# **1. Introduction**

A large fraction of individuals in low-income countries are self-employed, working in smallscale and low-productivity activities. This is particularly true for people living in Sub-Saharan Africa and women. Business training is often cited as a critical intervention to increase the productivity of these enterprises and contribute to national development.

To measure the effects of such interventions, it is important to distinguish between three possible levels of change: increase in knowledge, actual adoption of practices, and improvements in business outcomes. A comprehensive review of these experiments concludes that while most of the programs evaluated successfully promoted the adoption of new business practices, there is very little evidence that they can affect the business revenues and profits of their average participant (McKenzie and Woodruff 2013).

These findings lead to three possible conclusions: 1) skills are not the binding constraint to firm growth, 2) the current curricula focus on the wrong types of skills, and/or 3) training is targeting the wrong entrepreneurs. This study provides some evidence that business training can help and hurt different entrepreneurs and hence better targeting will improve the effectiveness of these programs. Using a randomized control trial, we assess the relative impact of two versions of MKUBWA,<sup>1</sup> a business training program which targeted female entrepreneurs with established activities in urban Tanzania. These entrepreneurs operate in sectors that the training provider had identified as having significant growth potential based on a market study. In the basic version of the training, the program relied on in-class sessions to strengthen the managerial and technical skills of the participants. In the enhanced version, training was supplemented by individual visits from business coaches to the site of participants’ activities, as well as other services tailored to their individual needs. The coaches who conducted these visits addressed both the managerial and the technical aspects of the businesses, and the visits took place in the months following the in-class sessions. Participants were randomly assigned to the enhanced training, the basic training, or a control group.

In our study of MKUBWA, we measure the impact of the program one year after the end of the in-class group sessions, about two years after the start of the whole program. We find that the basic training had no impact on either the business practices or business outcomes of its participants. This result is in line with what Berge et al. (2014) found for female entrepreneurs. The participants in the enhanced training on the other hand do adopt new business practices. Even for this enhanced training, however, we do not observe any significant effect on the revenues and profits for the _average_ participant. Exploring the idea further that different individuals may require different training, we test for heterogeneous effects and find that the enhanced program has a positive and significant impact on the entrepreneurs who had engaged in

> 1 Acronym for “Program to grow entrepreneurship and women entrepreneurs”, but meaning also ‘big’, ‘large’, ‘great’ in Kiswahili.

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