The challenge
It was unclear whether evidence of high returns to capital applies to the most marginalised and ultrapoor, with the lowest incomes, no capital and limited social networks, especially after war.
The case
After a 20-year war in northern Uganda, the Association of Volunteers in International Service (AVSI) identified 1,800 poor people, mostly women, in 120 war-affected villages for its Women's Income Generating Support (WINGS) programme, which provided grants of US$150 (about US$375 in purchasing power parity terms), five days of business skills training and planning, and ongoing supervision. Christopher Blattman, Eric Green, Julian Jamison, Christian Lehmann and Jeannie Annan evaluated it with a randomized field experiment. Sixteen months after the grants, participants had doubled their microenterprise ownership and incomes, mainly from petty trading. When the control group received cash and training 20 months later, the researchers varied supervision, which represented half of the programme's costs; a year later, supervision increased business survival but not consumption.
Why it worked
The researchers conclude that extremely poor, war-affected women have high returns to this package, and that group bonds, informal insurance and cooperative activities could be induced and had positive returns, but that costly supervision added little to consumption.
Sources
- Blattman, C., Green, E. P., Jamison, J., Lehmann, M. C., & Annan, J. (2016). The returns to microenterprise support among the ultrapoor: A field experiment in postwar Uganda. American Economic Journal: Applied Economics, 8(2), 35–64.
- Blattman, C., Green, E., Jamison, J., Lehmann, M. C., & Annan, J. (2015). The returns to microenterprise support among the ultra-poor: A field experiment in post-war Uganda. NBER Working Paper 21310.
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