Experimental Design
The COVID-19 pandemic posed a major threat to the Liberian economy and its people, in particular urban informal non-farming firms, which saw large revenue losses, with the risk of closing due to limited access to formal credit. The World Bank-financed Recovery of Economic Activity for Liberian Informal Sector Employment (REALISE) Project aims to increase access to income earning opportunities for the vulnerable in the informal sector in response to the COVID-19 crisis in Liberia. Under the Project, the Small Business Support (SSB) program targets up to 4,000 households operating Non-Farming Enterprises (NFEs) in urban areas, with a specific focus on Greater Monrovia in Montserrado County. These businesses, typically engaged in the informal sector, often face difficulties in sustaining their economic activities and overcoming the impact of shocks. The SSB program aims to address these challenges by offering grants, training and the piloting of an add-on business connectivity intervention to support existing businesses and establish new businesses.
The program employs a geographical targeting method to select project communities based on factors such as poverty status, access to basic services, population density, living conditions (e.g., slum communities), and proximity to major commercial areas. The selection process utilizes national census data and consultations to identify eligible communities, ensuring an inclusive approach. Overall, the SSB program is implemented in 20 community clusters within the Greater Monrovia area. An on-demand targeting mechanism is then utilized within each community cluster, providing interested individuals the opportunity to participate in the recruitment process. Both community-based and individual-based targeting processes are led by the Liberia Agency for Community Empowerment (LACE), with support from the Ministry of Youth and Sports (MYS), other stakeholders and partners.
Beneficiaries selected for the SSB program gain access to business grants to revive or initiate new businesses. The grants, disbursed through mobile money accounts, are intended for investment in inputs, productive assets, and other essential business expenses. The first tranche of the grant amounts to US$600, and the second tranche, totaling US$300, is disbursed upon justifying the utilization of the initial tranche for business investments. To enhance business management skills and practices of vulnerable households operating NFEs, the SSB program offers comprehensive training. Beneficiaries with existing businesses participate in a 5-day Business Management and Financial Literacy training, while those establishing new businesses undergo a 15-day training program. These sessions are designed to develop effective business plans, improve record-keeping capabilities, promote savings practices, and enhance customer service skills. Moreover, the training curriculum includes personal initiative and growth mind-set sessions, leveraging role models, and cost-effective coaching/mentoring involving peers from the local community. Beneficiaries also benefited from enrollment in the National ID Registry (NIR) and received National Identification Numbers (NIN) and NIR ID cards, which facilitate their registration for Mobile Money accounts. In conclusion, upon successful completion of the subproject activities, beneficiaries will receive a certificate of participation issued by the Liberia Agency for Community Empowerment (LACE).
The focus of this study is the first round of SSB implementation, which focuses on supporting existing businesses, targeting 1,200 beneficiaries from 15 selected community clusters in Greater Monrovia. The targeting process for Round 1 involves identifying one representative from each household to participate in the program. Individuals representing the households must be at least 18 years old and willing to engage in all program activities. They must reside in a participating community and should not be enrolled in any social assistance program similar to the benefits provided by the REALISE project. Furthermore, they, nor a member of their household, must not hold public office or have any form of employment with a monthly income exceeding US$250. In addition, eligibility requires prior experience in operating a small business before March 30, 2021. To promote gender inclusion and ensure female participation, the representative of the household must be female for at least 50 percent of the households selected.
In addition to the grant, a random selection of applicants (beneficiaries or non-beneficiaries) within participating communities takes part in a Business Connectivity Intervention (BCI). The purpose of the BCI is to improve business outcomes by addressing information frictions that small firms face through a low-cost information sharing activity. In particular, BCI takes place at the community level. Randomly selected participants from 8 different (also randomly selected) communities are invited to an in-person meeting at a convenient location within their community where they are split into groups of about 5 members each. Transportation and food expenses are paid for. Each group, under the guidance of a moderator who asks questions and encourages participants to share information, meets for an hour to discuss business challenges. The group continues to meet in the presence of the same moderator once per week over the five following weeks, but this time through a conference call. Discussion topics include sales strategies and business growth amongst others. Finally, participants who attend all the sessions are awarded with an incentive of USD 1 in the form of mobile money.