Employment Generation in Rural Africa: Mid-term Results from an Experimental Evaluation of the Youth Opportunities Program in Northern UgandaBlattman et al (2011)
Can cash transfers promote employment and reduce poverty in rural Africa? Will lower youth unemployment and poverty reduce the risk of social instability? We experimentally evaluate one of Uganda's largest development programs, which provided thousands of young people nearly unconditional, unsupervised cash transfers to pay for vocational training, tools, and business start_up costs. Mid_term results after two years suggest four main findings. First, despite a lack of central monitoring and accountability, most youth invest the transfer in vocational skills and tools. Second, the economic impacts of the transfer are large: hours of nonhousehold employment double and cash earnings increase by nearly 50% relative to the control group. We estimate the transfer yields a real annual return on capital of 35% on average. Third, the evidence suggests that poor access to credit is a major reason youth cannot start these vocations in the absence of aid. Much of the heterogeneity in impacts is unexplained, however, and is unrelated to conventional economic measures of ability, suggesting we have much to learn about the determinants of entrepreneurship. Finally, these economic gains result in modest improvements in social stability. Measures of social cohesion and community support improve mildly, by roughly 5 to 10%, especially among males, most likely because the youth becomes a net giver rather than a net taker in his kin and community network. Most strikingly, we see a 50% fall in interpersonal aggression and disputes among males, but a 50% increase among females. Neither change seems related to economic performance nor does social cohesion a puzzle to be explored in the next phase of the study. These results suggest that increasing access to credit and capital could stimulate employment growth in rural Africa. In particular, unconditional and unsupervised cash transfers may be a more effective and cost-efficient form of large-scale aid than commonly believed. A second stage of data collection in 2012 will collect longitudinal economic impacts, additional data on political violence and behavior, and explore alternative theoretical mechanisms.
Intervention settings: Urban and Rural
Intervention description: Cash grant of $304 per average beneficiary.
Sample: 2,000 individuals (aged 16 to 35) then placed into groups.
Findings: Hours spent on income-generating activities increases by 24%. Earnings increase 18% but statistically insignificant (linear estimate).
The impact of mobile phone coverage expansion on market participation: panel data evidence from UgandaMuto and Yamano (2008)
Uganda has experienced recently a rapid increase of area covered by mobile phone. As the information flow increases due to the mobile phone coverage expansion, the cost in crop marketing is expected to decrease, particularly more so for perishable crops, such as banana, in remote areas. We use panel data of 856 households in 94 communities, where the number of the communities covered by the mobile phone network increased from 41 to 87 communities over a two-year period between the first and second surveys in 2003 and 2005, respectively. We find that the proportion of the banana farmers who sold banana increased from 50 to 69 percent in the communities more than 20 miles away from district centers after the expansion of the mobile phone coverage. For maize, which is another staple but less perishable crop, we find that mobile phone coverage did not affect market participation. These results suggest that mobile phone coverage expansion induces market participation of farmers who are located in remote areas and produce perishable crop.
Intervention settings: Rural.
Intervention description: Expansion of mobile phone coverage.
Methodology: Fixed-effects instrumental variable estimation.
Sample: Households in 94 communities where information was collected about men and women in HH.
Findings: Participation of farmers in marketing bananas (a perishable crop) increased from 50-69% in communities more than 20 kilometers from district centers. No effect on participation of maize marketing (a less perishable crop).
Rural Land Certification in Ethiopia: Process, Initial Impact, and Implications for Other African CountriesDeininger, Ali, Holden, and Zevenbergen (2008)
Although many African countries have recently adopted highly innovative and pro-poor land laws, lack of implementation thwarts their potentially far-reaching impact on productivity, poverty reduction, and governance. We use a representative household survey from Ethiopia where, over a short period, certificates to more than 20 million plots were issued to decribe the certification process, explore its incidence and preliminary impact, and quantify the costs. While this provides many suggestions to ensure sustainability and enhance impact, Ethiopia's highly cost-effective first-time registration process provides important lessons.
Intervention settings: Nationwide.
Intervention description: Rural land certification.
Methodology: Probit, Tobit.
Sample: 2,300 households (16% women-headed) in 115 villages (kebeles).
Findings: Land was registered with rapid speed, in a participatory nature, and at low cost. The process did not favor the wealthy and was not biased against women. Study was preliminary and descriptive, and did not show detailed evidence of certification impacts on productivity and land market behavior.
