Asset Transfers and Anti-Poverty Programs: Experimental Evidence from Tanzania

We use a set of randomized experiments to examine the impact of a group business development program implemented by the Tanzanian government, along with a set of complementary training and cash transfer interventions targeted to vulnerable households in rural areas. In contrast with much of the recent literature, we find little effect of the business development program. While most enterprises remain operative three years after formation, even our highest estimates of effective wage rates suggest returns roughly equivalent to the opportunity cost of time for these households. Trainings on business skills and group transparency did not improve outcomes, although they appear to have exerted a redistributive effect from group elites to rank and file members. Unconditional and unanticipated lump-sum cash transfers to randomly selected members of these groups induce all members to invest more in the enterprise, with seemingly little to no return on these marginal investments. Our results emphasize the importance of profitability as the key motivation for asset transfer-based social protection programs.