@article{13ea8c187b0c4853809244f60ad31e6d,
title = "Do private consultants promote savings and investments in rural Mozambique?",
abstract = "Advice from managementprofessionals can help small- and medium-sized firms reach complex financial goals in low- and middle-income countries. We apply lessons learned in the firm literature to determine the degree in which farmer associations face constraints to management and planning capacity that can be alleviated by the provision of advice from external consultants. In particular, we conducted a randomized control trial in 42 water user associations (WUAs) in Mozambique to examine whether more intensive attention from financial consultants through repeated follow-up visits prompts households to save and invest in agricultural equipment. All WUAs received a financial literacy training and were eligible to receive a matching grant. Twenty-one WUAs were randomized into the treatment group that additionally were visited by private consultants quarterly, who tailored their advice to meet individuals{\textquoteright} own savings and investment objectives. We find the follow-up visits increase {\textquoteleft}hidden savings{\textquoteright} in the form of new capital investments on farmers{\textquoteright} own account. Thus, the visits may have changed savings{\textquoteright} habits by leading farmers to invest in technologies that were not directly subsidized. Our ability to detect an additional effect on the type of investments farmers targeted through the matching grant and, hence, the savings for the respective investments is limited given the power of our study design. Although the proportion of households saving increased, the intervention was likely less cost-effective than other modalities aimed to enhance the proclivity to save.",
author = "Paul Christian and Steven Glover and Florence Kondylis and Valerie Mueller and Matteo Ruzzante and Astrid Zwager",
note = "Funding Information: This draft benefited from comments from Chris Boyd Leon, Adriana Castillo Castillo, and participants of the Department of Agricultural and Consumer Economics Seminar at the University of Illinois at Urbana‐Champaign. We thank the World Bank i2i fund and the World Bank Mozambique Country Office for generous research funding. We thank Eugenio Nhone for excellent field assistance. Finally, we thank Ernst and Young, the National Irrigation Institute (INIR), Pedro Arlindo, Mark Austin, Aniceto Bila, Mark Lundell, Paiva Munguambe, and Antonio Samuel for being valuable research partners. The reproducibility package is available on GitHub. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Funding Information: This draft benefited from comments from Chris Boyd Leon, Adriana Castillo Castillo, and participants of the Department of Agricultural and Consumer Economics Seminar at the University of Illinois at Urbana-Champaign. We thank the World Bank i2i fund and the World Bank Mozambique Country Office for generous research funding. We thank Eugenio Nhone for excellent field assistance. Finally, we thank Ernst and Young, the National Irrigation Institute (INIR), Pedro Arlindo, Mark Austin, Aniceto Bila, Mark Lundell, Paiva Munguambe, and Antonio Samuel for being valuable research partners. The reproducibility package is available on GitHub. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Funding Information: INTRODUCTION Farmers were taught how to calculate profits generated from sales and translate those earnings into tailored savings plans over a time horizon. At the financial literacy trainings, farmers were additionally incentivized in both groups to save by showcasing the agricultural equipment available for purchase through a matching grant program offered by the Ministry of Agriculture. 2 The matching grant program served to relieve the financial barriers to investment. Farmers in all WUAs were eligible to submit a proposal of items they were interested in buying. The government would effectively subsidize 85% of the equipment costs, once the individuals raised 15% of the funds required for the proposal. Given the high matching rate, the gains to successfully meeting the fixed costs are potentially high if farmers can overcome the coordination and planning challenges associated with raising the fixed matching contribution over a long time horizon in a stochastic environment. Individual savings plans were designed to ensure the individual or group proposal objectives were met in order to attain the award. Publisher Copyright: {\textcopyright} 2021 International Association of Agricultural Economists",
year = "2022",
month = jan,
doi = "10.1111/agec.12672",
language = "English (US)",
volume = "53",
pages = "22--36",
journal = "Agricultural Economics (United Kingdom)",
issn = "0169-5150",
publisher = "Wiley-Blackwell Publishing Ltd",
number = "1",
}