Economic Empowerment

Note to reader: This information is from a previous round of research. While some of it may need to be updated, the majority of it is still accurate

Interventions aimed at economic empowerment include agricultural development (such as improving transport, improving irrigation, agricultural education, and distributing seeds, tools or livestock), and financial support (such as microfinance).

We don't yet have enough information to accurately assess and compare the cost-effectiveness of charities which focus on this area, but we can point out some of the issues that others have raised.

Agricultural development has received an unfavourable assessment from GiveWell (an organisation dedicated to analysing charity cost-effectiveness).1 Key difficulties besetting agricultural development programs include a lack of local knowledge and a lack of maintenance of the projects.

One relatively new intervention type that has a reputation for cost-effectiveness is microfinance: that is, the provision of financial services able to deal with the very small sums of money relevant to those living in poverty. It includes loans (microcredit), savings (microsavings), and insurance (microinsurance), though to date most microfinance has focused on microcredit. Because most of the loans are repaid and potentially spark economic growth, it is plausible that microfinance is highly cost-effective. As well as encouraging growth of businesses, it can help to smooth the financial volatility of very poor households. Microfinance was ranked as the 22nd highest global priority by the Copenhagen Consensus.2

There are some other considerations which mitigate this optimism, however. One difficulty is to ascertain whether microlending provides absolute, rather than merely positional, goods: that is, whether those who receive the loans are benefitted at the expense of others who do not receive the loans. Another is that the anecdotal reports of people who use to loans to start flourishing businesses may not be representative of typical loans.3

Overall, we are unable to accurately estimate the cost-effectiveness of microfinance.

For a more detailed analysis of an intervention-type, see our pages on health.