

Policy Issue: 

In many developing countries, small and medium enterprises (SMEs) employ a substantial portion of the population.[1] Many of these countries have government-sponsored trade-facilitation programs[2] based on the assumption that increased exports will spur local SME growth and help local economies. However, several studies have questioned the assumption that exportation to western markets raises aggregate productivity.[3] Additionally, the actual impact of increased SME market access on household welfare is unknown, making it difficult for policy makers to assess whether trade-facilitation methods are a cost-effective poverty reduction strategy. Finally, little is known about what specific firm characteristics are conducive to exportation.  Evidence on this subject would allow policy makers to implement more targeted export promotion programs.

Context of the Evaluation: 

The project is set in Fowa, a peri-urban Egyptian town with a population of 65,000. The business owners participating have a per capita income of about $400 annually, well below the national average of $2,250. The study focuses on small enterprises with a single employee, the majority of which have not knowingly exported in the past.

Details of the Intervention: 

A baseline survey conducted in July 2011 collected information from a sample of carpet-making SMEs on production techniques and quality levels, firm owner characteristics, and owners’ household indicators. A randomly chosen set of these firms were offered the opportunity to produce orders generated by a local carpet distributor destined for retailers in the United States and Europe. The orders were for a significantly higher quality carpet than the typical product produced by these firms for the domestic market. Periodic surveys capture changes in firm profits and weaver incomes. The goal of this study is to offer evidence on the link between exportation, firm performance, and family income levels that will help policy makers both assess the role of export promotion in poverty reduction and design more targeted programs.

Results and Policy Lessons: 

Project ongoing. Results forthcoming. 


[1] IFC: Scaling-Up SME Access to Financial Services in the Developing World 2010

[2] Cadot, Olivier, et al. 2011. "Impact Evaluation of Trade Assistance: Paving the Way." Where to Spend the Next Million?

[3] Melitz, Marc J. 2008. "International trade and heterogeneous firms." New Palgrave Dictionary of Economics.

Clerides, Sofronis K., Saul Lach, and James R. Tybout. 1998. "Is learning by exporting important? Micro-dynamic evidence from Colombia, Mexico, and Morocco." The Quarterly Journal of Economics 113.3: 903-947.

Bernard, Andrew B., and J. Bradford Jensen. 1999. "Exceptional exporter performance: cause, effect, or both?." Journal of international economics 47.1: 1-25.

Graduating the Ultra-Poor in Ethiopia

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, researchers evaluated a globally implemented “Graduation” approach to measure its impact on the lives of the ultra-poor. They found that the approach had long-lasting economic and self-employment impacts and that the long-run benefits outweighed their up-front costs. Here we summarize the Ethiopia site, which had similar effects as the other successful sites.

Policy Issue:

More than one fifth of the world’s population lives on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra-poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided ultra-poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers coordinated to conduct six randomized evaluations in  Ethiopia,  GhanaHondurasIndiaPakistan, and Peru.

Context of the Evaluation:

In Ethiopia, researchers partnered with the Relief Society of Tigray (REST) and the Dedebit Credit and Savings Institution (DECSI). The study focused on participants in Ethiopia’s food-for-work program who belonged to households without any outstanding loans and with at least one member capable of work. A local food security task force narrowed eligibility further by choosing those they considered to be the poorest members of their community. Within the sample, the median total per capita consumption was 2014 PPP US$1.22 per day, with two-thirds of households consuming less than US$1.25 per day. Two-thirds of households reported that not everyone in the household got enough food.

Details of the Intervention:

In partnership with local implementing organization REST and microfinance institution DECSI, researchers conducted a randomized evaluation to test the impact of a two-year comprehensive livelihoods program (“the Graduation approach”) on the lives of the ultra-poor. This approach was first developed by Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries. From a sample of 925 households, researchers randomly assigned half to the treatment group, and half to the comparison group, which would not be eligible to receive the program.

The intervention consisted of five complementary components, each designed to address specific constraints facing ultra-poor households:

1. Productive asset transfer: One-time transfer of a productive asset valued at 4,724 Birr (2014 PPP US$1,228). Most (62 percent) of participants chose sheep and goats, while 24 percent selected oxen and 10 percent selected bees.

2. Technical skills training: Training on running a business and managing their chosen livelihood. For example, households who selected livestock were taught how to rear the livestock, including vaccinations, feed and treatment of diseases.

3. Consumption support: Regular food support is a component of the Graduation approach, but in this study it was not unique to the treatment group. The entire sample received food support (valued at a maximum 2014 PPP US$26 per month) through a separate food-for-work program.

4. Savings: Households had DECSI bank accounts opened and were required to regularly deposit savings totaling 4,724 Birr (2014 PPP US$1,228) over the two years of the program; households were unable to withdraw funds until they reached this threshold.

5. Home visits: Weekly home visits by REST staff to provide accountability, coaching, and encouragement.

The Graduation program began in 2010 and continued until May 2012. Researchers conducted a first endline survey immediately after the program ended, as well as a second endline survey around one year later.

Results and Policy Lessons:

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs. In Ethiopia, specifically, researchers found similar effects:

Economic impacts: One year after the Graduation program ended, average total monthly consumption among treatment households was 2014 PPP US$47.50, an 18.2 percent increase over households in the comparison group. Food and durable goods spending were also higher than in the comparison group, and more households reported having enough food every day. An asset analysis also revealed larger values for both productive and household assets a year after the program ended. Treatment households had 2014 PPP US$2,657 in total asset values, 68 percent more than comparison group households. For treatment group households, measures of financial inclusion also increased. Graduation program households reported borrowing and saving at higher rates than comparison group households, with a 372 percent increase in average total savings to 2014 PPP US$345.

Self-employment:One year after the Graduation program ended, treatment group households reported spending 43 minutes per day on productive activities in addition to the average four hours among comparison group households. Graduation households also experienced a two-fold increase in livestock revenue relative to comparison group households.

Psychosocial wellbeing:Generally, the Graduation program did not affect measures of physical or mental health. There were no changes in illness, happiness, or stress, although treatment group households did report a smaller likelihood of feeling anxious or worried in the last year.

Political Involvement:There is some evidence that participation in the Graduation program increased political involvement. One year after the program ended, 38 percent of treatment group households reported being a member of a political party (compared to 33 percent for the comparison group) and 57 percent attended a village meeting in the last year (compared to 52 percent for the comparison group). Participation in the Graduation program did not improve women’s decision-making power.

Cost-benefit analysis: Researchers calculated total implementation and program costs to be US$884 per household (2014 PPP US$4,157). However, estimated benefits of consumption and assets growth amount to 2014 PPP US$10,805 per household, representing an overall 260 percent return on investment.

 

 

Graduating the Ultra-Poor in Ghana

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, in six countries researchers evaluated a multi-faceted approach aimed at “graduating” the ultra-poor from poverty. They found that the approach had long-lasting economic and self-employment impacts and that the long-run benefits, measured in terms of household expenditures, outweighed their up-front costs. Here we summarize the Ghana site, which had similar effects as the other successful sites.

Policy Issue:

More than one fifth of the world’s population lives on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra-poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided ultra-poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers conducted six randomized evaluations in Ethiopia,  Ghana, HondurasIndiaPakistan, and Peru.

Context of the Evaluation:

In Ghana, researchers partnered with implementing organizations Innovations for Poverty Action and Presbyterian Agricultural Services (PAS). The study took place in in the Northern and Upper East regions of Ghana, a region that is disproportionately poorer than the coastal south. Fifty-three percent of households in the study were living on US$1.25 a day or less when the study began, compared to 29 percent in Ghana as a whole. 

To select the poorest members of the communities, the project team conducted a Participatory Wealth Ranking, in which villagers collectively ranked households according to their wealth during a community meeting. PAS conducted a short survey afterwards to verify the results of the ranking.

Details of the Intervention:

Researchers conducted a randomized evaluation to test the impact of a two-year comprehensive livelihoods program (“the Graduation approach”) on the lives of the ultra-poor in northern Ghana. The approach was first developed by the Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries. The Graduation program consisted of six complementary components, each designed to address specific constraints facing ultra-poor households:

In Ghana, researchers first randomly assigned villages composed of a total of 2,606 households, to one of two groups. One group served as a pure comparison group and was not offered the program. In the other group, 666 households were randomly assigned to receive the program. The other half of the households in that group did not receive the program, and served as a sub-comparison group to measure “spillover” effects on non-participating households living nearby. The program consisted of six complementary components, each designed to address specific constraints facing ultra-poor households:

1. Productive asset transfer:One-time transfer of a productive asset valued at GHS 300

(2014 PPP US$451). Forty-four percent of participants chose goats and hens, roughly a quarter picked goats and maize inputs, and small number picked shea nuts and hens (6 percent). 

2. Technical skills training: Training on running a business and managing their chosen livelihood. For example, households who selected livestock were taught how to rear the livestock, including vaccinations, feed and treatment of diseases.

3. Consumption support: During the lean season (14 out of 24 months), households received weekly cash transfers of GHS 4-6 (2014 PPP US$6.02- 9.03), depending on household size.
4. Health: Households were enrolled in the National Health Insurance Scheme and received health and nutrition education.                                                                                                  5. Savings account: Half of the Graduation households received savings accounts through the Savings Out of Ultra Poverty (SOUP) program, also implemented by PAS. When PAS staff  made their weekly visits, they collected deposits and households logged deposits.                       6. Households visits: Weekly visits by PAS staff to provide to provide accountability, coaching, and encouragement.

In order to test the relative effectiveness of the savings and asset transfer component, the researchers also randomly assigned a portion of households (733 households) to only receive the SOUP program, while another portion (329 households) only received the asset transfer component of the program. Half of those in the SOUP program (362 households) received a 50 percent match on their savings to test the impact of incentives to save.

