Randomizing information about receiving incentives in household surveys

Rural financial services have been touted as a catalytic intervention that can enable farmer organizations and agricultural small-to-medium enterprises (SMEs) to increase production and marketing of agricultural commodities, with the ultimate aim of increasing incomes and reducing poverty in rural communities in developing countries. While this appears to be the conventional wisdom, the empirical evidence on the topic shows somewhat varied impacts and is mostly on micro-financial interventions that have targeted rural microfinance groups, such as village savings and loans groups. There is limited research that has actually looked at the impact of providing financial services and investment capital to rural commercial entities such as SMEs, producer organizations and cooperatives engaging in agribusiness.

The Smallholder Agriculture Development Project (SADP) is one such project that is being implemented in Lesotho with a major component on provision of financial capital through competitive grants for agribusiness SMEs and producer organizations. 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 towards the completion of project activities. As part of the primary survey data collection, the study administers a randomized control trial (RCT). The intervention as part of the RCT is the information whether the respondent would receive a small token of appreciation for participating in the survey. Within each treatment arm (SADP participants and non-participants), respondent will be randomly assigned whether they would receive this piece of information about the small token of appreciation to take part in the survey from the enumerators. The motivation behind this study is based on existing studies that investigate whether contingent incentives could improve the quality of surveys. This study complements this strand of literature by testing a slightly different but related intervention delivery, and therefore could offer comparisons to what has already been studied.