n.V1-7.03 | ONE-OFF CAPITAL GRANTS

01| A different instrument to the previous chapter, though it is often filed with it. A one-off capital grant is not income support. It is a lump given once, usually with the expectation that the recipient buys tools, stock or training and converts it into a livelihood. The theory is that the poor are not short of ability or willingness but of the one thing credit markets will not lend them: starting capital.

02| Uganda's Youth Opportunities Program is the best-documented test of it, and the only one followed long enough to be worth an argument. Groups of young people submitted proposals; successful groups received roughly $400 a head in 2008 to pay for vocational training and tools. At four years, the results were the kind that get a programme scaled: 17 percent more work, 38 percent higher earnings.

03| At nine years, they were gone.

"we find these gains have dissipated. Grantees' investment leveled off; controls eventually increased their incomes through business and casual labor; and so both groups converged in employment, earnings, and consumption levels."— Blattman, Fiala & Martinez (The Long-Term Impacts of Grants on Poverty: Nine-Year Evidence from Uganda's Youth Opportunities Program, AER: Insights, 2020, Vol. 2, No. 3, pp. 287–304)

04| The instinct on reading that is to call the programme a failure, and the instinct is wrong in a way worth being precise about. The grantees did not lose what they had gained. Their investment stopped growing, and the control group — with no grant, no training and no tools — arrived at the same place five years later under its own power. Durable assets persisted. Skilled work persisted. What did not persist was the gap, and the gap is what an evaluation measures.

05| This matters because it changes the question. "Why did the effect decay?" assumes something eroded. The correct question is "why did the untreated catch up?" — and the answer, in that setting, appears to be that the barrier to entering small business and casual trade was lower than the programme's theory assumed. If the constraint had truly been access to capital, the control group could not have closed the gap without capital. It did.

06| The counter-case is the Bangladeshi asset transfer, tracked over eleven years across 6,000 households in extreme poverty, where persistence was real and conditional:

"we identify a threshold level of initial assets above which households accumulate assets, take on better occupations (from casual labor in agriculture or domestic services to running small livestock businesses) and grow out of poverty. The reverse happens for those below the threshold."— Balboni, Bandiera, Burgess, Ghatak & Heil (Why Do People Stay Poor?, Quarterly Journal of Economics, 2022, Vol. 137, No. 2, pp. 785–844)

07| Read the two studies against each other and a rule emerges that is more useful than either alone. A grant compounds when it is large enough to move a household into a different occupation, and dissipates when it is not. $400 for tools and training did not change what the recipients did for a living; it let them do the same thing sooner and slightly better. A transfer that shifts a household from casual agricultural labour to running livestock changes the category of work, and the new category keeps paying.

08| The uncomfortable implication for programme design is that the threshold is a property of the local economy, not of the grant. It cannot be read off a budget line. It varies with what occupations exist locally, what they cost to enter, and how crowded they already are — none of which the funder knows, and all of which the recipient does.

09| Two things remain unestablished and both are load-bearing. First, what sets the threshold: an asset level, a skill level, a market-access level, or all three interacting. Second, whether the threshold logic applies at all outside physical capital. If crossing a capability threshold, or a network-position threshold, produces the same self-sustaining accumulation, then persistence becomes a design target you can aim at. If the logic is specific to livestock and stock-in-trade, then most of what the sector calls capacity-building has no persistence mechanism available to it, and nobody has said so out loud.