BUSINESS TRAINING OR TECHNICAL ASSISTANCE FOR FEMALE MICROENTREPRENEURS:

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Nov 20, 2013 (3 years and 6 months ago)

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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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