Lessons Learned from Innovations in Youth Microfranchising

On September 10, an incredibly honest and substantive breakout session on empowering adolescent girls through microfranchising was led by Barri Shorey of the International Rescue Committee (IRC) and Owen Ozier from the World Bank and Innovations for Poverty Action (IPA) during Day One of Making Cents’ 2013 Global Youth Economic Opportunities Conference in Washington, DC. The topic of the presentation focused on a project being implemented by IRC and partners, which uses an innovative project design to both support the local private sector through franchising model development and build young women’s capacity as empowered owners of microfranchise businesses. The project also includes an impact evaluation, led Innovations for Poverty Action (IPA), The World Bank and Population Council. The presentation and discussion covered in detail both the challenges the organizations confronted during program implementation as well as the vast number of lessons learned related to working with youth in urban areas, relationships with local businesses, the gap between expectations in project design and the realities of project implementation, and the integration of a rigorous research agenda with program logistics.

The Girls Empowered by Microfranchising (GEM) grew out of a small pilot project in Sierra Leone called YouthWORKS in which IRC sought to provide self-employment opportunities for 100 youth (ages 15-24) by facilitating franchise business relationships with existing companies that had products or services that could be distributed and sold independently by the youth. The microfranchising model was meant to be an answer to the inability of this segment of the population to reap any benefits from a microcredit program. A project evaluation was conducted, and while noting a number of challenges, the 2010 report concluded that the model was promising. At the end of 2009, 83 percent of the businesses being run by the youth were making a profit. The work sparked the interest of the Nike Foundation, who eventually provided funding for what became the GEM project, a similar program that focuses on adolescent girls—one of their prime markets—as part of The Girl Effect initiative.

The GEM project team and its donors were committed to pinpointing what aspects of the microfranchising model, such as had been previously tested in Sierra Leone, would work with young girls in Nairobi, Kenya. Researchers from IPA, The World Bank and Population Council all expressed interest in conducting rigorous evaluations alongside the project and shortly after the beginning of the project a research agenda was identified and designed. Overall, the GEM project provides girls aged 16-19 with a package of support that includes: basic life skills training and business training conducted by local partners; franchise-specific training conducted by the local businesses that agreed to operate, or were already operating, a franchise model; mentoring; and IRC's startup support of business related assets and initial stock supply. capital. The World Bank, Population Council, and IPA worked together to establish a baseline and then using an RCT evaluation design, planned to conducted a midline and endline evaluation of Year One. Through a randomized selection of applicants, 244 girls composed the treatment group while 100 girls composed the control group. Ozier stated that the research was meant to answer two questions:

• Measuring "process outcomes" – do participants actually go through the program as they intended?
• Measuring "economic outcomes" – are participants working, earning, spending, and saving more, and are they more food secure?

Shorey and Ozier explained how the program was set up, provided an in-depth look at their initial findings from monitoring data, openly discussed the numerous challenges they encountered, and shared their plans for adapting the program design in Year Two to both reach project outcomes as well as be better placed to find impact level data.

Some of the most significant challenges the team faced in Year One included:

• Retention there was attrition of close to 50% for the first year of the program from girls who started training to girls who ended up starting businesses
• Applications were collected all at once and training groups held overtime this contributed to significant challenges in finding the girls that applied in the beginning of the program)
• Given the retention issues finding control and treatment girls from Year One was difficult not allowing for any significant impact data findings for Year One
• Because the impact evaluation was designed at the outset of the program and not hand in hand, Research partners did not initially establish a relationship with the local implementing partners who were the keepers of the data, so access to the information was initially very challenging
• Tracking in an urban area was really difficult due to high mobility among youth, especially girls within this particular age group
• One of the local businesses tracking profits for their franchised product came away with barely breaking even, the product wasn’t particularly marketable in the new areas it was targeting and therefore IRC and the business decided not to offer additional franchise opportunities for that business

Changes in the local market that affected the new franchises were unpredictable. While initial findings from regular monitoring data are promising in terms of the direct benefit to girls who succeeded in starting their own business:

• 550 girls completed training in business and life skills
• 60 microfranchise businesses launched and still in operation
• US$24 average increase in income per month for girls in business
• 90 percent of those in business have already diversified
• 80 percent of those in business engaged in some form of savings

Shorey and Ozier were clear to caveat that monitoring data can only tell us so much. Having a comparison group made up of similar girls will help identify the actual effects of a program versus those that might actually be happening to all girls not just those in the program. Unfortunately Year One did not allow a large enough sample to be able to tell anything conclusively, both presenters stated that the learning generated, both for the project team as well as the local businesses, was priceless. Both were optimistic about how all of their lessons learned could inform implementation in Year Two. Some of the biggest lessons included:

• Largest attrition was among youngest age cohort, which may indicate that a microfranchise model may not be an appropriate intervention for them
• Distribution and systems for sustainability are key to success – working these out with private sector partners takes time and trial and error
• Private sector investment and ownership is essential
• Buy-in from the local partners and their understanding of the program stages was critical
• The original concept of a "buddy" system (where the lead girl of a franchise was obligated to bring on at least two more girls as employees) was hard to actually implement
• Need to account for the fact that while the businesses remain, the makeup of girls within the business may change

Entering into Year Two, the project team plans to adopt a new treatment arm in the form of cash transfers. Additionally the team would like to test whether "flooding the market" with new franchises has effects, either positive or negative, on local business community. The data collection methods are now more streamlined (including application roll out and not all at once), and while one business had to drop out of the program, it plans to expand its training program for adolescent girls in rural areas as a result of their experience. The other two businesses are making a profit and are enthusiastic about the project’s continuation. The GEM team is looking forward to sharing impact-level data from the project by the end of 2014, as well as expand its reach of microfranchising for girls and boys in Kenya, engaging new businesses and new beneficiaries.