Researchers conducted the first endline survey immediately after the two-year program ended, as well as a second endline survey around one year later.

Results and Policy Lessons:

Note: Results forthcoming from the relative effectiveness of the savings component (with and without incentives) and an asset transfer-only treatment.

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs. In Ghana, households that received the Graduation program saw similar effects one year after the program ended:

Economic impacts: Average total monthly consumption among treatment households was 2014 PPP US$33.62, an 11 percent increase over households in the comparison group. They spent $22.41 on food every month on average, 12 percent more than the comparison group.Households saw significant increases in asset holding and borrowed 58 percent more than those in the comparison group (2014 PPP US$35.60 monthly average), They also saved 2014 PPP US$16 a month on average, which was three times more than households in the comparison group.

Self-employment:Households experienced a 91 percent increase in non-farm income, earning 2014 PPP US$12.86 on average, as well as significant gains in livestock revenue, earning 2014 PPP US$40.60 a month on average, or 50 percent more than the comparison group.

Psychosocial wellbeing:Households that participated in the program did not report feeling significantly less stressed or happier than households in the comparison group.

Political involvement:Women in treatment households did not experience significant gains in empowerment in Ghana, and in fact experienced significantly less power in decisions about food in the household. However, treatment households did participate in more community meetings than those in the comparison group.  

Cost-benefit analysis:. Researchers calculated total implementation and program costs to be US$1,777 per household (2014 PPP US$5,408). However, estimated benefits of consumption and assets growth amount to 2014 PPP US$7,175 per household, representing an overall 133 percent return on investment.

Graduating the Ultra-Poor in India

More than one fifth of the world’s population lives on less than US$1.25 per day. While many credit and training programs have not been successful at raising income levels for these ultra-poor households, recent support for livelihoods programs has spurred interest in evaluating whether comprehensive “big push” interventions may allow for a sustainable transition to self-employment and a higher standard of living. To test this theory, researchers evaluated a globally-implemented “Graduation” approach to measure its impact on the lives of the ultra-poor. They found that the approach had long-lasting economic and self-employment impacts and that the long-run benefits, measured in terms of household expenditures, outweighed their up-front costs. Here we summarize the India site, which had similar effects as the other successful sites.

Policy Issue:

More than one fifth of the world’s population lives on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra-poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided ultra-poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment. To better understand the effect of these programs on the lives of the ultra-poor, researchers coordinated to conduct six randomized evaluations in Ethiopia,  GhanaHonduras, India, Pakistan, and Peru.

Context of the Evaluation:

In India, researchers partnered with Bandhan, a local microfinance institution. The study focused on households with an able-bodied woman that were not associated with any microfinance institution and received below a certain threshold of government aid. Households commonly had little land, no non-land productive assets, and relied on informal labor for income. Bandhan further narrowed eligibility by conducting a participatory rural appraisal to identify the poorest community members. Within the sample, the median total per capita consumption was 2014 PPP US$1.15 per day, with 73 percent of households consuming less than US$1.25 per day. Around 90 percent of households reported that some adults sometimes had to skip meals, and 40 percent reported the same for children.

Details of the Intervention:

In partnership with Bandhan, researchers conducted a randomized evaluation to test the impact of an 18-month comprehensive livelihoods program (“the Graduation approach”) on the lives of the ultra-poor. This approach was first developed by Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries. From a sample of 978households, researchers randomly assigned 512 to the treatment group and the remaining 466 to the comparison group, which would not receive the program. Of those offered the Graduation program, around half of all households accepted.

The intervention consisted of six complementary components, each designed to address specific constraints facing ultra-poor households:

1. Productive asset transfer: One-time transfer of a productive asset valued at Rs. 4,500 (2014 PPP US$437). A majority of participants chose goats, while 30 percent selected cows and 11 percent opted for nonfarm micro-enterprise inventory.

2. Technical skills training: Training on running a business and managing their chosen livelihood. For example, households who selected livestock were taught how to rear the livestock, including vaccinations, feed and treatment of diseases.

3. Consumption support: Households received weekly cash transfers of Rs. 90 (2014 PPP US$9) for 13 to 40 weeks, depending on the productive asset chosen

4. Savings: Households were required to save Rs. 10 (2014 PPP US$1) per week

5. Home visits: Weekly home visits by Bandhan staff to provide accountability, coaching, and encouragement.

6. Health: During weekly home visits, Bandhan staff discussed health matters.

The 18-month Graduation program was rolled out in 2007 and 2008 and ended between 2008 and 2010. Researchers surveyed participants immediately after the program concluded and one year later.

Results and Policy Lessons:

Across all six countries, researchers found that the program caused broad and lasting economic impacts. Treatment group households consumed more, had more assets, and increased savings. The program also increased basic entrepreneurial activities, which enabled the poor to work more evenly across the year. While psychosocial well-being improved, these noneconomic impacts sometimes faded over time. In five of the six studies, long-run benefits outweighed their up-front costs. In India, specifically, researchers found similar effects:

Economic impacts: One year after the Graduation program ended, average total monthly consumption among treatment households was 2014 PPP US$63.68, a 11 percent increase over households in the comparison group. Food spending was also higher than in the comparison group, and more households reported having enough food every day. Ownership of household and productive assets also increased significantly among Graduation program participants. For treatment group households, measures of financial inclusion also increased. Researchers were unable to collect savings data. However, significantly more Graduation program households reported borrowing from formal sources than those in the comparison group, with no change in borrowing rates from informal sources.

Self-employment: One year after the Graduation program ended, treatment group households reported spending 25 minutes more per day on productive activities than the average 3 hours 45 minutes among comparison group households. Graduation households also experienced a nearly four-fold increase in livestock revenue relative to comparison group households.

Psychosocial wellbeing: The Graduation program did not affect measures of physical or mental health. There were no changes in illness, happiness, stress, or likelihood of feeling anxious or worried in the last year.

Political Involvement: There is some evidence that participation in the Graduation program increased political involvement. One year after the program ended, 55 percent of treatment group households reported voting in the last election (compared to 48 percent of the comparison group) and 49 percent reported voicing concerns with their village leaders in the past year (compared to 44 percent in the comparison group).

Cost-benefit analysis: Compared to less comprehensive interventions, the Graduation program had relatively high up-front costs. Researchers calculated total implementation and program costs to be US$330 per household (2014 PPP US$ 1,455). However, estimated benefits from consumption and asset growth amount to 2014 PPP US$6,298 per household, representing an overall 433 percent return.

Girl Empowerment in Rural Liberia

Addressing high rates of gender-based violence experienced by girls is a policy goal in many developing countries, in particular in post-conflict settings such as Liberia where evidence suggests women commonly experience physical and/or sexual violence. This study in Nimba County, Liberia will evaluate the impact of a girls’ empowerment program for young adolescent girls and their caregivers on sexual violence and reproductive health outcomes.

Policy Issue:

Increasing the number of girls who complete secondary school, reducing early motherhood, and addressing sexual violence are common policy goals across many countries in Sub-Saharan Africa. In the post-conflict setting of Liberia, where girls and women commonly experience physical and/or sexual violence,1 improving the social assets and capacities of adolescent girls, including improving the protective environment around them, is a key priority. Providing young adolescent girls support through mentorship, asset building, and life skills training, in combination with protective parenting training for caregivers, has the potential to increase knowledge, reduce rates of sexual violence, decrease the incidence of early motherhood, and improve overall well-being as adolescent girls transition to adulthood. This research contributes evidence on this topic.

Context of the Evaluation:

Liberia, which emerged out of a 14-year long civil war in 2003, has made progress in women’s empowerment in the political sphere, yet gender-based violence and high adolescent fertility rates remain a problem.2

The International Rescue Committee (IRC), an international NGO and the partner in this study, conducts an innovative program for adolescent girls ages 13-14 called Girl Empower that includes mentorship, asset building, and protective parenting training with caregivers. The IRC is interested in learning the program’s impact on participants, in particular the impact of the program on rates of sexual violence among adolescent girls.

Results and Policy Lessons:

This randomized evaluation will measure the impact of the Girl Empower program on sexual violence among girls and changes in parental attitudes and behaviors.

Girls participating in the 12-month program will meet weekly in groups with their mentors in a girl-only safe space in their communities. The curriculum is designed to be contextually relevant and aims to help the girls build relationships with friends and their mentors. The program also aims to provide a space for girls to discuss issues that are of most concern to them, including life skills, the changes of puberty, their aspirations, and any violence they have experienced. Meanwhile, caregivers meet in groups once a month to discuss related topics such as adolescence, positive parenting, supporting their daughters' education, as well as savings and investing in their daughters’ futures.

The study’s eligibility criteria include all girls between 13-14 years of age regardless of school enrollment or other characteristics and their main caregivers in 100 clustered communities (approximately 2,000 girls) in Nimba County. The 100 communities will be randomly assigned to one of three groups:

1)    Girl Empower only – Girls in these communities will be invited to participate in the full program, which as described above includes an ongoing relationship with a mentor who leads the girls’ groups, relationship,  asset building, and monthly discussion groups for caregivers. 

2)    Girl Empower with a cash incentive for attendance - Girls in these communities will be invited to participate in the full program and caregivers will also receive a small cash incentive based on the girl’s regular attendance, designed to increase retention in the program.

3)    Comparison communities– No program. 

IPA will interview girls and their primary caregivers before the program begins when girls are 13-14 years of age, and two years later when girls are 15-16 years of age. During the interviews, IPA will collect self-reported data from the girls on school attendance; social capital and social networks; quality of care and communication with caregivers; life skills, financial literacy, self-esteem, self-confidence, and self-efficacy; sexual and reproductive health knowledge; and sexual experiences, including pregnancy and sexual violence and exploitation. IPA will interview caregivers about their gender attitudes and norms, their aspirations for girls, and communication with girls around sexual relationships and sexual violence.

