3rd Party Impact Evaluation Validates Village Enterprise Model

Randomized Controlled Trials (RCT)IPA

Innovations for Poverty Action (IPA) just completed a large-scale, independent, three-year Randomized Controlled Trial (RCT) to evaluate the effectiveness of the Village Enterprise program. An RCT is considered the “gold standard” of evidence in the social sciences for measuring the direct impact of any intervention. Learn more about randomized controlled trials. IPA’s findings are consistent with previous research on ultra-poor Graduation models and thus lead to a greater overall confidence in the graduation model in reducing poverty.

Data from Village Enterprise’s RCT shows:

  • Village Enterprise’s microenterprise graduation program led to increased consumption, assets, and
    income, as well as improvements in nutrition and subjective well-being.
  • Cost-effectiveness appears high: researchers estimate a full cost recovery within three to four years.
  • A cost-equivalent cash transfer appeared to have less promising medium-term impacts on poverty
    reduction and subjective well-being than the microenterprise program, though estimates are more
    ambiguous.
  • Overall, the results suggest that training and mentorship components of integrated poverty
    alleviation programs are sensible and cannot simply be removed (or substituted for cash transfers).
    More research is needed on the issue of scaling them while maintaining their quality.

To learn more, see IPA’s “Variations of Ultra-Poor Graduation Programming in Uganda“, describing preliminary findings from the randomized controlled trial.

Data from Village Enterprise’s RCT shows:

  • The Village Enterprise program is an extremely cost-effective approach to poverty alleviation with a benefit-cost ratio comparable or better than the already evaluated Graduation pilots
  • Village Enterprise microenterprise programming performs better on both income and consumption than cash only
  • Confidence in the effectiveness of Graduation programs in lifting people out of extreme poverty is increased.

The Village Enterprise RCT

This randomized controlled trial (RCT) tested the impact of the Village Enterprise program on extremely poor households compared to a control group, as well as to guide future refinements of our model.

Independent researchers worked with Village Enterprise to identify more than 6,378 of the poorest households across 138 villages in rural Uganda, and then randomly assigned eligible households to one of six groups: the full graduation program, the graduation program minus the savings group, unconditional cash transfers, unconditional cash transfers combined with a behavioral/mindset intervention, a variation of the full program called Business in a Box, and a control group for comparison purposes.

Positive results on the Graduation model in six countries published in Science magazine and highlighted by The New York Times in 2015 created a new awareness about the potential Graduation programs can have on alleviating extreme poverty.

The RCT results are being used as the benchmarks for the Village Enterprise Development Impact Bond (DIB).