evaluating-the-impact-of-the-economic-empowerment-project-in-malawi-on-multidimensional-poverty

Burchi, Francesco; Strupat, Christoph (2017). 'Evaluating the impact of the Economic Empowerment Project in Malawi on multidimensional poverty' Paper presented at the annual conference of the HDCA, Cape Town 2017.

Abstract

It is nowadays widely recognized that poverty is a multidimensional phenomenon. In the last two decades the scientific community has made a tremendous progress in terms of measuring poverty in a multidimensional space. The most prominent indicator is the Multidimensional Poverty Index, developed by OPHI and officially endorsed by the UNDP. However, the same progress has not been registered in the evaluation of development policies and projects in a multidimensional space. In very few cases, scholars have investigated the effects of economic or social policies on the multiple dimensions of poverty. One of the reasons, in our view, lies in the complexity of estimating models that have composite, multidimensional indices as dependent variables.

The present paper tries to fill this gap, focusing on the “Economic Empowerment Project” in Malawi. This is a pilot project designed by the GIZ, the German agency for technical cooperation, and financed by BMZ, the German Ministry for Economic Cooperation and Development. It targets labour-constrained and ultra-poor households (the bottom 10%) in the district of Mwanza, located in the center-south part of the country. The district is composed of 20 clusters, i.e. geographical zones. The project in this initial phase is designed as a randomized control trial at cluster level: it is implemented in 6 clusters out of 20. Moreover the interventions are different in the 6 clusters: beneficiaries in 2 clusters receive a lump-sum, those in other 2 clusters receive financial literacy and business training, and finally beneficiaries in 2 other clusters receive both lump-sum and training. The overall purpose is to see whether addressing the problems of lack of capital/assets and/or lack of knowledge/skills can reduce (extreme) monetary poverty and food insecurity, by making sure that these people engage in more productive activities.

While the design of the project is not based on the capability approach or, broadly speaking, on a multidimensional conceptualization of poverty, it is possible to imagine that the different project components might impact on different domains of people’s life, and make them more resilient and less dependent on external assistance in the future. The improvement of economic conditions and the increase of knowledge can potentially influence dimensions, such as food security, employment, health, and education. Moreover, the first part of the training focuses on group formation and dynamics of group behavior, especially but not only related to saving practices. Therefore, another dimension that could be affected by the project is social cohesion.

The German Development Institute is responsible for the evaluation of this project. This will be conducted using a mixed-methods approach. The analysis will rely on quantitative data for the baseline period – for a limited set of variables – and for the endline period, resulting from a survey conducted nearly one year after the implementation of the project. The latter survey will be carried in May 2017 and will provide information on a larger set of topics. Data will be collected for the three groups of beneficiaries, as well as for other individuals – in similar initial conditions – living in the remaining 16 cluster of Mwanza and in the neighboring district of Neno, which will form the control group. First, we will use simple econometric techniques (e.g. mean tests, OLS and probit regressions) to identify the project’s effects on each dimension separately. In our choice of indicators, we need to consider the fact that after only one year we cannot expect the project to affect outcome variables, such as mortality or children anthropometric status. Then, we will analyze its effect on different multidimensional poverty indices, calculated using Alkire-Foster method and Rippin’s correlation-sensitive index. Compared to previous studies, given the cluster–level randomization, we have less methodological challenges as we do not need to control for variables, such as education or health, which might be part of the composite index of poverty.

In order to understand more the processes behind some impacts, we will exploit findings from three different rounds of qualitative interviews conducted with project beneficiaries between June and October 2016, i.e. immediately after the intervention. During these interviews we asked them, among other things, how they intended to use the lump-sum and the training and how they did it at the end, which constraints they faced, and what information they retained from the training sessions.

The structure of the paper is the following one. First, it reviews previous findings on interventions that connect cash or asset transfer with training and other elements. Second, it illustrates the Economic Empowerment Project and explains the theory of change. Third, it explains the quantitative and qualitative data used, together with the methods employed. The fourth section presents the results. Finally, the fifth section includes the concluding remarks and discusses the policy implications.

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