Can Entrepreneurship Programmes Transform the Lives of the Poor?

A new way of helping the world’s poorest people is proving to be a staggering success and is spreading throughout the developing world. Recent research co-authored by Robin Burgess of the LSE and Director of the IGC finds that the scheme led to an increase in people’s incomes of around 35% after two years. For anyone this would be a big jump, but these are women who had previously struggled to feed themselves and their families.

The ‘Challenging the Frontiers of Poverty Reduction, Targeting the Ultra Poor’ (CFPR-TUP) programme targets the poorest 10% of people in Bangladesh, focusing on women. Run by Brac, the world’s largest NGO, the programme has two aims: to help these women ‘graduate’ from being ultra poor to have the basic skills, income, and confidence to begin fending for themselves, and to have enough stability to gain access to the mainstream development programmes, such as microfinance.

The programme starts with a temporary stipend to give the women involved short-term stability and breathing space while they are taught basic livelihood, healthcare and personal finance skills . They are then given an ‘asset’ such as a goat or a small plot of land that they can use to make money for themselves, whether by raising goats to sell milk or cultivating land to grow vegetables. Throughout, the women receive regular support through weekly visits, coaching and guidance. The programme ends with an invitation to join a microfinance scheme and further expand their business. Atiur Rahman, Governor of the Central Bank of Bangladesh said of the programme: ‘The ultra poor who have never been getting any kind of support are now becoming entrepreneurs.’

The programme’s organisers want to transform the lives of millions of the world’s most desperately poor people – not only in Bangladesh, but throughout the developing world.
Yet while such admirable and ambitious aims are likely to attract praise, it is important to know whether the programme is making a real difference. Together with researchers at Brac, as well as academics from London and Milan, Robin Burgess of the LSE and Executive Director of the IGC has provided the first independent study of whether the programme is actually working, focusing specifically on the ‘Specially Targeted Ultra Poor’ (STUP) component of the programme

He has tracked women in the villages that received the support and compared these women with other similarly poor women in the villages that did not. The study finds that all women in the programme communities are still in work, almost all are now self-employed and more likely to own property, and the number of hours they work has increased by 42% or around 500 hours each year. As a result of these changes, the average earnings of women have risen by around 35%. Remarkably, in the communities that received the support, even the women who were not eligible saw a 10% increase in their incomes, suggesting that there is a direct knock-on effect for the local economy.

Due to the success of the scheme, Brac is now piloting similar programmes in Pakistan and Haiti and there are other organisations with copycat programmes in Africa and other developing countries.

The research is still on-going – and there are many more questions to answer – but you can find out more by following the links below.

This research was presented at a seminar organised by IGC Bangladesh in collaboration with the Institute of Microfinance in Dhaka, Bangladesh, on 18 December 2011. Mashiur Rahman, Economic Affairs Advisor to the Prime Minister of Bangladesh, and Atiur Rahman, Governor of Bangladesh Bank were special guests at the seminar.