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Private Sector Development Capacity-Building Project – Matching Grants for SMEs

This concept note proposes a capacity-building project to boost SME competitiveness by providing matching grants, aiming to improve quality and international standards. The evaluation will assess sales and employment impact and evaluate different design options to maximize effectiveness.

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Private Sector Development Capacity-Building Project – Matching Grants for SMEs

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  1. Impact Evaluation Concept Note Ethiopia Private Sector Development Capacity-Building Project – Matching Grants for SMEs

  2. Intervention Summary • Current situation: SMEs are not technically or managerially competitive with international firms • Proposed solution: Assist SMEs by accelerating their capacity such that they increase quality of output to international standards • Intervention is part of a three-component project • Component 3: Ethiopian Competitiveness Facility • Window 4: Matching grants for SMEs engaged in light manufacturing • US$ 5.5 million in matching grants to SMEs with marketable business ideas over 18-month period • Maximum $50,000 per grant, with 25% matching

  3. Evaluation Questions • Does the matching grants for SMEs component lead to an increase in sales and employment? • Sales target: 10% increase • Does targeted promotion of, and support during, the program improve uptake, efficiency of processes, and results?

  4. Evaluation Design • Option 1: Encouragement design (random promotion) • Program to be implemented simultaneously across entire country • No eligible SMEs can be excluded from applying • About 80% of eligible grant applications will be approved • Option 2: Matching with similar SMEs in different countries • How to identify suitable firms? • How to control for confounding factors? Option 1: Encouragement Design

  5. Evaluation Design Promotion of matching grants program for randomly selected eligible SMEs (10-50 employees) • Updated registry of all eligible SMEs with 10-50 employees • Randomly assign firms to treatment and control groups • Start program!

  6. Sampling and Data • Expected take-up by treated firms: 80% • Sample size: 700 firms (350 treatment, 350 control) • Data sources: • Business plans submitted by firms • Dedicated surveys • Customs and Revenue Authority

  7. Timeline • July-August: Intervention design, final IE design, updating of firm registry • September: Additional Financing approved by Ethiopian Government and World Bank (expected) • October: Baseline Survey • Program implementation: November-April 2013 • April 2013: Follow-up Survey • August 2013: Final IE results and feedback into program design for scale-up

  8. Team and staffing • Project Team: TesemaAbebeGirmay, TsigeBekaluAzeze • World Bank: AsyaAklog (TTL), Miriam Bruhn, Marcus Holmlund

  9. Budget • Expected need: US$200,000 (mainly data collection) • Sources: • World Bank trust funds • World Bank Research Support Budget • External sources (?)

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