Supporting Micro-enterprise in Humanitarian Programming: Impact evaluation of business grants vs. unconditional cash transfer

Humanitarian programming in fragile economies often use unconditional cash transfers (UCT) to offset food-insecurity. However, there is an increasing focus on using cash transfers to boost household incomes beyond the short-term through micro-enterprise start-up and growth. This paper conducts a randomized control trial to measure the impact of three different sizes of business grants against UCT in Somalia. We find that giving the same amount of money as a lump-sum business grant results in higher likelihood of business ownership and income compared to UCT in the short run (3-4 months after the transfers). However, the impacts are larger and persist 3 years later only for those who received larger amount of grants. The results indicate our ‘medium’ sized grant being more cost-effective.