Texting to Train Microentrepreneurs: Evidence from a Field Experiment in Kenya

Policy Context

Poor management practices are a major factor constraining small business productivity in LMIC contexts. To address this shortfall, funders spend over USD $1Billion per year to provide business training to entrepreneurs. Most of these are conventional in-person, classroom-style trainings which are expensive, difficult to scale, and exclude those who are unable to travel or take out the requisite time to attend in-person. Due to low costs and scalability, SMS-based trainings are gaining popularity as a potential solution, however, there is limited evidence on whether remotely provided trainings are effective for micro-entrepreneurs in LMICs.

Study Design

Zia studies the demand for and potential of SMS-based business training to improve outcomes for micro-entrepreneurs via a field experiment in Kenya, in which access to an SMS-based training was randomized across 4,700 micro-entrepreneurs. He collected two rounds of phone-based data to estimate the impact of the trainings three and twelve months after the intervention. He further measured demand through Take-It-Or-Leave-It offers and the Becker, Degroot and Marschak (BDM) willingness to pay elicitation method for a subset of the study sample.

Results from the three month follow-up reveal that SMS trainings significantly improved knowledge and adoption of best business practices in the short-run, with younger micro-entrepreneurs seeing stronger positive effects on business performance driven by higher engagement with training content.

CEGA’s funding allowed Zia to travel to Kenya for data collection activities for the twelve month follow-up aimed at estimating longer-run effects of the training, and to estimate willingness to pay for training for a subset of the sample.

Results and Policy Lessons

Forthcoming.