Bruné, Giné, Goldberg and Yang (2011)
This paper reports the results of a field experiment that randomly assigned smallholder cash crop farmers formal savings accounts. In collaboration with a microfinance institution in Malawi, the authors tested two primary treatments, offering either: 1)"ordinary"accounts, or 2) both ordinary and"commitment"accounts. Commitment accounts allowed customers to restrict access to their own funds until a future date of their choosing. A control group was not offered any account but was tracked alongside the treatment groups. Only the commitment treatment had statistically significant effects on subsequent outcomes. The effects were positive and large on deposits and withdrawals immediately prior to the next planting season, agricultural input use in that planting, crop sales from the subsequent harvest, and household expenditures in the period after harvest. Across the set of key outcomes, the commitment savings treatment had larger effects than the ordinary savings treatment. Additional evidence suggests that the positive impacts of commitment derive from keeping funds from being shared with one's social network.
Intervention settings: Rural.
Intervention description: Provided either an ordinary savings account to rural smallholders with direct deposits of sales revenue from participating agri-businesses or both an ordinary savings account and a "commitment" savings account.
Sample: 3,150 (6% women) poor and low-middle income farmers in 299 clubs.
Findings: Increased land under cultivation (9.8%), use of agricultural inputs (26.2%), crop sales from subsequent harvest (22%), and HH expenditure during post-harvest (17.4%). No gender-specific effects are reported.
Davis and others (2010)
Farmer field schools (FFSs) are a popular education and extension approach worldwide. Such schools use experiential learning and a group approach to facilitate farmers in making decisions, solving problems, and learning new techniques. However, there is limited or conflicting evidence as to their effect on productivity and poverty, especially in East Africa. This study is unique in that it uses a longitudinal impact evaluation (difference in difference approach) with quasi-experimental methods (propensity score matching and covariate matching) together with qualitative approaches to provide rigorous evidence to policymakers and other stakeholders on an FFS project in Kenya, Tanzania, and Uganda. The study provides evidence on participation in FFSs and on the effects of FFSs on various outcomes. The study found that younger farmers who belong to other groups, such as savings and credit groups, tended to participate in field schools. Females made up 50 percent of FFS membership. Reasons for not joining an FFS included lack of time and information. FFSs were shown to be especially beneficial to women, people with low literacy levels, and farmers with medium-size land holdings. FFS participants had significant differences in outcomes with respect to value of crops produced per acre, livestock value gain per capita, and agricultural income per capita. FFSs had a greater impact on crop productivity for those in the middle land area (land poverty) tercile. Participation in FFSs increased income by 61 percent when pooling the three countries. FFSs improved income and productivity overall, but differences were seen at the country level. Participation in FFSs led to increased production, productivity, and income in nearly all cases: Kenya, Tanzania, and at the project level (all three countries combined). The most significant change was seen in Kenya for crops (80 percent increase) and in Tanzania for agricultural income (more than 100 percent increase). A lack of significant increases in Uganda was likely due to Uganda's National Agricultural Advisory Services. When disaggregating by gender, however, female-headed households benefited significantly more than male-headed households in Uganda.
Intervention settings: Rural.
Intervention description: Farmer field schools with 50% female participation.
Methodology: Difference in differences estimation with propensity score matching.
Sample: Poor households (50% female-headed) randomly selected, with and without farmer field schools.
Findings: FFS increased the value of crops grown and agricultural income per capita (61% in the pooled sample), especially among women.
Dupas and Robinson (2009)
Does limited access to formal savings services impede business growth in poor countries? To shed light on this question, we randomized access to non-interest-bearing bank accounts among two types of self-employed individuals in rural Kenya: market vendors (who are mostly women) and men working as bicycle-taxi drivers. Despite large withdrawal fees, a substantial share of market women used the accounts, were able to save more, and increased their productive investment and private expenditures. We see no impact for bicycle-taxi drivers. These results imply significant barriers to savings and investment for market women in our study context. Further work is needed to understand what those barriers are, and to test whether the results generalize to other types of businesses or individuals.
Intervention settings: Rural.
Intervention description: Individual commitment savings products offered by a village bank. Interest-free account; high withdrawal fees. Tested the importance of savings constraints for self-employed individuals.
Methodology: RCT - Moderate rigor (small sample size).
Sample: 185 microentpreneurs.
Findings: Positive impact of savings on business investment among women (40% increase). Increase in women's private expenditures (37 to 40% higher). Some impact on making women less vulnerable to health shocks. No effect for men.
