1. Global Workshop on Development Impact Evaluation in Finance and Private Sector Rio de Janeiro, June 6-10, 2011 Private Sector Development Capacity-Building Project – Matching Grants for SMEs Ethiopia Impact Evaluation Concept Note

2. Intervention Summary  Current situation: SMEs are not technically or managerially competitive with international firms  Proposed solution: Assist SMEs by accelerating their capacity such that they increase quality of output to international standards  Intervention is part of a three-component project  Component 3: Ethiopian Competitiveness Facility  Window 4: Matching grants for SMEs engaged in light manufacturing  US$ 5.5 million in matching grants to SMEs with marketable business ideas over 18-month period  Maximum $50,000 per grant, with 25% matching

3. Evaluation Questions  Does the matching grants for SMEs component lead to an increase in sales and employment?  Sales target: 10% increase  Does targeted promotion of, and support during, the program improve uptake, efficiency of processes, and results?

4. Evaluation Design  Option 1: Encouragement design (random promotion)  Program to be implemented simultaneously across entire country  No eligible SMEs can be excluded from applying  About 80% of eligible grant applications will be approved  Option 2: Matching with similar SMEs in different countries  How to identify suitable firms?  How to control for confounding factors? Option 1: Encouragement Design

5. Evaluation Design Promotion of matching grants program for randomly selected eligible SMEs (10-50 employees)  Updated registry of all eligible SMEs with 10-50 employees  Randomly assign firms to treatment and control groups  Start program!

6. Sampling and Data  Expected take-up by treated firms: 80%  Sample size: 700 firms (350 treatment, 350 control)  Data sources:  Business plans submitted by firms  Dedicated surveys  Customs and Revenue Authority

7. Timeline  July-August: Intervention design, final IE design, updating of firm registry  September: Additional Financing approved by Ethiopian Government and World Bank (expected)  October: Baseline Survey  Program implementation: November-April 2013  April 2013: Follow-up Survey  August 2013: Final IE results and feedback into program design for scale-up

8. Team and staffing  Project Team: Tesema Abebe Girmay, Tsige Bekalu Azeze  World Bank: Asya Aklog (TTL), Miriam Bruhn, Marcus Holmlund

9. Budget  Expected need: US$200,000 (mainly data collection)  Sources:  World Bank trust funds  World Bank Research Support Budget  External sources (?)