In 2007 professors Bertil Tungodden and Kjetil Bjorvatn started a research project to study effects of basic business training for microfinance clients from the organization PRIDE in Tanzania.

"We have conducted extensive research during this period, and we are now finishing the report from the first part of the project. An article presenting our main findings is on its way to an international journal," says Kjetil Bjorvatn.

Recently, they received the message that the Research Council of Norway has granted the project 9.7 million NOK over four years. The money comes from the Research Council's funding scheme for independent research projects in the social sciences.

There's fierce competition for these funds. The Research Council received 75 applications, and The NHH researchers and their partners at SNF and CMI are among the six applicants whom have been granted funding.

Gender Gap

"This grant is good news for us, and makes it possible to continue our microfinance project with a long-term perspective," says Bjorvatn.

The starting point for the project in Tanzania was the question whether basic business training for microfinance clients would matter for their degree of success in business.

The researchers developed a course that was offered to a selection of entrepreneurs with microfinance loans from PRIDE.

"We find that education has significant effect when it comes to profits, turnover and the willingness to start more businesses. But the effects only hold for men. Only men implement the knowledge in practice," Bjorvatn reveals.

"The question that immediately arises is why this is the case, and with the funds from the Research Council we can keep working with this and other questions," he adds.

Long-term Effects

The researchers have several hypothesis that they wish to investigate.

"Could it for instance be that women need more time before they start using what they have been taught? The education programme was completed in January 2009, and we measured the effect six months later. A possible explanation for our findings is that the women need more time because they have other duties that come first. In 2011 we will study the long-term effect of the business training to find whether the picture has changed," Bjorvatn explains.

"There are few field studies that measure both short-term and long-term effects. The reason is that this kind of work is expensive, but it is extremely important," he adds.

The practical work in the field is for the most part carried out by master students from NHH in cooperation with research assistants in Tanzania. The work consists of visiting the entrepreneurs and gathering data through questionnaires.

An Engine for Growth?

The long-term effect of basic business training is only one of the questions the researchers are studying.

"Another hypothesis is that women lack the ambition for growth that the male participants have. What if the women don't seek microcredit to become large scale entrepreneurs, but simply to better provide for their family? Could lack of growth ambitions explain why they don't respond to business training? Or are they just as ambitious as the men, but stopped by long established social constraints?"

"Our aim is to gain a more profound understanding of what motivates people to enter into microfinance," says Bjorvatn.

Answering this question might also shed light on the effect of microfinance on economic growth.

"Microcredit clients are primarily women. Can we expect that microfinance can function as an engine for growth in developing countries if the women involved lack ambitions for investment and growth?" asks Bjorvatn.

"If women primarily take these loans to support their family and household, and not from entrepreneurial ambitions, we should probably not overestimate microfinance potential as an engine for growth. But if it is established gender roles that stop their ambitions, we should try to couple business training and strengthening of the women's position," he continues.

"How the latter can be done is an interesting question. One model we have considered is to invite also the spouses of the female entrepreneurs to the courses, and focus on both business and household economics. One hypothesis is that if couples have gone through the training together, it will be easier for the women to implement the knowledge in practice."

Entrepreneur Reality

Yet another question is how one can reach as many people as possible in the cheapest possible way.

The PRIDE-project is based on classroom tuition, but this is an expensive method that reaches few people at a time.

"In an attempt to reach a larger audience we have started collaboration with the Tanzanian NGO Femina, which publishes magazines and has radio and TV-shows. They plan to launch an edutainment programme were they follow six young entrepreneurs."

"It will be a kind of reality-TV concept focusing on entrepreneurship, and if it is possible to reach people through such a channel, it opens new opportunities when it comes to spreading knowledge to many people in a cheap way."

"The aim of the project is to study the effect of the TV-show by giving a group of young people incentives to follow it closely, while another group is given incentives to follow a soap opera or something similar that isn't related to entrepreneurship," Bjorvatn concludes.



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