The impact of low cost business education:Evidence from a Randomized Controlled Trial in Cape Town
Programme
1. Introduction to Business Bridge:Director Dr Mike Herrington
2. Background to the research project3. Introduction to JPAL:
Laura Poswell: Executive Director4. Results to date5. Meet the Graduates6. Call to action
The Business Bridge Mission
To tackle poverty and unemployment byproviding high quality, relevant,
applicable business education at lowcost on a mass scale
?
The missing middle
SmallStunted Growth (e.g. sales)Lack Prosperity (e.g. profits)
• Institutions (e.g. property rights)
• Information (e.g. registration)
• Human Capital (e.g. health)
• Financial Capital (e.g. credit)
• Managerial Capital (e.g. financial skills)
Micro-level solutionsfor Small Firms:
- Finance focused- Evidence mixed
(see Acemoglu et al 2005; Beck et al 2006; Bloom et al 2010; Bruhn et al 2010; Duflo et al 2012; Hsieh & Olken 2014;Jensen 1998; Karlan & Appel 2012; Nichter et al 1999; Tybout 2000; Sachs 2006)
Marketing Skills?
Factors affecting growth
Policy Makers…Researchers…Experts…
Muhammad Yunus,Nobel Laureate:“[The poor] do not need us to teachthem how to survive; they alreadyknow. So rather than waste our timeteaching them new skills, we try tomake maximum use of their existingskills. Giving the poor access tocredit allows them to immediatelyput into practice the skills theyalready know.” (1999)
The doubters…
Addressing the Need
Major lack ofManagerial Capital –the management offactors of production
1. High quality coursematerials
2. Face-to-face tutoring bybusiness professionals
3. A network of partnerorganisations that providewider enterprisedevelopment supportservices
The Need Our three-part model
Our Stakeholders
FACILITATORS
SMMEsPARTNERS
A Representative Sample
Beauty Shops12%
Restaurants11%
Family Clothing(reseller)
5%
Building/Construction5%
Grocery stores4%
Electrical repair4% Child care
3%Cleaning,landscaping
3%Misc. apparel
2%Misc. trade
2%
Misc. apparel(reseller)
2%Misc. metal products
2%
Barber shops2%
Outerwear (uniforms)2%
Computer/dataprocessing
2%
OTHER39%
15 industries account for 60% of the sample
Core offering: Training
Course Offerings Finance; Sales & Marketing
Time Frame Four hours once a week for eight weeks (per course)
Medium ofInstruction
Face-to-face tutoring by highly experienced business professionalson a pro-bono basis
Location Local venue provided free of charge or at minimal cost bystrategic partner
Cost toParticipant R150 per entrepreneur per course as a ‘commitment fee’
Learning That’s Relevant
• Module 2: Identifycustomer needs
• Module 4: Questioningskillfully
• Module 7: Deliveringon product/servicepromises
• Module 1: Financialjargon
• Module 5: Analysingbusiness and financialdecisions
• Module 8: Fundingyour growth
Making Sales Managing Money
Laura PoswellExecutive Director for JPAL Africa
What is J-PAL?
• The Abdul Latif Jameel Poverty Action Lab (J-PAL) was established in 2003as a research centre at the Economics Department at the MassachusettsInstitute of Technology (MIT).
• J-PAL is a global network of researchers who use randomized evaluationsto answer critical policy questions in the fight against poverty.
• 108 affiliated professors, 573 ongoing or completed evaluations in 56countries.
• J-PAL’s mission is to reduce poverty by ensuring that policy is informed byscientific evidence. We do this through three main activities:
J-PAL core activities
J-PAL offices
J-PAL and Business Bridge
• J-PAL identified the Business Bridge programme as a key interventionwhich could potentially reduce unemployment and poverty in SouthAfrica.
• J-PAL and Business Bridge worked closely together to design the mostrigorous impact evaluation of the training program.
• Once the training started, J-PAL conducted independent high quality datacollection with the business owners in the study sample.
• J-PAL organised and supervised three rounds of data collection: baseline,midline and endline.
• The first preliminary results compiled by the researchers look promisingand we are now eager to turn those results into recommendations forpolicy makers.
“Business Skills” Training for small firms
Prior Studies(see McKenzie & Woodruff 2012)
Our Study
Sample: heterogeneous homogeneous
Intervention: weaker stronger
Functional focus: general specific
Measurement: paper electronic
Innovations in our research
The Research in NumbersSample size 832 Entrepreneurs
Registration 5 training locations: urban, suburban and township areas
Data Collection 20+ researchers collected data at the business locations using a newelectronic tool
The “typical”Business BridgeEntrepreneur
1.50 employeesR13,750 monthly salesR3,840 monthly profits38% registered5 years operating53 hours/week6% accessed loans39 years46% female62% graduated secondary school98% black/colored
Time
Perf
orm
ance
(e.
g. s
ales
)
Effect
Intervention
The RCT ExplainedAn Illustrative Example:
Marketing: 69% Finance: 39%
Increasing Sales
Raising ProfitsMarketing: 86% Finance: 75%
Marketing: 9.7% Finance: 12.7%
Improving Survival Rates
Marketing: 61.9% Finance: 32.9%
Generating Employment
Marketing growth focusutilization: changing sales staff incentivesallocation: planning product line adjustments
Finance efficiency focusutilization: tracking the cost of goodsallocation: separating personal and business
expenditures
Skills Do Improve Performance
Meet the graduates
Melton Oppelt : Owner, MP Transport CC
Thumi Kgaphole : Owner, Bob Masters Salon and Academy
Our GoalsDeliver 1500 course places to over 1000 entrepreneurs by May 2015Replicate the model in new locations by Q3 2015
Our Partners
Bringing Research to Reality
Business Support Network
What? Fortnightly networking sessions
Where? Every community in which we deliver training
Who? Business Bridge graduates and community basedentrepreneurs
Why?
1. Continued interaction with graduates2. Increase the flow of business and strengthen
communities3. Access point for partners and ED opportunities4. Further data collection
How?
Building Bridges to Opportunity
Entrepreneurs
Communities
New markets, ideasand knowledge
ED Partners
Corporate Partner
Get involved!
1. Facilitators2. Long term partnersCorporateDonorsEnterprise Development
The next ‘Train the Trainer’What? Facilitator training session
Where? TBD
When? Friday 10th October, 1-5pm
Who? Local business professionals with sales, finance orentrepreneurial experience
Why?
1. Share your business skills2. Develop your facilitation skills3. Gain knowledge of the micro-economy4. Have fun!
How? [email protected]