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General

Study Overview

Title:

The Prospects of Business Proposal Endorsement: Evidence from SACCOs and Horticulture Farmers in Rwanda

Study is 3ie funded:

No

Study ID:

RIDIE-STUDY-ID-5d64ecc3e241c

Initial Registration Date:

08/27/2019

Last Update Date:

11/20/2019

Study Status:

Ongoing

Abstract:

One challenge for farmers to secure formal credit is to develop sound business plans. Most of the empirical work in this context focuses on the direct effects of credit access and business plan competitions, but none dealt with spillovers beyond intended beneficiaries. In this paper, I study both the direct and indirect impact of a business plan competition on horticulture farmers and Savings and Credit Cooperatives (SACCOs) in Rwanda. Specifically, I tackle three research questions: a) conditional on business plan implementation, whether business plan endorsement affects business’ survival and farmers’ outcomes, b) whether business plan implementation, conditional on being rejected, creates indirect impacts on horticulture farmers’ outcomes, and c) whether this business plan competition creates indirect effects on SACCOs. I use two datasets: a) a cross-sectional household survey data collected in 2018 that comprises 1,578 horticulture farmers who developed business plans and b) a panel administrative data of 416 SACCOs in Rwanda over 2011-2017. I analyze the household data in a regression discontinuity design (RDD) framework and the SACCOs data using the difference-in-difference (DID) approach.

Change History for Abstract

Changed On	Previous Value
11/20/2019	The paper studies the impact of the endorsement process of business proposals on Savings and Credit Cooperatives (SACCOs) and horticulture farmers in Rwanda. It also assesses the impact of being rejected (farmers whose business plans were rejected and they implemented their business idea) on horticulture farmers' outcomes. I use two sources of data: a) a panel admin data of SACCOs in Rwanda over 2011-2017; b) a cross-sectional household survey data collected in 2018 that comprises 1,578 horticulture farmers who developed business proposals to be endorsed. Some Key Informant Interviews (KIIs) with relevant stakeholders are also used to get some insights about the endorsement process. I analyze the SACCOs data using the difference-in-difference (DID) approach and the household data in a regression discontinuity design (RDD) framework. The paper also estimates the information efficiency and technical efficiency on the SACCO level and evaluates their impacts on endorsement, loans and matching grant success rates on the household level.
11/01/2019	The paper studies the impact of the endorsement process of business proposals on Savings and Credit Cooperatives (SACCOs) and horticulture farmers in Rwanda. I use two sources of data: a) a panel admin data of SACCOs in Rwanda over 2011-2017; b) a cross-sectional household survey data collected in 2018 that comprises 1,578 horticulture farmers who developed business proposals to be endorsed. Some Key Informant Interviews (KIIs) with relevant stakeholders are also used to get some insights about the endorsement process. I analyze the SACCOs data using the difference-in-difference (DID) approach and the household data in a regression discontinuity design (RDD) framework. The paper also estimates the information efficiency and technical efficiency on the SACCO level and evaluates their impacts on endorsement, loans and matching grant success rates on the household level.
10/08/2019	The paper studies the impact of the endorsement process of business proposals on Savings and Credit Cooperatives (SACCOs) and horticulture farmers in Rwanda. I use two sources of data: a) a panel admin data of SACCOs in Rwanda over 2011-2017; b) a cross-sectional household survey data collected in 2018 that comprises 1,578 horticulture farmers who developed business proposals to be endorsed. Some Key Informant Interviews (KIIs) with relevant stakeholders were also used to get some insights about the endorsement process. I analyze the SACCOs data using the difference-in-difference (DID) approach and the household data in a regression discontinuity design (RDD) framework.

Registration Citation:

Abouaziza, M., 2019. The Prospects of Business Proposal Endorsement: Evidence from SACCOs and Horticulture Farmers in Rwanda. Registry for International Development for Impact Evaluations (RIDIE). Available at: 10.23846/ridie184

Categories:

Agriculture and Rural Development
Finance

Additional Keywords:

Horticulture, SACCOs, Business Plan Competition, Spillovers, Rwanda

Change History for Additional Keywords

Changed On	Previous Value
11/20/2019	Business Proposal Endorsement, SACCOs, Horticulture Farmers, Rwanda

Secondary ID Number(s):

Principal Investigator(s)

Name of First PI:

Mohamed Abouaziza

Affiliation:

Economics PhD student, University of Sussex

Name of Second PI:

Affiliation:

Intervention

Intervention Overview

Intervention:

The endorsement process was implemented in many stages. The National Agricultural Export Development Board (NAEB) in Rwanda first launched the submission periods- during October-November 2013 and during June-July 2014. To ensure careful screening is carried out considering required conditions to develop business plans and eligibility of getting a loan from financial institutions, an evaluation team consists of professionals from NAEB, the Single Project Implementation Unit (SPIU), and the Bank of Rwanda Development Fund (BDF) participated in the screening process. They evaluated and scored each proposal out of 100 points based on the selection criteria: market and export potential/differentiation opportunity/value-adding capacity, ensured markets, potential for export growth for Rwanda, experience and interest of the applicant, business idea’s potential impact, investment cost and financing, sustainability, and other factors (e.g., crop type and whether it is a primary production business proposal or involves post-harvest/marketing activities).