Researchers will evaluate if the program imparts the desired knowledge and skills on participants, how it affects rates of sexual violence, and whether the cash incentive affects these outcomes.

Results and Policy Lessons:

Results forthcoming.



[1]Callands, Tamora A., Heather L. Sipsma, Theresa S. Betancourt, and Nathan B. Hansen. "Experiences and acceptance of intimate partner violence: Associations with STI symptoms and ability to negotiate sexual safety among young Liberian women." Culture, health & sexuality 15, no. 6 (2013): 680.

[2]Ministry of Health and Social Welfare, Republic of Liberia. “National Sexual and Reproductive Health Policy,” February 2010. Accessed April 6, 2015 at: http://liberiamohsw.org/Policies%20&%20Plans/National%20Sexual%20&%20Reproductive%20Health%20Policy.pdf

Evaluation of Female Supervisor Effectiveness in the Bangladesh Garments Sector

In recent years, the ready-made garment sector has experienced rapid growth in Bangladesh. While overall, most of these new jobs have gone to women, few of them have been in management. At the same time, firms are under pressure to increase productivity. Researchers are exploring whether a vocational training program can successfully improve productivity and help women advance into management. 
 
Note: This is not a fully randomized controlled trial.
 
Policy Issue:
Evidence suggests that the creation of secure, salaried jobs leads to a growing middle class and reduced poverty.[1] Increasing the productivity of medium and large-scale firms is thought to be one of the best ways to create these stable employment opportunities. As a result, policymakers and firms are both interested in programs that can improve productivity. A barrier to enhanced productivity is limited managerial expertise. Underperformance by management may arise from a lack of training or from failure to select the right managers. This study looks at the role of these two perceived constraints to productivity by evaluating the impact a vocational training program that prepares mostly female workers in the Bangladesh ready-made garment industry to become supervisors.
 
Context of the Evaluation:
The study examines the ready-made garment sector in Bangladesh, a sector that has historically played a crucial role in the early phases of the industrialization process. With labor costs rising in China, international buyers are increasingly sourcing from other countries. This has led to rapid growth of garment exports and employment in Bangladesh, with sector employment nearly doubling between 2002 and 2012.[2] However, pressure from foreign governments and multinational organizations to increase wages and improve working conditions could put the industry at risk if productivity levels do not also rise.
 
Skilled management could play a key role in increasing productivity. But factories may be reluctant to pay for training out of fear that workers will leave to work for a competitor, while low-wage workers may not have the money to pay for formal training outside of work.
 
Most of the recently created jobs have gone to women; about 80 percent of machine operators in the ready-made garment industry in Bangladesh are female. However, only about 5 -10 percent of supervisors are women.[3] It is possible that this limits communication and leads to quality defect and delays. Reducing this gender disparity could play an important role in increasing productivity.
 
Description of Intervention:
This project provided the GIZ Operator to Supervisor Training Program, which trains sewing machine operators to become line supervisors, to evaluate the impact of the training on female versus male participants and the effectiveness of female trainees who are promoted to supervisory roles. The program consists of 36 day-long training sessions held over a period of six weeks covering a variety of production, social, and leadership topics.
 
Seventy-seven factories agreed to participate in the training. Each factory was offered a number of spaces in the training session reserved for female and male workers to allow for comparison of outcomes across genders. The trainings were highly subsidized to incentivize factories to participate.
 
A baseline survey conducted with managers measured organizational and business practices. Additional surveys were conducted with training participants, workers nominated for but not (randomly) selected for training, and a sample of randomly-selected machine operators at three points in time: before the training, and four and ten months after training. Survey respondents also participated in a number of trust and communication exercises to measure effects of the program on collaboration between workers and supervisors. Detailed production level data was gathered in each factory throughout the study to measure the impact of the program on productivity, quality defects, working hours, and other productivity-related measures.
 
 
Results and Policy Lessons
Project ongoing. Results forthcoming. 
 
Read more about this project in this policy brief from the International Growth Centre. 
 

[1] Banerjee, Abhijit V., and Esther Duflo. "What is middle class about the middle classes around the world?." The journal of economic perspectives: a journal of the American Economic Association 22, no. 2 (2008): 3.
[2] Bangladesh Garment Manufacturers and Export Association (BGMEA), accessed September 24, 2014 http://www.bgmea.com.bd/chart/number_of_employment_in_garment#.U72ojfldX8o
[3] Gender ratios are based on factories participating in the first phase of this project.

The Impact of Cognitive Behavior Therapy and Cash Transfers on High-Risk Young Men in Liberia

In many fragile states, poor young men with limited economic opportunities drive high rates of crime and violence, and are easily mobilized into destructive activities such as rioting and rebellion. A large body of largely observational evidence in psychology research in the United States demonstrates that cognitive behavior therapy (CBT), a therapeutic approach to improving a wide range of harmful beliefs and behaviors, is an effective way to reduce violence and criminality among children and adolescents. To understand the potential effectiveness of CBT among adults in fragile states, researchers evaluated the impact of a short-term CBT program and the distribution of unconditional cash transfers on the behavior of high-risk young men in Liberia. Results demonstrate that CBT reduced criminal behavior and improved self-control and self-image among participants; these results were greater for participants who received both CBT and cash grants, but cash grants alone had no impact.

Find a four-page policy brief here, and the full paper here.
 

Policy Issue:

In many fragile states, poor young men with limited economic opportunities drive high rates of crime and violence, and are easily mobilized into destructive activities such as rioting and rebellion. For weak governments, these young men often pose one of the greatest risks to stability and economic growth. A large body of largely observational psychology research and experience in the United States suggests that cognitive behavior therapy (CBT), a therapeutic approach to improving a wide range of harmful beliefs and behaviors, is likely an effective way to reduce violence and criminality among children and adolescents. However, less evidence exists on the impacts of CBT on adults, or in other country contexts. To understand the potential effectiveness of CBT among adults in fragile states, researchers evaluated the impact of a short-term CBT program and the distribution of unconditional cash transfers on the behavior of high-risk young men in Liberia.

Context of the Evaluation:

In the past three decades, Liberia suffered two civil wars that killed ten percent of the population, displaced a majority, and recruited tens of thousands of people into combat. Though the last armed conflict ended in 2003, the country still remains very poor; most young men have limited employment, and so some turn to criminal activity. The men who were targeted and participated in this study were considered at highest risk for this type of criminal or violent behavior. The sample enrolled in the CBT program had an average of eight years of schooling and earned about US$68 in the past month working 46 hours per week (mainly in low skilled labor and illicit work). Thirty-eight percent were former members of an armed group, and 24 percent were homeless.

Details of the Intervention: 

Researchers conducted a randomized evaluation to measure the impact of the Sustainable Transformation of Youth in Liberia program (STYL), a short-term CBT program targeting high-risk young men to reduce destructive behaviors, such as criminality and substance abuse. STYL was developed organically over the past ten years by the Network for Empowerment and Progressive Initiatives, a local organization led by reformed combatants and other formerly high risk youth. Among a random sample of 999 young men living in Monrovia, half were randomly enrolled in STYL.

The eight-week STYL program combined frequent group therapy sessions with one-on-one counseling, conducted by program facilitators who were graduates of a previous STYL program. Through a combination of discussion, reflection, and practical homework assignments, the program aimed to improve participants’ self-image and self-control. Participants were given lunch during session days to compensate for time spent in session.

Researchers also examined the impact of unconditional cash transfers on the young men’s behaviors and beliefs. Shortly after the therapy program ended, another random half of the 999 young men received one-time unconditional cash grants of US$200. Thus, one group of the men received cash, a second group received therapy, a third group received both cash and therapy, and a fourth comparison group received nothing.

To measure both short- and longer-term impacts on participants’ beliefs, behaviors, and economic outcomes, researchers conducted follow-up surveys two and five weeks, and twelve and thirteen months after the cash grants were distributed. Since most data were self-reported, they validated the behavior of a subsample with intensive qualitative observation.

Results and Policy Lessons:

STYL participation had large and significant impacts on participants’ behaviors and beliefs, both in the short and long term. This effect was even greater for participants who received both the therapy and the cash grant. The cash grant alone had no behavioral effect on participants. Neither the therapy nor the cash grant impacted long-term economic outcomes.

Behaviors and beliefs

Receiving therapy with or without the cash reduced the likelihood of aggressive and criminal behavior among participants. Those who received therapy were 8.6 percentage points (55 percent) less likely to carry a weapon and 8.0 percentage points (47 percent) less likely to sell drugs in the short term, relative to the comparison group. These reductions persisted over the long term, and were even greater for individuals who received both the cash and therapy. In the long term, those who received both therapy and cash reported conducting 0.72  (38 percent) fewer thefts in the past two weeks.

Receiving therapy with or without the cash also improved some measures of self-control and self-image. On an index assessing impulsive behavior, therapy recipients reported a long-term reduction in impulsivity of 0.17 standard deviations and those who received therapy and cash reported a reduction of 0.21 standard deviations. Those who received both therapy and cash also reported a long-run improvement on an index measuring self-esteem of 0.19 standard deviations. These are large changes by the standards of most therapeutic interventions.

Economic outcomes

Receiving therapy had no impact on the usage of the cash grant. Regardless of receiving therapy, cash recipients reported using roughly a quarter of the grant on consumption and rent, a quarter on business investments, and about one-fifth on savings and debt payments. Only 4 percent of the grant was allocated to drugs, alcohol, and other temptation goods.

