Assessing the Poverty Impact of Small Enterprise Initiatives

Small enterprises (SEs) account for a significant share of the economy of developing countries. Donor agencies have:

• Taken a broad range of initiatives to bolster the SE sector, as development of SEs is seen as an important vehicle for providing opportunities for gainful employment for the world's poor;
• Come under scrutiny to demonstrate whether SE initiatives have actually achieved the intended outcomes, particularly with respect to the eradication of extreme poverty.

The author provides a conceptual framework for measuring the poverty impacts of SE programs, particularly those that focus on business development services (BDS), and presents specific methods that can be used in such evaluations.

The author recommends that evaluators:

• Decide on a definition of poverty prior to evaluating a program;
• Select one or more indicators that will be used in determining whether an initiative reduced poverty among a particular population;
• Identify the target population with explicit reference to the poor;
• Specify how the poor will be affected, particularly in cases where the poor are not direct program beneficiaries;
• Select regions for programs in an explicit manner;
• Undertake evaluations of poverty impacts only if the scale of programs warrants it.