BUSINESS TRAINING OR TECHNICAL ASSISTANCE
FOR FEMALE MICROENTREPRENEURS:
LESSONS FROM TWO EXPERIMENTAL EVALUATIONS
Martin Valdivia
Conference "Women's Entrepreneurship: What do we
know? What is next?”
Washington D.C.,
April
6th, 2011
Structure of the presentation
•
Motivation: Teaching entrepreneurship to female
microentrepeneurs
•
This presentation: Analysis of two experimental
interventions for improving management capital for
female
microentrepreneurs
•
Research questions
•
Results and discussion
•
Remaining questions
Motivation I
•
Is it possible to transform a small trader/producer into a
successful businesswoman?
–
In the developing world, millions of people work in their own familiar
microbusinesses
(GEM, 2007)
–
Many of those families are still poor
•
Exclusion or use of opportunities? (Perry, et. al., 2007)
•
Entrepreneurship in Latin America reproduces gender
inequities (GTZ
-
BM
-
BID, 2010)
–
Female participation in labor force has increased a lot in the last
decades, but mainly in the informal sector
–
Female
-
run businesses tend to be smaller, less profitable and less
productive
Motivation II
•
Majority of
microbusinesses
have low returns to capital,
especially those female
-
run (de Mel, McKenzie y Woodruff,
2008)
–
Possibilities of business growth and sustainability are ambiguous
–
Contribution of this sector to poverty reduction and economic growth
is uncertain
•
Pro
-
microentrepreneurship
interventions have been tried
(microfinance, titling), but recent evidence showed they have
not been enough
–
Microfinance (
Banerjee
et. al., 2009; Karlan &
Zinman
, 2010)
–
Titling
(
Field
& Torero, 2005; Galiani &
Schargrodsky
, 2010)
Motivation
III
•
So, what else could be done to strengthen entrepreneurial
efforts by females?
–
If the problem is exclusion, firms may be inefficient
–
need to improve management capital available to these businesses
(Bruhn, Karlan &
Schoar
, 2010)
•
business training
•
Technical assistance
•
Or both?
–
In the case of women, need to include a gender approach to empower
the role of women within the household and in the community
What do we present here?
•
Lessons from two experimental evaluations:
•
Teaching entrepreneurship: Impact of business training on
microfinance clients and institutions, with Dean Karlan (forthcoming,
REStat
2011)
•
Training or Technical assistance for female
microentrepreneurs
?: an
experimental evaluation (first results, study in progress)
•
Driving research questions
•
Can entrepreneurship be taught, making a businesswoman succeed?
–
Is it intuition, determination?
–
Adoption of good business practices?
•
Need some concrete advice (technical assistance) to improve business
outcomes and consolidate new knowledge?
Characteristics of Study 1(FINCA)
•
A business training module was added to the financial
services of a MFI
–
We worked with
FINCA
-
Perú
, small but financially sustainable MFI
(village banking)
–
Serving
microentrepreneur
women in Lima and Ayacucho
–
Two modules (22 sessions, with
Atinchik
, FFH):
•
Module 1: what is a business, how does the market work, commercial
strategies
•
Module 2: separate account management (home
-
business), productions
costs calculation, prices
–
Half
-
hour sessions in the dates of their regular payment meetings, run
by previously trained FINCA promoters
–
Random assignment
of banks to treatment and control groups to
identify effects
•
Control group: business as usual for FINCA village banks
•
Marginal contribution of training on clients and MFIs
Characteristics of Study 2 (Consortium)
•
Study associated to the RBI project by WB
-
UNIFEM
–
Eligible female
microentrepreneurs
were called in the north and south
cone of Lima
–
Design and
execution
of training in charge of the consortium CEDLAS
-
CAPLAB
-
INPET
–
Three modules: personal development, business management,
productive development
•
Random selection of beneficiaries and control group from the
eligible interested population
–
T1
3
-
month regular training, 3 classroom group sessions of 3 hours
each week
–
T2
regular training plus technical assistance (AT)
–
C
nothing
Research questions
•
Key general questions
–
Can good business practices be taught to adult women with low
formal education level and, in some cases, low self
-
esteem?