The cash grants increased recipients’ short-term incomes and business investments, relative to those who did not receive cash grants, but these effects did not persist into the long run. In the short term, cash recipients invested approximately US$57 more on average in their businesses, and weekly business profits increased by US$4.40, or 30 percent. Interviews with participants suggested that at least part of the reason they were not able to sustain these profits in the long run was due to insecure property rights. At each survey round, about 70 percent of the men reported a robbery or stolen belongings in the past month.

These results demonstrate that cognitive behavior therapy, combined with unconditional cash transfers, can be an effective method of reducing criminality, violence, and drug use. The program was fairly low cost, at US$530 per participant, suggesting that this program could be implemented on a larger scale.

Media coverage of this project:

Chris Blattman writes on The Washington Post Monkey Cage Blog.

Chris Blattman Talks with NPR's Planet Money team here.

Chris Blattman and Paul Niehaus in Foreign Affairs here.

Jason Margolis interviews ex-combatants and researchers Tricia Gonwa and Chris Blattman.

Investigating Rural Labor Markets Among the Ultra-Poor in Northern Ghana

Few subsistence farmers engage in paid labor, even when pursuing these opportunities would enable them to earn more and protect against risk. A variety of factors may influence this trend, including poor nutrition, the complexity of the work, and lack of access to financial services. Researchers designed an employment program in northern Ghana and evaluated participants’ willingness to engage in paid labor and carry out complex tasks on the job.

Policy Issue:

Self-employed farmers in sub-Saharan Africa may earn more by engaging in wage labor, but few pursue off-farm opportunities, forgoing higher and more predictable incomes. There are a number of possible explanations for this trend, including lack of information about job opportunities or high transportation costs to get to work sites. The choice to engage in wage labor may also be affected by the wage level, the complexity of the work, or an individual’s nutrition status. For instance, farmers may only be willing to pursue wage labor above a certain wage threshold, or they may find the tasks too complex or onerous to complete.  Poor nutrition could also make workers less productive and, thereby, more costly to hire. Rigorous research is needed to disentangle the various mechanisms that affect individuals’ choices to engage in wage labor.

Context of the Evaluation:

Subsistence agriculture is the main economic activity for the vast majority of rural households in Ghana. Researchers introduced an employment program in communities in northern Ghana that were already participating in an ultra-poor graduation program. The two-year Graduation from Ultra Poverty (GUP) program, originally developed and evaluated in Bangladesh, offers a comprehensive package of services (productive assets, consumption support, financial literacy training, and healthcare) to households living in extreme poverty.

A random subset of participants in GUP was assigned to a voluntary savings program called Savings Out of Ultra Poverty (SOUP), in which clients had the opportunity to earn a 50 percent match on their savings.

Researchers partnered with Presbyterian Agricultural Services (PAS) and Innovations for Poverty Action (IPA) to implement GUP and SOUP in 155 communities in northern Ghana.

Details of the Intervention:

Researchers introduced an employment program in communities in northern Ghana that were already receiving GUP and SOUP or part of the comparison group for the GUP evaluation.  Half of all GUP, SOUP, and comparison villages were randomly selected to participate in an 11-month employment program that offered wages for the production of cloth bags.  This amounted to 120 villages: 42 comparison villages, 39 GUP villages, and 39 SOUP villages (1,098 households total).

Researchers randomly varied the complexity of the bag design and wage per bag to understand the impact of these factors on individuals’ decisions to engage in paid labor and whether willingness to engage in complex tasks depended on the wage level. Of the 120 villages assigned to the bags program, 60 were assigned to produce a simple bag and 60 were assigned to produce a complex bag, based on the difficulty of the stitching required. Participants were randomly assigned to receive either a high wage of GHC 0.70 (approximately US$0.39) or a low wage of GHC 0.30 (approximately US$0.16), and the wage assignment switched every four weeks.

Communities received all sewing materials and a four-day training on how to produce the bags prior to the start of the employment program. Program facilitators carried out regular quality checks to assess how well the simple and complex bags produced met the pre-determined quality standards. Within each wage category, participants could earn an additional GHC 0.10 more per bag for producing a high quality bag or lose GHC 0.10 per bag for producing a low quality bag.

Results and Policy Lessons:

Results forthcoming.

 

The Market for Local Agricultural Information in Western Kenya

Providing better information to farmers about local agricultural conditions could enable them to make more informed and locally appropriate agricultural decisions, with potentially positive consequences for their income, food production, and the environment. This study in Western Kenya will test for failures in the market for local agricultural information and measure the impact of disseminating local information on farmers’ decisions to invest in agricultural inputs.

Policy Issue:

Across Africa, soil and agro-climatic conditions vary dramatically from place to place, and some researchers argue this high variability has hindered the continent’s ability to reap the benefits of the Green Revolution like Asia and Latin America have. After all, the effectiveness and/or profitability of specific agricultural inputs can be highly dependent on local conditions such as soil type, micro-climate, and local prices. Providing better information to farmers about local agro-climatic conditions may help them make more informed and appropriate agricultural decisions, with potentially positive consequences for their income, food production, and the environment. However, information has traditionally been difficult to sell: since it can be easily shared, it is hard for a producer of information to recover its costs. Failures in the market for local information might warrant the development of policies that would support the creation and dissemination of local information.

Context of the Evaluation:

In Western Kenya, soil tests that can determine what type and amount of inputs are suitable for a given area are rarely used. Most small-scale farmers have never formally experimented with different fertilizers on their own land. While soil tests and experimental plots might be too expensive for every farmer to implement (especially since farms are small), testing soils for some farmers in the area and sharing these results with neighboring farmers could potentially be a cost-effective way to produce locally-relevant information about soil conditions and appropriate inputs.

Details of the Intervention:

This study in rural Western Kenya aims to measure farmers’ demand for local agricultural information, evaluate the impact and cost-effectiveness of different information interventions, and explore the potential for institutional mechanisms to address market failures.

First, researchers will conduct a randomized evaluation among a group of 1,069 smallholder farmers to better understand how two types of information affect their decisions to purchase fertilizer. Eight-hundred respondents will be randomly assigned to receive soil tests or both soil tests and test plots on their land. The remaining 269 respondents will serve as a comparison group. During an initial survey, soil samples will be collected and sent to a lab for testing, to measure the soil’s acidity and nutrient composition, and to determine the best type of inputs to improve the soil quality.

Farmers assigned to receive test plots will receive fertilizer and technical assistance to set up plots using different types of fertilizer. After harvesting with the farmers, researchers will analyze the test plot yields to inform the farmers of which inputs are most profitable for their land. All respondents will also receive fertilizer coupons to measure the effect information has on decisions to purchase fertilizer.

Second, researchers will measure demand for local agricultural information from a new group of farmers’ identified in the first evaluation. To do so, the research team will elicit farmers’ willingness to pay for test plot and soil test results from other farmers in their area.  

Third, researchers will also work with the second study sample to examine the relative effectiveness of two additional sources of agricultural information on farmers’ knowledge and investment decisions. In a partnership with the Kenya Agriculture and Livestock Research Organization, they will randomly divide the sample into three groups: one incentivized to attend open farmer field days, one to receive an SMS intervention, and a comparison group. The farmer field days will exhibit test plots and provide information about best farming practices. The SMS intervention will provide farmers with general tips about how to increase yields throughout the season.

Finally, once results from the endline surveys are in, researchers will compare all of the information inventions tested to identify the most cost-effective and scalable solutions.

Results and Policy Lessons:

Results forthcoming.

 

The Impact of Marketing and Finance Training on Firm Performance in South Africa

Entrepreneurs in developing countries face a number of constraints that limit their growth and therefore their contribution to employment and long-term economic development. This study assesses the impact of two intensive training programs, one on marketing skills and the other on financial skills, for small business owners in the Cape Town region of South Africa. The evaluation will look at the direct impact of the training programs on firm outcomes and the specific business practices that are affected by each training program.

Policy Issue:

Small and medium enterprises (SMEs) are thought to be important sources of innovation and employment in developing countries due to their flexibility in responding to new market opportunities and their potential for growth. However, entrepreneurs in developing countries face a number of constraints that limit their growth, and therefore their contribution to employment and long-term economic development. Poor managerial skills has been cited as one possible barrier to growth for small businesses. To address this constraint, governments and other institutions support a range of business training programs that vary widely in design and delivery. Rigorous evaluations of these programs have found mixed results, leaving policymakers with little guidance on which programs to support. Additional research is needed to understand the impact of different types of training programs. Results may inform policymakers’ decisions to support specific programs.

Context of the Evaluation:

South Africa’s SME sector plays an important role in the country’s economy, contributing more than 50 percent of jobs and over 36 percent of GDP. However, a high proportion of start-ups fail, and relative to the 70 countries in the Global Entrepreneurship Monitor (GEM) network, including those in the Sub-Saharan African region, South Africa’s rate of total entrepreneurial activity is very low. Through its New Growth Plan, the government has set ambitious targets to create five million new jobs by 2020, much of this through the SME sector. Significant investments in developing SMEs in South Africa is funneled through the country’s Broad-Based Black Economic Empowerment plan, which supports public, private, and not-for-profit players engaging in various initiatives to boost SME growth. Business skills training is a popular policy approach in South Africa, as elsewhere.

Details of the Intervention:

This study compared the impact of two intensive training programs for SME business owners. One program focused on marketing skills and the other taught financial skills. In addition to assessing the direct impact of the programs on firm sales, profit, and employment outcomes, the evaluation looked at how business owners applied the knowledge they gained in training.