Impacts of Land Certification on Tenure, Security, Investment, and Land Markets: Evidence from EthiopiaDeininger, Ali and Alemu (2009)
While early attempts at land titling in Africa were often unsuccessful, the need to secure land rights has kindled renewed interest, in view of increased demand for land, a range of individual and communal rights available under new laws, and reduced costs from combining information technology with participatory methods. We used a difference-in-difference approach to assess the effects of a low-cost land registration program in Ethiopia, which covered some 20 million plots over five years, on investment. Despite policy constraints, the program increased land-related investment and yielded benefits significantly above the cost of implementation.
Intervention settings: Rural: East Gojjam zone of the Amhara region.
Intervention description: Low-cost land registration scheme covering 20 million plots over 5 years.
Methodology: Difference in differences estimation using four rounds of panel survey data spanning 8 years.
Sample: 900 plots owned by households from 7 villages in 3 districts.
Findings: Significant positive effect on the three outcomes examined: i.e., perceived tenure security, land-related investments and participation in land rental markets.
Duflo, Kremer and Robinson (2008)
Intervention settings: Rural: Busia district.
Intervention description: Free fertilizer and hybrid seeds provided to randomly selected farmers. Assistance in applying the inputs correctly and harvesting the crops.
Sample: 673 farmers with children enrolled in schools (randomly selected from school enrollment list).
Findings: Median increased in yields from 9% to 49% (depending on the fertilizer treatment). However, median rates of return were positive for only one of the treatments.
Challenges in Banking the Rural Poor: Evidence from Kenya's Western ProvinceDupas and Robinson (2012)
Most people in rural Africa do not have bank accounts. In this paper, we combine experimental and survey evidence from Western Kenya to document some of the supply and demand factors behind such low levels of financial inclusion. Our experiment had two parts. In the first part, we waived the fixed cost of opening a basic savings account at a local bank for a random subset of individuals who were initially unbanked. While 63% of people opened an account, only 18% actively used it. Survey evidence suggests that the main reasons people did not begin saving in their bank accounts are that: (1) they do not trust the bank, (2) service is unreliable, and (3) withdrawal fees are prohibitively expensive. In the second part of the experiment, we provided information on local credit options and lowered the eligibility requirements for an initial small loan. Within the following 6 months, only 3% of people initiated the loan application process. Survey evidence suggests that people do not borrow because they do not want to risk losing their collateral. These results suggest that, while simply expanding access to banking services (for instance by lowering account opening fees) will benefit a minority, broader success may be unobtainable unless the quality of services is simultaneously improved. There are also challenges on the demand side, however. More work needs to be done to understand what savings and credit products are best suited for the majority of rural households.
Intervention settings: Rural.
Intervention description: Provided safe place (metal box) to save money with randomly varying levels of commitment to save.
Sample: 771 Members of 113 rotating savings clubs (ROSCAs) in one administrative division of western Kenya.
Findings: Preventive health investments increased by 68%. The share of households achieving their savings goals increased by 13% (compared to 34% in the control group). Three years later 39% of those who received metal boxes were still using them for saving. Larger effects found among married than among unmarried females. The results also suggest that savings programs that do not restrict liquidity are most effective.
Duflo, Kremer and Robinson (2009)
While many developing-country policymakers see heavy fertilizer subsidies as critical to raising agricultural productivity, most economists see them as distortionary, regressive, environmentally unsound, and argue that they result in politicized, inefficient distribution of fertilizer supply. We model farmers as facing small fixed costs of purchasing fertilizer, and assume some are stochastically present-biased and not fully sophisticated about this bias. Even when relatively patient, such farmers may procrastinate, postponing fertilizer purchases until later periods, when they may be too impatient to purchase fertilizer. Consistent with the model, many farmers in Western Kenya fail to take advantage of apparently profitable fertilizer investments, but they do invest in response to small, time-limited discounts on the cost of acquiring fertilizer (free delivery) just after harvest. Later discounts have a smaller impact, and when given a choice of price schedules, many farmers choose schedules that induce advance purchase. Calibration suggests such small, time-limited discounts yield higher welfare than either laissez faire or heavy subsidies by helping present-biased farmers commit to fertilizer use without inducing those with standard preferences to substantially overuse fertilizer.
Intervention settings: Rural: Busia district.
Intervention description: Farmers randomly offered one of the following: the chance to purchase a voucher immediately after the harvest, the chance to purchase at the time of their choosing, fertilizer at regular price with free delivery 2-4 months after harvest or fertilizer at a 50% subsidy with free delivery 2-4 months after harvest.
Sample: 924 farmers (841 in follow-up) with children enrolled in 16 local schools.
Findings: Fertilizer use increased in every group (from 14-22% on a base of 23%), except for the group allowed to purchase fertilizer at the regular price.