For a business plan to be endorsed, due to the number of applicants for each crop, the evaluation team determined different passing marks for different group of crops, ranging between (50 to 80 percent). They assigned 50 percent as a passing mark for essential oils, flowers, and all crops that involved processing, post-harvest, packaging, transport and marketing. A passing score of 75 percent was set for Onions, passion fruit, Apple banana and pineapple. Other business proposals for vegetables and fruits need to score 80 percent in order to receive an endorsement letter. The selection team received 300 applicants during the first application period (October –November 2013) and 2700 applicants during the second application round (June-July 2014). More than 382 farmers received endorsement letters.

Theory of Change:

On SACCO level, the development and endorsement process may attract new members to the SACCOs as well as affect the magnitude of SACCO’s deposits and loans. The notion of having an impact on the SACCO level is corroborated by some dimensions: first, the program was mainly run through SACCOs given that they are near to farmers in all sectors in Rwanda. Second, the number of applicants to be endorsed increased from approximately 300 to 2700 farmers between the two application rounds over 2013-2014. Such oversubscription after few months indicates the quick spread of information between farmers as well as between SACCOs and their members. Third, one way to quickly secure loans, to potentially get the grant, was to be an active member with SACCOs. Finally, the endorsed farmers who didn’t get the grant were told by their financial institutions that there may be other rounds of grant. Such news may encourage other horticulture farmers and other farmers to join SACCOs for potential grant opportunities.

At the household level, the main assumption is that such business plan endorsement may lead horticulture farmers to update their beliefs about the validity of their proposed projects and increase their confidence in a way that facilitate the process to get funding if needed and encourage them to implement their projects. This process may affect farmers’ investment decisions in horticulture, which in turn may increase households’ productive assets and horticulture income. The argument of having an impact on those who got endorsement letters without obtaining matching grants is justified by the qualitative data collection of the PRICE project impact evaluation. The latter indicated that most of those who were selected to receive an endorsement letter did not depend on the PRICE project grant and they secured financing from alternative financial channels.

Multiple Treatment Arms Evaluated?

Yes

Intervention Timing

Intervention or Program Started at time of Registration?

Yes

Start Date:

10/01/2013

End Date:

Evaluation Method

Evaluation Method Overview

Primary (or First) Evaluation Method:

Difference in difference/fixed effects

Other (not Listed) Method:

Additional Evaluation Method (If Any):

Regression discontinuity

Other (not Listed) Method:

Method Details

Details of Evaluation Approach:

I analyze the SACCOs data using the difference-in-difference (DID) approach and the household data in a regression discontinuity design (RDD) framework. 

Outcomes (Endpoints):

On the SACCO level, the main focus is devoted to studying the extensive and intensive impact of the endorsement process (T1). However, we control for the other two levels of treatment, namely the endorsement process and getting loans (T2) and endorsement process coupled with loans and matching grants (T3). SACCO-level indicators include the number of members, number of members who paid shares, collected capital, deposits, and loans.

On the household level, the emphasis is mainly placed on the impact of the business plan endorsement (more than 382 farmers’ business plans were endorsed out of 3000 farmers). The paper also assesses the impact of being rejected (farmers whose business plans were rejected and they implemented their business idea). Household-level indicators include horticulture farmers' technical efficiency, survival, income, harvest, sales, productive assets, hired labor, and land.

The household sample encompasses three different groups of farmers: 358 farmers whose business plans were selected (G1), 856 farmers whose business plans were rejected and they implemented their business idea (G2), 364 farmers whose business plans were rejected but didn’t implement their business idea (G3). The analysis includes two group comparisons: G1 against G2 and G2 against G3. 

Change History for Outcomes (Endpoints)

Changed On	Previous Value
11/20/2019	On the SACCO level, the main focus is devoted to studying the extensive and intensive impact of the endorsement process (T1). However, we control for the other two levels of treatment, namely the endorsement process and getting loans (T2) and endorsement process coupled with loans and matching grants (T3). SACCO-level indicators include the number of members, number of members who paid shares, collected capital, deposits, and loans. On the household level, the emphasis is mainly placed on the impact of the business plan endorsement (more than 382 farmers’ business plans were endorsed out of 3000 farmers). The paper also assesses the impact of being rejected (farmers whose business plans were rejected and they implemented their business idea). Household-level indicators include horticulture farmers' technical efficiency, income, harvest, sales, productive assets, hired labor, and land. The household sample encompasses three different groups of farmers: 358 farmers whose business plans were selected (T1), 856 farmers whose business plans were rejected and they implemented their business idea (T2), 364 farmers whose business plans were rejected but didn’t implement their business idea (C). The analysis includes two group comparisons: T1 against C and T1 against T2. The former is to evaluate the impact of the endorsement and the latter is to assess whether being rejected might have pushed farmers to implement their project and achieve some developmental effects on the household level. Comparing T1 against T2 would give some insights about the impact direction of being rejected.
11/01/2019	On the SACCO level, the main focus is devoted to studying the extensive and intensive impact of the endorsement process (T1). However, we control for other two levels of treatment, namely the endorsement process and getting loans (T2) and endorsement process coupled with loans and matching grants (T3). SACCO-level indicators include number of members, number of members who paid shares, collected capital, deposits and loans. On the household level, the emphasis is placed on the impact of the business plan endorsement (more than 382 farmers’ business plans were endorsed out of 3000 farmers). Household-level indicators include horticulture income, harvest, sales, productive assets, hired labor, and land.