Researchers partnered with the Business Bridge Initiative to identify and train the entrepreneursin urban, suburban, and slum neighborhoods in the greater Cape Town metropolitan area. The participants were selected through a recruitment process aimed at identifying firms with the potential to grow. Businesses were selected through a multi-round recruitment process. Firms operating out of a physical structure, rather than a small stand or cart, were asked if they wanted to apply for the program by participating in a short screening survey. Using information from the survey, respondents were scored on their potential for growth based on entrepreneur and business characteristics like number of employees, business structure, level of education, and number of business practices employed. Those with the highest scores were invited to a one-hour long registration session.

Participating firms were randomly assigned to one of three groups: 272 business owners were offered the opportunity to participate in an intensive training on marketing and sales; 261 business owners were offered the opportunity to participate in an intensive training on finance and accounting; and 299 business owners were not offered training.

Each of the trainings ran for eight weeks, with entrepreneurs attending one four-hour class per week. Seven of the classes involved two to four hours of work outside of class. Classes were taught by volunteer business professionals who had academic and corporate experience in marketing, finance, and/or running a business. Instructors attended a one-day training course that introduced them to course materials.

A baseline survey was conducted prior to the training. Surveys to track changes in business practices and business sales, costs, profits, and employment were conducted after six and 12 months.

Results and Policy Lessons:

Project ongoing. Results forthcoming. 

Bilal Zia

Changing Behavior to Improve Household Financial Management in Malawi

For many people investments to improve the quality of their lives require saving significant amounts first. Human nature, however, can make saving for long-term goals difficult. In Chitkale, Malawi, researchers are working with NBS Bank Malawi, using random assignment to test the effectiveness of three different interventions aiming to help study participants save: labeling of savings accounts for specific purposes, financial training and motivation, and the use of direct deposits into savings accounts. Researchers will compare the groups that took part in the different study arms to the ones that did not in order to evaluate their effects on savings behavior.
 
Policy Issue:
In contexts where access to credit is limited, people often have to rely on accumulating savings in order to make investments to improve the quality of their lives. Households must save a significant portion of their incomes over a long period of time in order to accumulate enough money to start a small business, purchase seeds for their fields, pay school fees, or pay for emergency healthcare. Human nature, however, can make saving for long-term goals difficult. Money that is saved without a designated purpose is often spent on unnecessary luxury goods. People who have struggled to meet their goals in the past may not believe they are capable of achieving future savings goals. Furthermore, when people hold their savings as cash instead of in a bank account, they may be tempted to spend it prematurely or lend it to friends and family members. A range of interventions, such as labeling savings accounts, attending financial literacy classes that increase aspirations, or having earnings deposited directly to a bank account rather than receiving them in cash, may allow people to overcome some of the behavioral barriers to saving.
 
Context of the Evaluation:
This study takes place within a five to six kilometer radius (3.1 to 3.7 miles) of the town of Chitakale, a major trading center in Mulanje district. The district has as literacy rate of 62.3 percent, which is slightly lower than Malawi as a whole, but significantly higher than more isolated rural districts. In 2011, median per capita consumption in the district was MK 37,543 (USD $115) per year, and only 3.1 percent of households took out a loan that year. The target population for this study lives on the outskirts of the town. Most earn an income from small businesses, but many still rely on agriculture for their own food production and to generate extra cash.  
 
NBS Bank Malawi, the partner bank in this study, operates thirteen branches throughout Malawi, including one in Chitakale.
 
Details of the Intervention:
Researchers are testing the effectiveness of three different interventions for overcoming common behavioral barriers to saving. 
 
Labeling savings accounts: The first intervention seeks to determine if labeling a bank account with a specific goal for which the money is intended to be spent, such as “school fees,” can help people to achieve their saving goals. The researchers randomly selected 500 people to receive subsidized bank accounts that were labeled with a personal saving goal. A comparison group of an additional 500 people were offered subsidized accounts that were not labeled with any specific saving goal.
 
Financial training and motivation: The second intervention tests whether financial training and motivation courses raise people’s aspirations and inspire them to set and achieve savings goals. The researchers randomly divided the same group of 1000 people who were offered bank accounts into three equal groups. The first group received a 90 minute basic financial literacy training course, the second received basic financial training and an additional “aspiration module” that attempted to motivate them to achieve their savings goals, and the third group served as a comparison and did not receive any financial training or motivation.
 
Direct deposits: The third intervention tests if depositing earnings directly to a bank account instead of receiving them in cash can reduce unplanned spending and increase savings. Three hundred of the 1000 people who were offered bank accounts were randomly selected to receive grants distributed in three installments. Half of those receiving the grants had them deposited directly to their savings accounts, while the other half received the grants in cash.
 
Researchers will collect information on aspiration levels, financial knowledge, consumption, savings, and agricultural inputs and outputs to determine if the interventions affected the savings behavior of participants.
 
Results and Policy Lessons:
Project ongoing; results forthcoming.

The Impact of Contractual Partnerships on Small-Scale Rice Growers in Ghana

In Ghana, and in much of Sub-Saharan Africa, a large portion of the extreme poor live in rural areas and work in agriculture. Higher productivity in the agricultural sector could reduce extreme poverty, while improving food security and economic growth. This study measures the impact of an “out-grower scheme,” a contractual partnership between growers and agribusiness companies, on small-scale rice growers’ productivity, income, and quality of life, and intra-household dynamics. This study aims to contribute to agricultural development policy in Ghana and beyond, as well as to the body of evidence on how to close the gender gap in productivity.

Policy Issue:

Low agricultural productivity in Sub-Saharan Africa has led to increasing food imports and the loss of competitiveness for domestic producers. Spending on agricultural research and extension in Africa, especially regional research, remains low, and links between farmers and agribusiness are weak.[i] Agriculture and rural development have been identified as priorities for reaching the Millennium Development Goals,and regional bodies have formulated agriculture development plans that prioritize sustainable land and water management, access to markets, and the reduction of hunger. Individual countries, such as Ghana, have also implemented programs to address these issues. Additionally, while almost half of the agricultural workers in Africa are women, productivity on their farms is significantly lower per hectare compared to men. [ii] Addressing the agriculture gender gap will help drive economic growth across Africa, but more evidence is needed on how best to do this. This study evaluates a farm “out-grower scheme,” a contract between farmers and agribusiness companies with potential benefits to both parties. Evidence from the study aims to contribute to Ghana’s agricultural development program, and to similar programs in other parts of Africa and beyond.

 
Context of the Evaluation:

As part of Ghana’s strategy to increase food security and agricultural development, it has launched the Ghana Commercial Agriculture Project (GCAP). The program, which is funded by the World Bank and USAID, aims to promote agricultural productivity and livelihoods, specifically by linking small farmers into the agricultural value chain through encouraging large-scale commercial agricultural firms to establish outgrower schemes.[iii]  The study partner, a commercial rice producer, GADCO, is offering contracts to small-scale rice producers in the Accra Plains area. IPA and the World Bank are collaborating to evaluate the impact of the contracts on productivity, income, and general quality of life of the rice growers.

Thirty percent of the plot cultivators in this study are female. Of these, half are in male-headed households, and half are in female-headed households. And many of the rice plots being farmed in this study were distributed by the Government of Ghana to individuals who signed up for them, as part of the development of the Kpong and Weta Irrigation Schemes.

 
Details of the Intervention:

The study looks at the impact of the contracts, or out-grower schemes, on plot cultivators. Researchers will compare plot-cultivators who participate in the out-grower scheme to a comparison group of growers who do not participate.

Following completion of the baseline survey, 50 percent of the study sample farmers will be assigned to participate in the scheme, and 50 percent will be assigned to a comparison group that will not participate. The commercial rice producer will then offer contracts to farmers in the treatment group. A farmer who signs the contract receives inputs on credit for planting, fertilizer application, and crop protection as well as extension advisory services and mechanized harvesting. On harvesting the rice, GADCO buys the output, accounts for input costs, and then pays the farmer the difference between the value of output and input cost.

This evaluation will look at the impact of the contracts on farmers’ productivity, quality of life and intra-household gender dynamics. Researchers will measure, for example, crop production, yield, profits, sale price, extension, technology adoption, hired and family labor use, and market access. With regard to impact on the household, researchers will look at indicators such as labor and time use, employment, business activities, assets and household investments in education and health. In addition, the study will assess the impacts on male versus female farmers.

 
Results and Policy Lessons:

Results forthcoming.

 


[i] "Agricultural Development in West Africa: Improving Productivity through Research and Extension."World Bank, 2013. Available at: http://www.worldbank.org/en/results/2013/03/28/agriculture-development-in-west-africa-improving-productivity-through-research-and-extension

[ii] “Levelling the Field: Improving Opportunities for Women Farmers in Africa.” World Bank and One Campaign, 2014. Available at: http://www.worldbank.org/en/region/afr/publication/levelling-the-field-improving-opportunities-for-women-farmers-in-africa

[iii] "World Bank Approves $100 Million for Scaling Up Commercial Agriculture."  World Bank, 2012. Available at: http://www.worldbank.org/en/news/press-release/2012/03/22/world-bank-approves-us100-million-for-scaling-up-commercial-agriculture-in-ghana

Identifying Gazelles among Micro and Small Enterprises in Ghana

This study examines methods of identifying microenterprises with higher growth potential in developing countries. Researchers surveyed 335 small businesses in Ghana, invited them to participate in a business plan competition, and then tested whether business plan competition judges or survey instruments were better able to identify firms that would grow faster. Both methods worked to predict growth, but survey data were slightly more predictive, and the best growth estimates resulted when both methods were taken together. Training offered to enterprises had no effect, regardless of firm or owner characteristics.
 
Policy Issue:
A large number of very small enterprises exist in developing countries, but very few ever scale to a point at which they hire additional employees, despite interventions meant to spur growth in this sector.1 If the microenterprises with higher potential for growth could be identified, resources currently spent on interventions provided to the full set of microenterprises could be diverted to provide more intense support to a much smaller target population. Researchers tested various methods used to identify such businesses and explored whether training could help them achieve growth.
 
