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Nigeria's Free Money Business Boost

38:38 recording · EN · 8 speakers

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Brief overview

Giving Nigerian entrepreneurs cash grants and testing aid with randomized trials in Kenya both proved remarkably effective.

  1. Cash grants beat loans where credit is brokenNigerian banks could not judge one-person firms, so You Win gave grants instead, and the winners created 7,000 jobs at $8,500 each.
  2. Randomness bought both fairness and evidencePicking many winners at random defused fears of connections deciding the money, and let the World Bank evaluate the program as a real experiment.
  3. Surprising results redirect millions in aidFree textbooks lifted only the strongest students' scores, pushing governments and aid groups toward remedial education instead.
Executive Summary AI
  • In 2011 Lariat Alhassan ran Lark Lux Paint alone out of her car in Abuja, losing big orders because she had no office to invite clients to.4:55
  • Finance minister Ngozi Okonjo-Iweala, facing 8 million young Nigerians who needed jobs and banks unwilling to lend to one-person firms, decided to simply hand entrepreneurs cash through a nationwide business-plan contest called You Win.7:24
  • World Bank researcher David McKenzie told them to pick many winners at random, which both blunted accusations of favouritism and turned the program into an experiment; 24,000 people applied, 6,000 reached the semifinals, and Lariat won 10 million naira, about $65,000, which she used to hire staff and rent a showroom.10:14
  • The World Bank evaluation found the 1,200 winners created 7,000 lasting jobs for $60 million, roughly $8,500 per job, prompting Chris Blattman to ask whether it was the most effective development program in history.14:19
  • In Busia, Kenya, Michael Kramer's four-year textbook trial across 100 schools raised no average test scores, only those of already-strong students, an unexpected result that redirected aid toward remedial education and made the town a hub of randomized trials, work that later won Kramer, Abhijit Banerjee and Esther Duflo the Nobel Prize.23:41
Key Quote
“I was everything except the security.”
— Lariat Alhassan5:20
Key Quote
“That only people who are connected get a chance and ordinary people will not.”
— Ngozi Okonjo-Iweala9:35
Key Quote
“My job, I work in the research group at the World Bank, and so I typically come in when people have got an idea and they want to know, does it work?”
— David McKenzie10:05