The Returns to Cash and Microenterprise Support Among the Ultra-Poor: A Field Experiment

This paper examines cash transfers to one of the poorest and most marginalized groups in the world: young adults, mainly women, living in 120 small rural villages in post-war northern Uganda. The transfers involved NGOs providing selected villagers with a grant of USD 150 (equal to nearly 18 months cash earnings) along with five days of business skills training.  The NGOs also performed on-going "follow-up visits" that provided substantive advice as well as supervision and pressure to implement the business plan. The evaluation of the program included randomizing villages to immediate versus delayed treatment 20 months later. The paper aims to answer the following four questions:

• Does putting financial capital in the hands of the poorest yield new occupations and high returns to capital?
• Can interventions such as supervision counter behavioral or social pressures that may limit investments?
• Does social capital contribute to enterprise success, and can it be spurred by simply encouraging excluded people into groups?
• Are rising incomes and work empowering in increasing autonomy and baragaining power?