Context of the Evaluation:
This project targeted self-employed small business owners with modest levels of formal schooling and substantial experience running businesses in urban Accra-Tema and Kumasi. Rather than focusing on a few large businesses, the project aimed 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, including areas such as business services (e.g., marketing services), retail trade, and basic manufacturing (e.g., producing soap).
 
Description of Intervention:
Enterprises were 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. To participate in the competition, applicants submitted a form with basic information to ensure compliance with eligibility criteria. Eligible entrepreneurs had to be between the ages of 20 and 55 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 Consult Limited, designed to guide them in writing a basic business plan. Training participants were asked to submit and present a business plan to a panel of four judges. Each panel, comprised of consultants and successful business owners, scored 12 to 16 business plans on several criteria.
 
Half of the entrepreneurs were chosen to receive more intensive follow-on training. The selection was random with probabilities increasing with the panel ranking. Those in the top quartile of the rankings had a 75 percent probability of receiving training; the middle two quartiles had a 50 percent chance, while those in the lowest quartile had a 25 percent chance. This second round of training by the National Board of Small Scale Industries consisted of a six-day group course based on the International Labor Organization‘s “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 survey gathered information on the owner, the history of the business, and enterprise-level data on assets, current employees, and sales and revenues. It also included measurements of risk aversion, numeracy, logical skills, personality diagnostics, and other measures from the entrepreneurial psychology literature. To track growth, follow-up surveys were conducted with all applicants one and two years after the business plan competition. Growth measures included level of sales, profits, and investment, along with the number of paid employees.
 
Results and Policy Lessons:
Survey data measured five categories: ability, management practices, access to credit, and two attitudes, one an outlook on the potential for growth and another combining trust, optimism, and internal locus of control. The ability measure - a combination of non-verbal reasoning tests, numeracy tests, years of formal schooling, and financial literacy - was significantly associated with growth as were management practices measured at baseline. Access to credit and both attitude measures were not associated with growth.
 
The two summary scores provided by the panel of judges, overall prospect of growth and how attractive the enterprise would be to an angel investor correlated highly with growth. Compared with the survey data, the panel scores did not explain quite as much of the variance in growth, however. The two measures together were a stronger predictor of growth than either one alone. The survey measure was somewhat better at predicting growth for more competitive contenders, while panel scores were more useful for separating out those at the bottom of the distribution.
 
The evaluation of the final intensive training found little effect on growth, regardless of firms’ panel or survey scores. In fact, on average, the training had a slightly negative effect on firm growth and was associated with some firms exiting the market. This finding is consistent with a number of other recent studies that find training has little or no effect on firm growth.
 

1Schoar, Antoinette. “The Divide between Subsistence and Transformational Entrepreneurship.” In Innovation Policy and the Economy, Volume 10, 57–81. University of Chicago Press, 2010. http://www.nber.org/chapters/c11765.pdf.

Technical Vocational Training in Mongolia

Can vocational education increase the wages of poor Mongolians? This study evaluates a project designed to improve technical skills and productivity to meet labor market demand in key industries (including, among others, construction, mining, electronics, mechanics, and transport). 

Policy Issue:

Youth underemployment, especially among less educated populations, has the potential to create significant social unrest and perpetuate poverty. However, little is known about how best to help youth find jobs and smooth the school-to-work transition, particularly in less developed countries. One would-be tool for expanding the labor market opportunities in these settings is vocational education, which could help students learn a trade and acquire the skills needed to take advantage of employment opportunities, and create successful small businesses. However, little is known about the actual benefits of vocational education in developing countries.

Context of the Evaluation:

Mongolia’s vocational education system has not evolved to serve the demands of a modern, private-sector led economy. The capacity of this system to teach core technical skills and provide critical labor information is weak, training equipment is limited and outdated, and instructors ill-prepared to teach. Essential partnerships between the government and business to ensure that students receive high quality, demand-driven training are largely absent, and credentialing systems are substandard. As a result, Mongolia tends to import skilled labor from other markets, leaving high rates of unemployment among unskilled young Mongolians.

Details of the Intervention: 

Researchers evaluated the Vocational Education Project, an initiative designed to address the gaps in Mongolia’s vocational education system, specifically by seeking to increase the wages of poor Mongolians by improving their technical skills and productivity to meet labor market demand in key industries (including, among others, construction, mining, electronics, mechanics, and transport). This will be done by (a) strengthening the institutional framework needed to support a demand-driven vocational education system through legal and policy reform and the creation of a Labor Market Information System, (b) defining industry training standards for occupations and translating these standards into a modern vocational education curriculum supported by new instructional materials and equipment, (c) developing 30 new career preparation tracks, and (d) improving teacher training and professional development.

This study will evaluate the overall impact of attending a Technical Educational Vocational Training (TVET) school, and the incremental impact of school equipment upgrades on both academic and labor-market outcomes. Equipment upgrades will complement the competency-based training curriculum and other components by providing the physical and technological resources that schools will need to instruct a new generation of skilled workers. This is the most expensive component of the program, and is expected to have the largest and most direct impact on student skill levels and employment outcomes.

Researchers are working with TVET schools to create comprehensive standards for admitting students.  Out of a pool of ‘qualified’ applicants, students will be chosen at random to gain admittance to the school. The randomized design will ensure that all qualified applicants will have an equal probability of receiving the vocational and technical training. Qualified applicants who were not admitted will serve as the comparison group. Surveys will be administered to the entire pool of applicants at the time of the application, one year after, and again at the time of graduation, including a standardized general knowledge test to measure skill levels and academic performance. Upon graduation, students will complete standardized trade-specific tests that measure knowledge and skills in specific trades. Shortly after graduation, another survey will be administered to collect information on labor-market outcomes, including wages and hours worked. This follow-up survey will continue annually for three years.

Results and Policy Lessons: 

Results forthcoming.

 

Ultra Poor Graduation Pilot in Yemen

Can an intensive package of support lift the ultra poor out of extreme poverty to a more stable state? Graduation programs provide ultra-poor beneficiaries with a holistic set of services including: consumption support, new livelihoods (such as chickens or goats) provided as an asset transfer along with training on management of the assets, access to savings, and coaching visits over a 24-month period. IPA is conducting randomized evaluations of CGAP and Ford Foundation-sponsored graduation pilots in seven countries: IndiaPakistanHondurasPeruEthiopiaYemen, and Ghana.

Policy Issue:

Governments have often attempted to address the needs of the ultra poor by offering consumption support that is costly and offers no clear pathway out of food insecurity. The Graduation Approach, developed by BRAC in Bangladesh, recognizes that the ultra poor face an interrelated set of challenges: lack of skills, assets, and confidence, along with nutritional gaps and health shocks. The graduation approach incorporates a comprehensive package of services designed to ensure that households have the "breathing space" to focus on building new livelihoods, along with a secure place to grow their assets.

This project is a part of a set of evaluations, in partnership with CGAP and the Ford Foundation, that intends to determine whether the model, pioneered in Bangladesh, is effective in a range of contexts.

Context of the Evaluation:

Located on the tip of the Arabian Peninsula, Yemen faces economic challenges. Food insecurity, aggravated by a scare supply of water, leaves 32 percent of the country undernourished [1].  Over 45 percent of the population lives under $2 US a day and about 17 percent lives under $ 1.25 US a day [2]. The Social Welfare Fund (SWF), the Yemeni welfare department, and the Social Fund for Development (SFD), a government-run development agency, have partnered with IPA to pilot the Graduation Model in three governorates of southern Yemen.

Description of the Intervention:

The Graduation Model in Yemen works in accord with the SWF welfare system.  All households in the sample frame come from the SWF welfare lists and receive an average quarterly stipend of 3,000 YR ($15 US).  The poorest households are identified using the Progress Out of Poverty Index and are verified as the poorest during SWF field officer visits.  These households are then randomly assigned to either a treatment or comparison group. Beneficiaries in treatment households receive training on an income generating activity such as, sewing, raising livestock, or petty trading.  As households’ income and food consumption stabilizes, beneficiaries are required to open a savings account at the local post office and are encouraged to reach a savings goal of 10,750 YR (about $ 50US) by the end of the two year program. In addition, these ultra poor households are monitored throughout the program with weekly visits from field officers and receive additional trainings on confidence building, social integration, and sanitation practices.

Results and  Policy Lessons:

Results forthcoming.

For additional information on the Ultra Poor Graduation Pilots, click here.

 

[1]World Bank, “Yemen Country Brief

[2] The World Bank, “Yemen

Empowerment and Livelihood for Adolescents in Sierra Leone

Adolescent girls living in low-income settings may be trapped in a vicious cycle that prevents them from attaining employment and achieving better health outcomes and reproductive autonomy. Researchers will evaluate the impact of a program in Sierra Leone that aims to address this problem by bundling health education, vocational skills training, and micro-credit. They will evaluate the impact of these programs components, together and individually, on girls’ economic activity, engagement in sexual and risky behaviors, and future goals.

Policy Issue:

Adolescent girls in low income countries appear to be trapped in a vicious circle where low skills and poor labor market opportunities make girls turn to (often older) men for financial support; this increases the chances of childbearing that, in turn, further reduces the chances of acquiring useful skills and future labor force participation. In previous research in Uganda, researchers found that a combination of health education and vocational skills training can break the vicious circle. This study aims to assess where the causal chain starts, namely, whether it is the lack of health education, skills, or credit that keeps adolescent girls trapped in the vicious cycle of high fertility and low labor force participation.

