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Study Overview

Title:
Smallholder Agriculture Development Project (SADP) in Lesotho
Study is 3ie funded:
No
Study ID:
RIDIE-STUDY-ID-5de0b801a5144
Initial Registration Date:
11/29/2019
Last Update Date:
11/25/2019
Study Status:
Ongoing
Location(s):
Lesotho
Abstract:

The Smallholder Agriculture Development Project (SADP) provides financial capital through competitive grants for agribusiness SMEs and producer organizations in Lesotho. This is combined with technical support for the development of business proposals through professional service providers. SADP has the overall objective of increasing marketed output among project beneficiaries in Lesotho’s smallholder agriculture sector and is co-financed by the World Bank and the International Fund for Agricultural Development (IFAD), together with contributions from the Government of Lesotho and beneficiary contributions. The project entered into force in December 2011 and has a current completion date of March 31, 2020. 

This study evaluates the impact of SADP using an ex-post impact evaluation framework. The impact assessment of SADP aims to address the following main research questions:

1. Does SADP increase demand for and access to financial services for the beneficiary SMEs and POs?  Does SADP increase investments, production, sales, and profits at the agribusiness enterprise (SME and PO) level?

2. Does o the SADP grant intervention increase the enterprise, agricultural, and total household income of beneficiary smallholder farmers (households) who engaged in the value chains supported by SADP?

3.  Do the service providers influence the probability of obtaining a grant from SADP? What are the characteristics and qualifications of the service providers and do these influence the success or impacts of the SADP grants on the agribusiness enterprise (SMEs/POs) performance as measured by production, sales, and gross profits?

Categories:
Agriculture and Rural Development
Finance
Private Sector Development
Additional Keywords:
Matching grants, horticulture, Lesotho
Secondary ID Number(s):

Principal Investigator(s)

Name of First PI:
Athur Mabiso
Affiliation:
International Fund for Agricultural Development (IFAD)
Name of Second PI:
Tisorn Songsermsawas; Marup Hossain; Hugues Robinson Toguem
Affiliation:
International Fund for Agricultural Development (IFAD)

Study Sponsor

Name:
International Fund for Agricultural Fund (IFAD)
Study Sponsor Location:
Italy

Research Partner

Name of Partner Institution:
NA
Type of Organization:
Other
Location:
Italy
Intervention

Intervention Overview

Intervention:

At the onset of the program, a call for proposals is made by the project. Recognizing the limited management capacity of most businesses, the applicants are required to partner with a service provider who provides technical assistance, business and management advice, support for business proposal development and market identification, and help with drafting the application and reports. Applicants have to prepare and submit technical agribusiness proposals, with the help of the services provider and must demonstrate co-financing of at least 40% of the total investment costs, implying that the grants are effectively matching grants worth 60% of the total investment. Following submission of the agribusiness proposals, a competitive selection process ensues, whereby the business proposals are first screened for compliance with the procedures of the call then reviewed for technical content. After the evaluation and recommendations by the Committee, the project arranges a field visit to verify the facilities and resources mentioned in the application. The applications found to be compliant during the field verification will be submitted to the Project Manager for approval, while the non-compliant applications will be rejected.

Theory of Change:

SMEs and producer organizations operating in the agriculture sector, like any other business entity, require capital for investment and operations. This capital is often not easy access, particularly for small business entities operating in agriculture, a sector often deemed too risky by financial service providers such as commercial banks and micro-financial institutions. The challenge of accessing financial capital for investment in an agribusiness in developing countries such as Lesotho is further exacerbated by the capacity constraints of the business people that run these agribusinesses. For one, they often lack the ability to develop bankable business and financial proposals. They also often do not have adequate experience and capabilities for managing financial resources in a prudent manner, thus condemning them riskier than the typical large business in the economy. 

Agricultural development plan can stimulate innovative business activities of companies or farmer organizations through competitive grant matching and provision of extension services and other infrastructural investments. Grant matching scheme can relax credit constraint of entrepreneurs, especially for start-ups and innovation. At the least, it reduces risks for other financial institutions in financing the business activities of such entrepreneurs. Grant matching can also induce entrepreneurs to take risk-efficient investment decisions by increasing the expected return by lowering the price of investment. As the intervention is often given at the organization level, economic or organizational performances of the group or business are short-term outcomes of this type of intervention followed by household-level outcomes in the medium and longer terms. 

Multiple Treatment Arms Evaluated?
No

Implementing Agency

Name of Organization:
Government of Lesotho
Type of Organization:
Public Sector, e.g. Government Agency or Ministry

Program Funder

Name of Organization:
Government of Lesotho; World Bank; International Fund for Agricultural Development;GEF Least Developed Countries Fund
Type of Organization:
Public Sector, e.g. Government Agency or Ministry

Intervention Timing

Intervention or Program Started at time of Registration?
Yes
Start Date:
01/01/2012
End Date:
12/31/2020
Evaluation Method

Evaluation Method Overview

Primary (or First) Evaluation Method:
Regression discontinuity
Other (not Listed) Method:
Additional Evaluation Method (If Any):
Matching
Other (not Listed) Method:

Method Details

Details of Evaluation Approach:

Grants are allocated if the evaluation score of a business plan exceeds 70. So, there will be a discontinuity in the probability of program participation at the score 70, which would allow us to use the regression discontinuity design (RDD) to evaluate the impact of the CGP program on various outcome variables.  While RDD estimates a local average treatment effect, we are also interested to estimate the average treatment effect considering all the observations available, therefore, we will use the propensity score matching (PSM) technique as well to estimate the impact of the CGP program.

Outcomes (Endpoints):

Primary Outcomes:

Input cost, labor employment

Production, Sales, and Income fo horticultural products

Secondary Outcomes:

Total income, asset holding

Unit of Analysis:
Enterprise level; Household level
Hypotheses:

1. Grant increases input expenditure and hired labor employment at the enterprise level

2. Grant increases production, sales, and income of horticultural products at the enterprise level

2. Grant increases asset holdings and total income at the household level

Unit of Intervention or Assignment:
Enterprise
Number of Clusters in Sample:
0
Number of Individuals in Sample:
1333 enterprises (all applicants); we expect to reach to at least 70% of the sample. 2000 sample using a household level survey
Size of Treatment, Control, or Comparison Subsamples:
685 treatment enterprises and 648 control enterprises

Supplementary Files

Analysis Plan:
Other Documents:
Data

Outcomes Data

Description:
Enterprise-level survey: 1340 enterprises from the list of applicants. We expect to survey at least 70% of those enterprises. Household survey: 2,100 households from these enterprises Service provider level survey: 270 service provides from the list of available service providers in the region.
Data Already Collected?
No
Data Previously Used?
Data Access:
Data Obtained by the Study Researchers?
Data Approval Process:
Approval Status:

Treatment Assignment Data

Participation or Assignment Information:
No
Description:
The administrative record of the program on who received grants for the list of applicants
Data Obtained by the Study Researchers?
No
Data Previously Used?
Data Access:
Data Obtained by the Study Researchers?
Data Approval Process:
Approval Status:

Data Analysis

Data Analysis Status:

Study Materials

Upload Study Materials:

Registration Category

Registration Category:
Prospective, Category 1: Data for measuring impacts have not been collected
Completion

Completion Overview

Intervention Completion Date:
Data Collection Completion Date:
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

Data Availability (Primary Data):
Date of Data Availability:
Data URL or Contact:
Access procedure:

Other Materials

Survey:
Survey Instrument Links or Contact:
Program Files:
Program Files Links or Contact:
External Link:
External Link Description:
Description of Changes:

Study Stopped

Date:
Reason: