Short-Term Impacts of Targeted Cash Grants and Business Development Services : Experimental Evidence from Entrepreneurs in Burkina Faso
Most support programs targeted at small firms in low- and middle-income countries fail to generate transformative effects at a large scale due to poor targeting, too little flexibility, and the limited size of the support, among others. This paper...
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| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/undefined/478351639075910631/Short-Term-Impacts-of-Targeted-Cash-Grants-and-Business-Development-Services-Experimental-Evidence-from-Entrepreneurs-in-Burkina-Faso http://hdl.handle.net/10986/36735 |
| Summary: | Most support programs targeted at
small firms in low- and middle-income countries fail to
generate transformative effects at a large scale due to poor
targeting, too little flexibility, and the limited size of
the support, among others. This paper assesses the
short-term effects of a randomized targeted government
support program for small and medium-size firms that were
selected based on a business plan competition. One group
received large cash grants of up to US$8,000, with flexible
conditions of use. A second group received grants of an
equally important size but earmarked to business development
services and thus less flexible and with a required own
contribution of 20 percent. A third group served as a
control group. All the firms operate in agribusiness or
related activities in a semi-urban area. An assessment of
the short-term impacts shows that beneficiaries of cash
grants engage in better business practices, such as
formalization and bookkeeping. They also invest more. Yet,
this does not translate into higher profits and employment.
There is no effect on investment and business practices
among beneficiaries of grants for business development
services. Yet, both treatment groups show a higher ability
to innovate relative to the control group. The results also
show that cash grants cushioned the adverse effects of the
COVID-19 pandemic. A further round of data collection will
soon allow assessing the longer-term effects of the
interventions, which may differ from the short-term effects
analyzed here as both interventions may need time to unfold
their full effects. |
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