Economic Inclusion in Chad: A Cost-Effective Path to Poverty Reduction

A low-cost economic inclusion program in Chad, studied by the World Bank, significantly improved food consumption, income generation, and women’s empowerment while also creating positive spillover effects in local communities. The intervention proved highly cost-effective, offering a scalable model for poverty reduction in low-income settings.

The World Bank's Development Impact Group and the Social Protection and Labor Global Department conducted a landmark study in Chad to evaluate the effects of a low-cost multifaceted economic inclusion program. Led by researchers Patrick Premand and Pascale Schnitzer, this randomized controlled trial (RCT) sought to assess both the direct and indirect impacts of the intervention, which targeted poor female beneficiaries already receiving government cash transfers. Unlike traditional economic inclusion programs that require substantial financial investments, this model was designed to be a cost-effective solution at just $104 per household. The study aimed to determine whether such a streamlined intervention could significantly improve livelihoods while also benefiting the wider community.

Empowering Women Through Economic Inclusion

The intervention combined three key components: group savings promotion, micro-entrepreneurship training, and a lump-sum cash grant. These elements were designed to help poor women overcome financial and skill-related barriers, enabling them to enhance their productivity and economic participation. Implemented in 57 villages, the program targeted selected cash transfer recipients, while 31 villages served as a control group. Within the treatment villages, a subset of beneficiaries was randomly chosen to receive the additional economic inclusion measures. This unique setup allowed researchers to evaluate not just the direct impact on program participants but also the potential spillover effects on non-beneficiaries living in the same communities.

Eighteen months after the intervention, the study revealed that participant households experienced a 13% increase in food consumption. Economic activity also shifted, with women reallocating labor and generating higher revenues from agriculture and off-farm micro-enterprises. Many women expanded their businesses and became financially more stable, partly due to increased participation in savings groups. Importantly, their role within households also strengthened, as they gained greater control over financial decisions and household expenditures. The intervention also contributed to broader social well-being, with participants reporting better financial support networks and an enhanced sense of respect and inclusion within their communities.

The Ripple Effect: Economic Benefits for the Entire Community

One of the most striking findings of the study was the positive spillover effects on non-participant households within targeted villages. Even those who were not directly enrolled in the economic inclusion program benefited from improved food consumption and increased participation in economic activities. This suggests that the intervention did more than just uplift individual households—it stimulated local economic activity and financial sharing mechanisms.

The study identified multiple pathways through which these spillovers occurred. First, the program strengthened community-based savings groups, creating new financial support systems that extended beyond direct beneficiaries. Second, the lump-sum grants injected liquidity into local economies, increasing demand for goods and services, which, in turn, helped non-beneficiaries earn higher incomes. Finally, improved business activities and labor reallocation among program participants created new opportunities within local labor markets. By enhancing access to capital, promoting entrepreneurial skills, and fostering financial sharing, the intervention generated benefits that reached far beyond the immediate recipients.

A High-Impact, Low-Cost Model for Economic Growth

From a cost-effectiveness standpoint, the intervention demonstrated remarkable efficiency. Traditional graduation programs can cost between $1,500 and $6,000 per household in purchasing power parity (PPP) terms, making them difficult to scale in low-income countries. In contrast, this streamlined program in Chad costs only $104 per household while still yielding substantial improvements in economic well-being.

When considering direct economic gains alone, the intervention was cost-effective under reasonable assumptions, particularly if benefits lasted beyond the initial 18-month evaluation period. However, once the spillover effects were factored in, the program became cost-effective immediately—without requiring any assumption of sustained long-term impact. This makes the Chad model an attractive option for policymakers looking to implement economic inclusion initiatives on a larger scale while working within budget constraints.

Policy Implications and the Future of Social Protection

The findings of this study contribute to a growing body of evidence supporting economic inclusion as a critical component of social protection programs, especially in fragile states like Chad. Traditionally, cash transfer programs focus solely on providing financial assistance without addressing long-term economic sustainability. This study shows that integrating even simple, low-cost economic measures can significantly enhance outcomes.

Additionally, the research challenges concerns that targeted social interventions might create divisions within communities. Instead, it demonstrates that such programs can produce widespread benefits, even for those not directly enrolled. This has important implications for governments and international organizations seeking to optimize social protection strategies in resource-constrained settings.

However, while the intervention improved economic outcomes and social well-being, its impact on psychological health was limited. Unlike similar programs in Niger, which included psychosocial support, this intervention did not significantly enhance mental health or self-efficacy. This suggests that while financial and business support is crucial, additional measures such as coaching or counseling may be needed to boost psychological resilience and long-term well-being.

Overall, the Chad pilot program provides a compelling case for integrating low-cost economic inclusion initiatives into existing social protection frameworks. By proving that a relatively simple and affordable intervention can drive economic growth, increase women’s empowerment, and generate positive spillovers, the study offers valuable insights for policymakers worldwide. As governments and development agencies continue to seek effective poverty reduction strategies, this model stands out as a promising, scalable solution for improving livelihoods in some of the world’s most vulnerable communities.