Despite the initial promise of microcredit, randomized evaluations have found at best modest effects of microloans on poverty. Digitized payments from government cash transfer programs provide a unique opportunity to offer microcredit while addressing some of its shortcomings, potentially reducing interest rates, default risk, and repayment issues.
Youth account for 60% of the unemployed in Africa. One approach to increasing employment among youth is to provide training and mentoring for young people to help them find jobs or start new businesses. This study evaluates the impact of a training and mentorship program with a robust long-term support component on Tanzanian youth’s employment, entrepreneurial activities, and self-confidence.
As education subsidies become more common, policymakers are looking for alternative sources of funding to cover the costs for such programs. One potential source is remittances from family members who have emigrated, which are one of the largest types of international financial flows to developing countries.
Differences in productivity between firms, which are especially large in developing countries, are often attributed to the quality of their management practices. Researchers tested the effect of management practices by randomly assigning some Indian textile firms to receive free consulting advice. Firms that received this advice significantly raised their productivity within a year, resulting in an estimated increase in annual profits of US$325,000.
Many financial products such as 401k plans have been designed to help U.S. consumers overcome limited self-control and limited attention in order to reach their savings goals.
There are an estimated 411 million mobile money accounts worldwide, allowing even the poor in remote areas to send and receive money at low cost. How access to this financial tool affects long-term financial well-being, however, is not well understood. In Kenya, IPA worked with researchers to track the economic progress of households as the M-PESA mobile money service expanded over six years.
A lack of access to finance can impede the potential for growth among small firms. To meet this finance gap and to encourage high-growth entrepreneurship, governments and multilateral agencies throughout the developing world often directly fund small and medium enterprises. Governments, however, have little guidance when it comes to choosing the firms with growth potential, and making sure that limited funds are targeted where they will spur the most growth.
Despite a substantial decline in child mortality in recent years, millions of children still die from preventable diseases every year. In this study in rural Uganda, researchers evaluated the impact of a micro-franchise model, which incentivizes door-to-door community health workers. The program reduced mortality among infants and children, improved knowledge about health among clients, and increased the visits that households received from health workers.
Numerous developing country governments, such as Brazil and Mexico, have adopted conditional cash transfer (CCT) programs as a social safety net, providing billions of dollars in transferred funds to millions of low-income citizens, in many cases by depositing them directly into a bank account. However, most of these recipients have little to no previous experience with formal financial products, thus providing the opportunity for product-linked training.
Many microentrepreneurs in developing countries may lack the training or skills to make the most effective financial and business management decisions. In India, researchers tested a low-cost and easy-to-scale financial capability intervention that delivered easy-to-remember and easy-to-adopt rules of thumb via voice-based mobile phone messages.
Improving access to family planning in Sub-Saharan Africa has the potential to help women and couples achieve their desired family size and avert unintended pregnancies and unwanted births. It may also have longer-term effects by improving women’s health, educational attainment, and socio-economic status. However, little is actually known about the effectiveness of family planning.
Although the success of microcredit was originally attributed to the group loan model, there is little evidence on the relative impacts of individual lending versus group lending on household consumption, income, and enterprise creation. In this study, researchers randomly selected existing group-lending centers to convert to an individual liability model.
Small farm productivity in sub-Saharan Africa lags behind that in Asia and other parts of the world. One reason for this may be low rate of adoption of inputs such as fertilizer. In Tanzania one reason for this may simply be the absence of local retailers, especially in more remote areas. Researchers are testing if their absence may be because of the costs of entering these markets or demand, with interventions targeted to each.
Microcredit has been successful in bringing formal financial services to the poor, but given that many microcredit clients live in poverty, this success has sparked a debate surrounding the question of how to set interest rates. In Ghana, researchers set out to measure how different interest rates on individual loans affect demand for the loans and if and how different interest rates affect borrower profile.
Industrial sector development to boost mass hiring is seen as important to poverty alleviation at the macroeconomic level. But how those jobs, particularly in early stages of industrial sector development, affect the workers themselves and what the workers prefer are less well-understood. In Ethiopia, Innovations for Poverty Action worked with researchers measure the effects of being offered an industrial job or an entrepreneurship promotion program.
Microenterprises, businesses with one to nine employees, in low-and middle-income countries face disadvantages compared to larger firms when it comes to sourcing inventory. Because of their smaller purchasing quantities, they may pay higher costs and have to travel frequently to restock.
Around the world, 168 million children are engaged in child labor, and in the Philippines many of the children working illegally are in occupations that pose a threat to their health and safety. However, poor families may have little other choice to support themselves. The government of the Philippines aims to help families avoid child labor by providing them with a one-time asset transfers equivalent to US $500 and training in using the asset to develop a livelihood.
Incentive (or performance-based) pay has been shown to increase worker productivity in high-income countries, yet it is uncommon in developing countries and little evidence exists on the impacts of individual- and group-level incentives in these contexts. Cultural norms, such as the desire to stand out or get ahead, may influence how people respond to incentives.
Lack of access to finance constrains small business growth—a problem that is exacerbated for Muslim business-owners, many of whom do not take out traditional loans for religious reasons. Innovations for Poverty Action is supporting research in Pakistan on a lease-based product that features more flexible repayment schedules, allows businesses to share risk with a large microfinance institution, and complies with local Islamic financial norms.
The agricultural sector in Sub-Saharan Africa has been changing in recent years, with more farmers living near urban areas, selling more of their crops for income, and also engaging in more off-farm work and non-agricultural activities to supplement farm revenue. However, little evidence exists thus far on how these trends are affecting nutrition, especially that of the most vulnerable members of farming families—women and children.