–
Can the training contribute to the growth of the women
´
s business?
•
FINCA study
–
Can training help improve the outcomes of the MFI? (client retention,
repayment rate, loan size, etc.)
–
Should the MFIs provide business management training?
•
Consortium Study (how to provide training?)
–
Is there any difference when the training is provided by specialists?
–
Can traditional training be enough (transmission of good business
practices), or is a component of technical assistance required (more
specific advice to the businesses of these women)?
Results: do
microentrepreneurs
’ practices
change/ improve?
•
Yes, definitely
–
FINCA study: improved record keeping of inputs/outputs, separate
household and business accounts, reinvest more, think proactively
about business innovations and implement them
–
Consortium study: separate household and business accounts, close
non
-
profitable businesses/ open new businesses, participate more in
producers/ traders associations, seek more credits (specially from
informal sources)
•
According to the emphasis of each training
–
But not all recommended practices were adopted
Results: does it contribute to businesses
growth?
•
It seems general training is not enough, TA is needed
–
FINCA study: sales of the treated increased 15% more than those of
the control group, especially in “low” periods
•
Nevertheless, we cannot reject that this effect might be explained by
some structural differences
–
Consortium study: sales increased between 17%
-
20%, but only for
women who received full treatment (general training plus technical
assistance)
•
Could it be the effect of working with specialists in the
provision of training (Consortium)?
–
No, as women with just regular training in Consortium study do not
present any effects either
–
Instead, the effect is only significant when combining general training
with technical assistance
Discussion of key results
•
Policy implication:
–
Teaching general good business practices (GT) is cheaper and more
scalable, but TA is needed to help
microentrepreneurs
grow
–
Both effects are stronger in relatively larger businesses
•
Existence of a threshold from which this kind of intervention can help
•
But, can we really say that the full intervention (GT+TA) has
transformed beneficiaries in better businesswomen?
–
Not necessarily. Positive effects do imply there were inefficiencies
(room to improve) and specific advice was sound
–
Do not know whether the diagnosis and innovation process could be
replicated further without a third party’s help (subsidized or not)
•
If not, these
microentrepreneurs
would still be vulnerable to changes in
the economic context,
•
and their businesses’ growth and sustainability would still be uncertain
–
We can learn a lot from a second follow up.
Other key results:
•
Should a MFI provide business training? It is beneficial for the
MFI
–
Improves client retention
–
Reduces loan repayment problems of the members
•
Important: with joint liability, there are repayment problems that do not
affect directly the MFI accounts
•
But with joint liability, payment problems destabilize village banks, so
improvements in this indicator are good for the MFI
–
But things may still get complicated if TA is added
•
FINCA study provided training in a mandatory scheme
–
Who benefits the most?
–
Results in business practices and institutional outcomes are stronger
in those initially less interested in the training
–
Policy implication: demand
-
driven selection of beneficiaries would not
be the most appropriate choice
•
Free
-
trial periods and tied
-
sales would be more advisable
Remaining questions I: randomization and
effective treatment
•
Consortium study: only 50% of the selected beneficiaries
accepted to start the training program, and only 305 reached
75% of it.
–
In the FINCA study that selectivity was also true, because of clients
dropping out of village banks
–
In any case, ITT estimator is relevant if programs work this way
–
A cost
-
benefit analysis that assumes perfect compliance is not useful
•
Nevertheless, it is crucial to try to see how to maximize
effective treatment
–
Connection between early childbearing/distance to training center
suggest time constraint is a key issue (childcare services, shorter/less
frequent sessions)
–
Other related adjustments: group invitations, use of ICTs may help
catch up after unavoidable absences
Remaining questions II: external validity
•
Businesses in both studies are very small
–
FINCA study: average monthly sales of 800 soles
–
Consortium study: average weekly sales of 500 soles
•
This group is very important because it includes very poor
people
•
Nevertheless, it is valid to think that results could be different
for small and medium businesses
–
Pilot strategies like these should be implemented
–
It is likely that other restrictions may come as relevant
•
Formality costs, technological level
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