 
Context of the Evaluation:

In Sierra Leone, teenage pregnancy and early childbearing are pervasive: of all pregnancies, 34 percent occur amongst teenage girls (SLDHS 2008) and 40 percent of maternal deaths occur as a result of teenage pregnancy (MICS 2010). In 2013, the Government of Sierra Leone launched a Strategy for the Reduction of Teenage Pregnancy, which aims to reduce the adolescent fertility rate by 4 percentage points by 2015. As part of this strategy, the government has partnered with UNICEF and BRAC to implement the Empowerment and Livelihood for Adolescents (ELA) program. BRAC is implementing the ELA program in six countries globally. In Africa, the program has already been implemented and evaluated in South Sudan, Tanzania, and Uganda.

 
Details of the Intervention:

Researchers designed a randomized evaluation, which is being implemented by IPA, to evaluate the impact of the ELA program and its various components on girls’ economic activity, engagement in sexual and risky behaviors, and aspirations. In addition, they will assess if the program affected girls who did not participate in the program but have social ties with those who had. 

The program operates from adolescent development centers, or “clubs,” staffed by BRAC trained mentors, who are older adolescent girls from the same communities. Researchers will evaluate the following three program components, together and individually:

  • Health education ("life skills training") which is mostly delivered by trained mentors, covers the following topics: sexual and reproductive health, early pregnancy, menstruation and menstrual disorders, leadership among adolescents, gender, sexually transmitted infections, HIV/AIDS, family planning, gender-based violence, and adolescent responsibility within the family and community. Group learning is encouraged through participatory classroom trainings. In addition, the girls receive issue-based sexual and reproductive health training from the BRAC Health Program. Girls aged 13-24 can participate in the health education training.
  • Vocational (“livelihood”) training covers the skills required to engage in different income generating activities and financial literacy. Girls can choose to receive training in hairdressing, tailoring, animal husbandry, or agriculture. The training lasts about a month and is delivered by local service providers in Sierra Leone. The financial literacy module covers topics such as budgeting, financial services, financial negotiations, and accounting. Following successful completion of training, trainees receive input supplies to start their chosen business activity. To prevent school dropout, only girls aged 17-24 are eligible for training.
  •  Microcredit  Eligible girls who are engaged in a self-employment activity will be offered credit of up to US$100 to finance their business. The loan duration will be one year with an annual interest rate of 25 percent and weekly repayments. Girls aged 17-24 are eligible for credit.

Participants will be randomly assigned to one of the following four groups, each consisting of 50 villages and 1,400 adolescent girls:

(1)  Health education

(2)  Health education, vocational training

(3)  Health education, vocational training, microcredit

(4)  Comparison group: No program

Results from this replication study will allow for a cross-country comparison of the program’s effects and help to build the evidence on the program’s impact. In addition, by introducing different treatment groups this evaluation aims to separate the effects of the programs different components, which will provide important information to partners on how the program should be expanded. Moreover, information drawn from individuals about the relationships they have with others in their village, known as social networks data, will reveal how information and skills acquired by program participants spreads to non-participants.

Results and Policy Lessons:

Results forthcoming.  

Read more about the ELA Sierra Leone program here

Read about previous research on the program in Uganda here.

Returns to Apprenticeship Training in Ghana

Youth unemployment—an acute problem in Sub-Saharan Africa—is overwhelmingly considered to have long-term negative implications, both on individuals’ quality of life and on broader socio-economic development outcomes. This study assesses the impact of a government apprenticeship program in Ghana that pairs young people who have limited education with master trainers operating small businesses for a one-year training period. Researchers are evaluating the targeting and recruitment process, the benefits for apprentices and trainers, the program’s cost-effectiveness, and to what extent performance-based incentives increase the quality of training apprentices receive. Results from this study will assist policymakers in Ghana to formulate sound policy to address youth unemployment. 

Policy Issue:

Youth unemployment is an acute problem in low-income countries, and especially in Sub-Saharan Africa.[1] Young people account for 60 percent of the unemployed in Sub-Saharan Africa, and 72 percent of young people between the ages of 15 and 24 live below the $2 a day poverty line.[2] A lack of necessary skills is often cited as contributing to high unemployment. Job training programs, and in particular apprenticeship training with private-sector informal firms, could expand labor market opportunities for young people by providing them with relevant on-the-job experience and market-ready skills.

Despite their promise, program evaluations of job training programs around the world have been disappointing and job training has been shown to provide mediocre labor market returns on average. One reason for these lackluster effects may be wide variability in the quality of training. In Ghana, as in other poor countries, productivity (and likely, training ability) varies greatly across businesses. In addition, though non-institutional, on-the-job training is otherwise believed to be the most effective option, it potentially introduces new issues where the incentives of training providers may be misaligned with those of trainees or the government agency implementing the program. In particular, apprentices provide low-cost labor to businesses via their on-the-job experience, and this dual role could incentivize training providers to seek to retain apprentices at a skill level that is profitable for the business but makes them less than employable elsewhere.

Context of the Evaluation:

In 2012, 26 percent of young people in Ghana between the ages of 15 and 24 were unemployed.[3] The skills deficit in Ghana is partly driven by an education system in which a large number of students fail to progress beyond junior high school. Access to senior high school is based on performance in national examinations and places are often limited; in 2011/2012 only 50 percent of qualified students transitioned to senior high school, and the gross enrollment ratio for senior high school was only 37 percent.[4]  The gross enrolment ratio in public technical and vocational training institutions was just 3.5 percent. Limited capacities at government schools and public and private training institutions combined with costly fees prevent many young people from furthering their education and improving their skills.

The National Apprenticeship Program (NAP) is a training program initiated by the Council for Technical and Vocational Education and Training (COTVET), and implemented by district-level coordinators of the Ghana Education Service, in close partnership with craft-specific trade associations. The program is based on the traditional three-year apprenticeship model, which is extremely widespread in Ghana, except that the NAP training period has been shortened to one year in order to reduce the amount of time before apprentices enter the labor market. Similar to the traditional apprenticeship model, COTVET has committed to paying master trainers and to providing a toolkit to each participating apprentice.

The program is mostly targeted at young people who are unable to continue their education beyond Junior High School. Recruitment of both trainees and master trainers  was conducted at the district level.

Details of the Intervention:

To estimate the returns of the apprenticeship program, and to examine how it can work most effectively, researchers are implementing a randomized evaluation in 32 nationally representative districts across all 10 regions of Ghana. Researchers assigned a random half of the 4,601 applicants to participate in the apprenticeship program. Treatment apprentices were then randomly assigned to master trainers’ businesses that matched their trade and geographic preferences. The businesses and their owners have a wide range of characteristics to enable researchers to measure if there are certain business-level characteristics associated with higher quality training (as measured by self-reported progress throughout the program, and apprentice attendance, retention, and completion) and higher labor market returns upon completion.

Additionally, a random half of master trainers will be offered cash incentives to encourage them to instruct their apprentices well. This additional cash incentive program is designed to encourage trainers to ensure a proficient skill level within the specified time period.

Results and Policy Lessons:

Results forthcoming.


[1] Africa Development Forum (2014). Youth Employment in Sub-Saharan Africa. Washington D.C.:  The International Bank for Reconstruction and Development/The World Bank. [Online].  Available at: <http://documents.worldbank.org/curated/en/2014/01/19342178/youth-employment-sub-saharan-africa-vol-2-2-full-report>. [Accessed: 8th May 2014].

[2] World Bank (2009). Africa Development Indicators 2008/09. Youth and Employment in Africa: The Potential, the Problem, the Promise. Washington D.C:  World Bank. [Online].  Available at: <https://openknowledge.worldbank.org/handle/10986/12350>. [Accessed: 8th May 2014].

[3] African Economic Outlook (2012). Ghana 2012 Paris: OECD[Online]. Available at: http://www.africaneconomicoutlook.org/fileadmin/uploads/aeo/PDF/Ghana%20Full%20PDF%20Country%20Note.pdf. [Accessed: 25th June 2014].

[4] Ministry of Education (2012).  Education Sector Performance Report.  Accra: Ministry of Education. [Online].  Available at: http://www.ndpc.gov.gh/GPRS/Dist%20and%20Sec%20APR%202012/SECTOR%202012%20APRs/Ministry%20of%20Education.pdf. [Accessed: 25th June 2014].

Isaac Mbiti

What Generates Growth in Microenterprises? Evidence from Sri Lanka

This study examined constraints that might be keeping small businesses in developing countries from growing and hiring more employees. To test interventions that might help spur growth and hiring, researchers offered a sample of male-owned businesses with two or fewer employees different combinations of capital, incentives to hire new employees, and management training. 

Policy Issue: 

Very small businesses are abundant in many developing countries, but few grow to the point where they employ more than one person. If even a small percentage of these microenterprises were able to scale up enough to hire a few employees, a significant number of new jobs could be created. While some research suggests that injections of capital into microenterprises increase profitability, there is little evidence suggesting that this profit increase would help a business grow enough to require additional employees. Is it possible to generate growth from microenterprises which leads to significant job creation?

Context:

The study focuses on microenterprises with two or fewer employees, located in urban areas of, Colombo, Kandy, and Galle/Matara in Sri Lanka. The 1,525 microenterprises in the sample were engaged in either the retail sector or manufacturing and service industry. Only male-owned enterprises were included in the sample because previous work showed that capital alone had a much larger effect on male-owned businesses.[1]

Details of the Intervention:

In this randomized controlled trial, three constraints thought to inhibit firm growth were relaxed: capital, labor, and entrepreneurial skills. A matched savings program was used to address capital constraints (details below). To incentivize hiring additional employees, a wage subsidy was used, and an entrepreneurial training based on the International Labor Organization’s (ILO’s) Improve your Business (IYB) program was used to improve entrepreneurial skills. Enterprises in the sample received either zero, one, or two of the interventions to determine which one, or combination was most effective. The group of businesses that did not receive any support was tracked as a comparison group.

