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A Framework for Assessing the Poverty Impact of Small Enterprise Initiatives, Nexus/Donor Committee, 2003
Implementing agency(ies)Donor Committee for Enterprise Development, Nexus Associates, Inc.
Date completedSeptember 2003
Issues/challengesWith reference to the first goal, members of the United Nations expressed their commitment to halving the proportion of people living in households with income per person of less than US$1 per day by 2015. Member states recognized that a strong and vibrant private sector is critical to the achievement of goal. Private businesses, particularly small enterprises (SEs), account for a significant share of the overall economy in developing countries. Further development of small enterprises is seen as an important vehicle for providing opportunities for gainful employment for the world's poor.

Significantly, the UN Millennium Declaration highlighted the importance of measurable results. In this vein, donor agencies are now being asked by governments and other stakeholders to demonstrate whether SE initiatives have actually achieved intended outcomes, particularly with respect to the eradication of extreme poverty. Given the obligation to show results, the Committee of Donor Agencies for Small Enterprise Development (Donor Committee) would like to develop a better understanding of how to conceptualize and measure the impact of small enterprise initiatives in terms of poverty reduction.
This paper is intended to help meet this need. It provides a conceptual framework for measuring the poverty impacts of small enterprise programs, particularly those that focus on business development services (BDS), and presents specific methods that can be used in such evaluations.

Following this introduction, Section 2 discusses the logic underlying BDS programs, including the causal mechanisms that link program activities to poverty reduction. Section 3 focuses on specific methods that organizations can use to assess the poverty impacts of BDS programs. After presenting specific indicators of poverty, the section outlines the steps required to use five different methods to assess poverty impacts using a hypothetical BDS program as an example. This section also includes a discussion of potential sources of household income and consumption data.

The paper concludes with recommendations that donors should consider in conducting impact studies in the future.

Associated documents
»Assessing the Poverty Impact of Small Enterprise Initiatives, Nexus, 2003 (280 kB)
»Evaluer limpact des initiatives d'appui a la petite entreprise sur la reduction de la pauvrete (39 kB)

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Last update: 1 February 2011