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. 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.
The Village Enterprise RCT
This 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.
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
- 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 RCT. 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).