Matching Savings Program

In November 2008, enterprises in this group were offered a matched savings bank account with National Savings Bank. Participants were told that they could deposit, but not withdraw, funding until August 2009. Savings were initially matched at a rate of 50 percent up to 1000 Sri Lankan Rupees (LKR). The match rate was later raised, ultimately reaching a maximum match of 100 percent up to 5000 LKR. Just before the account was unlocked, 5000 LKR was added to every account, regardless of previous deposit patterns to ensure that all enterprises in this group had some capital injection.

Business Training

The ILO’s IYB training program is one of the most widely implemented entrepreneurship training programs, reaching approximately 4.5 million people around the world.[2] IYB is a five day program intended to generate growth in microenterprises. The modules cover marketing, buying, costing, stock control, record keeping, and financial planning. The Sri Lanka Business Development Centre (SLBDC) delivered the ILO’s IYB training. Additional training on hiring and managing employees was added to the core modules.

Wage subsidy program

The subsidy provided a flat amount of 4000 LKR per month for a period of six months to businesses in this sample that hired an additional employee to work at least 30 hours per week. A flat amount of 2000 LKR per month was offered for an additional two months. The initial subsidy of 4000 LKR represented about half of the earnings of a typical unskilled worker.

Semi-annual follow-up surveys were conducted in 2009, 2010, 2011, 2012 and early 2013. The large number of surveys over a long time period enabled researchers to trace the trajectory of impacts.

Results and Policy Lessons:

Project ongoing. Results forthcoming. 


[1] De Mel, Suresh, David McKenzie, and Christopher Woodruff. "Returns to capital in microenterprises: evidence from a field experiment." The Quarterly Journal of Economics 123.4 (2008): 1329-1372.

De Mel, Suresh, David McKenzie, and Christopher Woodruff. "Are women more credit constrained? Experimental evidence on gender and microenterprise returns." American Economic Journal: Applied Economics (2009): 1-32.

[2] “Start and Improve Your Business Programme,” International Labor Organization, accessed June 3, 2014, http://ilo.org/empent/areas/start-and-improve-your-business/lang--en/index.htm.

Training and Consulting Services for Managers: Experimental Evidence from Bangladeshi Garment Production Lines

Lack of managerial capital remains one of the core challenges to SME growth in developing countries. However, rigorous evidence on the impact of programs focused on improving managerial skills is limited. This study evaluates a program which offers training and consulting for managerial staff in garment factories. It focuses on understanding how new management practices are adopted and implemented and what determines their success. The study will measure the impact of the training and consulting on output, productivity and other important outcomes of the factories.

Policy Issue: 

Small and medium enterprises (SMEs) are thought to be an important source of innovation and employment in developing countries, due to their flexibility in responding to new market opportunities and their potential for growth. However, entrepreneurs face a number of barriers to expanding their businesses and employing more workers, including constrained access to credit, lack of management skills, and unfavorable government regulation. In the manufacturing sector lack of knowledge and skills on how to manage medium-sized production teams may be another key constraint to the creation and expansion of SMEs (see, e.g., Sutton (2011, 2012)).

Training and consulting could help SMEs overcome the lack of knowledge and skills and lead to improvements in productivity. This pilot project evaluates a training and consulting program with a strong emphasis on the implementation of new processes and practices for garment factories in Bangladesh. It focuses on understanding how new management practices are adopted and implemented and what determines their success. 

Context of the Evaluation: 

Despite exceptional growth in the garment sector, Bangladeshi factories still lag behind in productivity when compared to other countries, such as China, Indonesia, India and Vietnam. At the same time, there are mounting pressures on the factories to improve working conditions and social compliance. Many practitioners in the industry believe that it is possible to achieve both goals with appropriate changes in management practices. 

Details of the Intervention: 

This study will analyze the impact of a training and consulting program offered to staff in two factories. The program is a combination of classroom teaching to a variety of factory mid-level managers from the production, human resources, and planning departments and “activations” during which the material presented in the training is adapted and implemented in the factory. The program spans a broad range of production-related activities, including quality control, wastage, line lay-out, human resource practices, planning practices, provision of incentives and aspects related to social compliance. Because having accurate performance indicators is important to increasing productivity, the program also focuses on introducing a culture of recording and monitoring into the factory. 

In each factory, two production lines from an eligible set will be randomly chosen to pilot all of the twenty to forty activations expected to be implemented over the course of a year. The short-term outcomes associated with the experimentation of activation on the pilot lines will be compared to the remaining non-activated lines in the set. Subsequently, the activations will be rolled out to the other lines in the factory and the diffusion (both planned and spontaneous) of practices will be tracked. 

There will be two distinct data collection efforts in this study. First, detailed daily and hourly data on input and output for each production line, used to monitor operations will allow for measuring outcomes across lines as well as over time. Second, there will be surveys of key production lines managers and random samples of operators every month. The administrative and survey data will include a range of outcomes, such as output, productivity, workers’ absenteeism, adoption of new practices and others. 

Results and Policy Lessons: 

Project ongoing. Results forthcoming. 

Improving SME Market Access via Local Content Marketplace Services in Africa

Governments, multilateral agencies, and corporations, have touted local content policy (the requirement for multinational organizations to develop local supply chains and source in-country) as a means for fostering the growth of small- and medium-sized enterprises (SMEs). However, evidence for the positive linkage effects of local procurement remains mixed. This pilot – originated as a result of conversations between the principal investigator and the partner organization at the first SME Initiative working group – will evaluate via a quasi-experimental study the impact of the Building Markets' business facilitation services in Liberia. Findings will assess the viability of the design, will set the stage for future RCT and quasi-experimental studies, will improve understanding of the impact of local sourcing on SMEs, and will contribute to knowledge on the role of market access on SME growth.

Matthew Bird

Returns to Consulting for Women Entrepreneurs

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.

Policy Issue:

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.[1]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. 

Results and Policy Lessons:

Results forthcoming.



[1] Ellis, Amanda, Claire Manuel, and C. Mark Blackden, “ Gender and Economic Growth in Uganda: Unleashing the Power of Women,” Directions in Development 2006. 

Empowering Girls in Rural Bangladesh

What is the best way of empowering adolescent girls? Rights-based campaigns? Skills training? Researchers are cooperating with the Bangladesh office of Save the Children USA to evaluate a broad range of interventions.

Policy Issue: 

Throughout the world, cultural stigmatism has often excluded women from receiving education or earning income equivalent to men, though educating a woman increases her financial independence and dramatically improves the chances that her children will survive, be better nourished and better educated. For less developed nations in particular, women may embody a previously untapped source of human capital, and those countries that have embraced more aggressive policies in regards to gender equality in education can be expected to return greater social and economic benefits.

Context of the Evaluation:

When it comes to education, social mobility, and marriage choices, adolescent girls in Bangladesh appear to face numerous barriers. In recent years, school enrollment rates have improved, but girls are still often forced to drop out of school, to be married off at a young age. A recent UNICEF study shows that almost 50% of girls are married by the age of 15, and 60% are mothers by the age of 19. Effectively, this harms their health, education, and future decision-making prospects as well as their future income-generating potential and their status within the family. While some female-empowerment programs focus on rights-based campaigns or skill-building activities within the community, little is known about the relative costs and effects these different programs have on the social and economic empowerment of adolescent girls.

Details of the Intervention:

Researchers are cooperating with the Bangladesh office of Save the Children USA to implement a broad range of interventions, aimed at empowering adolescent girls in southern Bangladesh. The Kishoree Kontha (KK) project operates through small peer-led sessions in Safe Spaces (spaces within a community where adolescent girls can safely meet on a regular basis). Out of a sample of 460 target villages, 307 villages have been randomly selected to receive one of four intervention packages. The remaining villages will serve as the comparison group. The four intervention packages are:

  1. Basic Package: This package provides literacy and numeracy training for illiterate girls, as well as study support and educational mentoring for school-going girls. It also provides social competency training, which includes information on health, rights, and general negotiation and social skills.
  2. Livelihoods Package: This package complements the Basic package with additional sessions on financial livelihood readiness. Rather than providing direct vocational training, these sessions build entrepreneurial and budgeting skills that are applicable to a wide variety of financial opportunities in the community.
  3. Full Package: This package includes all the sessions of the Livelihood package, but adds a direct incentive to delay marriage until the legal age of 18 years old. All girls in targeted villages, between 15 and 17 years old, will be eligible to receive approximately 16 liters of cooking oil per year, on the condition that they remain unmarried. This amount surpasses the financial cost associated with delaying marriage that families must pay in the form of dowry.
  4. Delayed Marriage Package: This package provides only the incentives to delay marriage, as described above, without any peer-led sessions in the communities. As such, it will allow researchers to disentangle the effects of direct conditional incentives from changes in attitudes and skills.
Results and Policy Lessons: 

Results forthcoming.

Training Women to Grow Microenterprises

Previous work in Sri Lanka has found very low returns to capital for female-owned microenterprises, which appears to be in part due to women operating businesses in female-dominated industries with low efficient scale and little scope for growth. This project aims to evaluate the role of business training and capital in getting women who are thinking about starting a business to start it in industries with greater scope for growth, and getting women in these low return industries to switch to more profitable sectors.

Separate business training courses are being offered to randomly-selected out of the labor force women who express an interest in entering the labor force in the next year, and to randomly-selected women currently in business in female-dominated low-return occupations. Half of those who complete the training will also receive a cash grant. One of the innovations of this work is not working with the existing clientele of a microfinance organization, but rather in seeing what the returns to such services are to the average poor woman. This informs us of the potential demand for such services, and can help identify the segments of the population not currently well-served by existing institutions.

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