The Impacts of Microfranchising on Young Women in Nairobi

Pamela Jakiela

Integrating young adults into the formal labour market is a major challenge facing developing nations, particularly in Africa. In sub-Saharan Africa, women living in urban areas appear to have the most difficulty finding paid employment. These high levels of unemployment, particularly among young women, have led many policymakers to advocate microfinance and other forms of credit market expansion intended to promote microentrepreneurship. However, empirical evidence on the overall impacts of expanding credit access and providing capital to entrrepeneurs has been decidedly mixed, particularly among women – identifying a business opportunity and developing a business plan may be among the more onerous barriers that a prospective microentrepreneur faces. With this in mind, the researchers conduct a randomized impact evaluation of a recent policy innovation whose efficacy has not yet been convincingly demonstrated: microfranchising. Microfranchising provides motivated individuals with a “business in a box”, a proven business model and the specific capital and business linkages needed to make the business model operational.

This study will evaluate the Girls Empowered by Microfranchise (GEM) Project, which was implemented in six Nairobi neighborhoods in 2013. The evaluation estimates the impact of the microfranchising program on young women’s labour supply, income and expenditures, savings, empowerment and self-actualization, and overall well-being. The randomized design compares the microfranchising program to both a control group which recieves no intervention and a cash grant treatment, roughly equivalent in value to the microfranchise package. This will specifically test the relative impact of the microfranchising “business in a box” package as compared to a “vanilla” capital  transfer which provides young women with the financial resources to launch an income-generating activity without the field-tested business plan, sector-specific training, and supplier linkages.

As the first ever impact evaluation of a randomized microfranchising intervention, the findings of this project will be of substantial interest to policymakers and development professionals considering microfranchising as a viable way to promote entrerpreneurship and business growth. Given the escalating concern over high levels of youth unemployment in Kenya and the need for novel solutions to address this issue, results could be highly valuable to the Kenyan government – in particular its Youth Enterprise Development Fund, whose initiatives include franchise financing.