About This Project

Lack of guidance and support to female micro-entrepreneurs can lead to poor business performance and underutilization of microfinance loans. This experiment proposes weekly, individualized mentoring sessions among female micro-entrepreneurs to promote sustainable profits, higher aspirations, and female empowerment. The results will present the validity of mentoring as a pathway out of poverty for impoverished female micro-entrepreneurs.

Ask the Scientists

What is the context of this research?

This research aims to test the external validity of a study conducted in Kenya, where results showed that mentored micro-entrepreneurs gained 20% more in profits relative to a control group and a business class treatment arm (Brooks et al., 2017). They contribute the success of the experiment to social learning, where local knowledge is exchanged through observation of successful individuals (Foster & Rosenzweig, 1994). The experimental design will be replicated within the Latin American context where self-employment is 36.8% (World Bank, 2017). The team's decision to focus on women micro-entrepreneurs was driven by the 81% of the poorest micro-borrowers being female and 42% of all small firms in Latin America owned by women (Daley-Harris, 2007, World Bank, 2011).

What is the significance of this project?

Adding a mentorship component to micro-financing will create further benefits for micro-entrepreneurs since mentorship meetings have shown to significantly impact profits, sales, and number of business clients (Cai & Szeidl, 2016; Brooks et al., 2017). Moreover, role modeling has shown to significantly change behavior by increasing aspirations (Riley, 2017). The mentorship experiment among micro-borrowers will reaffirm or negate these results, which can guide policy towards supplementary microfinance programs, like mentorship. The project will also shed light on the cost-effectiveness of mentorship versus other supplementary microfinances, such as business courses.

What are the goals of the project?

The goal of this study is to assess the impact of mentorship on sales, profits, and female empowerment among female micro-entrepreneurs in Medellin, Colombia. With the sample of 200 female micro-entrepreneurs, half are randomly assigned to receive an industry specific mentor. Mentoring occurs once a week for 5 weeks, then once a month thereafter. Mentors will coach mentees on business topics using a guided curriculum. At the conclusion of the experiment, meetings may be self-sustained informally. We will identify any increases in profits and female empowerment in the short and long run as a result of mentoring. The data collection will be 4 waves of surveys over the course of one year. The impact analysis will draw policy conclusions for future supplementary micro-finance programs.