Unit of Analysis:

Savings and Credit Cooperatives (SACCOs) and horticulture farmers in Rwanda

Hypotheses:

On the SACCO level, the development and endorsement process may attract new members to the SACCOs as well as affect the magnitude of SACCO’s deposits and loans. At the household level, the main assumption is that such business plan endorsement may lead horticulture farmers to update their beliefs about the validity of their proposed projects and increase their confidence in a way that facilitate the process to get funding if needed and encourage them to implement their projects. This process may affect farmers’ investment decisions in horticulture, which in turn may increase households’ productive assets and horticulture income.

Unit of Intervention or Assignment:

Savings and Credit Cooperatives (SACCOs) and horticulture farmers in Rwanda

Number of Clusters in Sample:

416 Savings and Credit Cooperatives (SACCOs)

Number of Individuals in Sample:

1578 horticulture farmers

Size of Treatment, Control, or Comparison Subsamples:

G1: 358 farmers with selected business proposals. G2+G3: 1,220 farmers with rejected business proposals.

Change History for Size of Treatment, Control, or Comparison Subsamples

Changed On	Previous Value
11/20/2019	Treatment: 358 farmers with selected business proposals. Control: 1,220 farmers with rejected business proposals.

Data

Outcomes Data

Description:

The paper depends on a combination of survey and administrative data. A panel data for admin SACCO-level indicators over 2011-2017 was used to assess the impact on the SACCO-level indicators. The household-level analysis depends on a cross-sectional household data encompasses 1,578 horticulture farmers, including 358 farmers with selected business ideas and 1,220 farmers with rejected ones. Some Key Informant Interviews (KIIs) with BDF’ management and randomly selected SACCOs are also used.

Change History for Description

Changed On

Previous Value

10/08/2019

The paper depends on a combination of survey and administrative data. A panel data for admin SACCO-level indicators over 2011-2017 was used to assess the impact on the SACCO-level indicators. The household-level analysis depends on a cross-sectional household data encompasses 1,578 horticulture farmers, including 358 farmers with selected business ideas and 1,220 farmers with rejected ones. Some Key Informant Interviews (KIIs) with BDF’ management and randomly selected SACCOs were also used.

Data Already Collected?

Yes

Data Previously Used?

Yes

Data Access:

Restricted -- Access requires a formal approval process

Data Obtained by the Study Researchers?

Data Approval Process:

The author is thankful for the permission from the IFAD's Research and Impact Assessment Division (RIA) to use the PRICE impact evaluation data in this paper. The household-level data was used in the IFAD impact assessment report of the PRICE project on which I was a co-author, whereas the SACCO-level data was collected by the author and not used in the report. The evaluation of the business proposal endorsement, especially on the SACCO-level, was not assessed - the focus of this paper.

Approval Status:

Yes-obtained approval and have received the data

Treatment Assignment Data

Participation or Assignment Information:

No

Description:

On the SACCO-level, I will use some additional data from the NAEB/PRICE staff who implemented the business proposal endorsement process in Rwanda. This data includes the number of farmers whom business proposal got endorsed by region (Sector). However, the household-data contains information on the treatment assignment.

Change History for Description

Changed On	Previous Value
10/08/2019	On the SACCO-level, I will use some additional data from the NAEB/PRICE staff who implemented the business proposal endorsement process in Rwanda. This data includes the number of farmers whom business proposal got endorsed by region (Sector). However, the outcomes household-data contains information on the treatment assignment.

Data Obtained by the Study Researchers?

Yes

Data Previously Used?

Yes

Data Access:

Restricted -- Access requires a formal approval process

Data Obtained by the Study Researchers?

Data Approval Process:

During my work period for the International Fund for Agricultural Development (IFAD) over April 2017-December 2018, I obtained this data from the NAEB/PRICE Project Implementation Unit- through five missions to Rwanda.

Approval Status:

Yes-obtained approval and have received the data

Data Analysis

Data Analysis Status:

Yes

Study Materials

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Registration Category

Registration Category:

Non-Prospective, Category 4: Data for measuring impacts have been obtained/collected by the research team and analysis for this evaluation has started

Completion

Completion Overview

Intervention Completion Date:

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Unit of Analysis:

Clusters in Final Sample:

Total Observations in Final Sample:

Size of Treatment, Control, or Comparison Subsamples:

Findings

Preliminary Report:

Preliminary Report URL:

Summary of Findings:

Paper:

Paper Summary:

Paper Citation:

Data Availability

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Other Materials

Survey:

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Description of Changes:

Study Stopped

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