Conceptual Framework

Taking inspiration from the theoretical models explored above, the conceptual framework employed for the research recognises the importance of defining a clear theory of change that explicitly links development outcomes with MSME financing policy objectives, systemic change in the market, and the funder’s intervention. Theory of Change Approach: Researchers have been attempting to find evaluation strategies and methodologies that correspond well to the goals and designs of MSME finance policies and initiatives. Such strategies are expected to meet both the need to estimate these initiatives' effects on interim and longer-term outcomes and the need for information on how the interventions produce those outcomes.

A theory of change approach can sharpen the planning and implementation of an initiative as it has the ability to facilitate the measurement and data collection elements of the evaluation process. Weiss (1995) simply defines a theory of change as “a theory of how and why an initiative works”. In applying this to evaluation of

programmes therefore, a theory of change approach is “a systematic and cumulative study of the links between activities, outcomes, and contexts” of an initiative. By articulating a theory of change from the beginning of the evaluation process and gaining agreement on it by all stakeholders, some of the problems that may be associated with causal attribution of impact can be reduced.

It is argued that stakeholders of complex community interventions may find the nature of the change process unclear and therefore unmindful of the early and midterm changes that are required to reach a longer term goal. The theory of change in its application to evaluation is therefore a form of critical theory that ensures the inclusiveness of many perspectives and participants in achieving solutions, rather than being a mere research methodology.

White (2009) identifies the following six principles to successful application of a theory-based approach to impact evaluation: “1) map out the causal chain (programme theory); 2) understand context; 3) anticipate heterogeneity; 4) rigorous evaluation of impact using a credible counterfactual; 5) rigorous factual analysis; 6) use mixed methods”.

An element of the theory of change is the programme theory which explains the way in which an intervention’s (a project, a programme, a policy, a strategy) contribution to the results chain which produce the intended or actual impacts is understood.

can provide a conceptual framework for monitoring, evaluation, or for an integrated monitoring and evaluation framework. A programme theory can also be a very useful means of collating existing evidence about a programme, and clarifying areas of agreement and disagreement about perceptions on the way the programme is working, and where gaps exist in the evidence.

There are three main elements to a conceptual framework:

▪ a model of the impact chain that the study is to examine,

▪ the specification of the unit(s), or levels, at which impacts are assessed, and

▪ the specification of the types of impact that are to be assessed.

In terms of process, the different steps in the conceptual framework have been systematically outlined by OECD in what has been termed Standard Results Measurement.

Standard for Results Measurement: The Standard for Results Measurement (DCED 2014) is designed by OECD as a process standard widely used by market development programs in a variety of industries. Standard for Results Measurement (DCED 2014) comprising of eight elements can be adjusted for different programmes to define relevant indicators for the type of changes sought in the market and to assess plausible influence of the program on the market. DCED Standard steps at a glance is as follows:

1. “Articulating the Results Chain 2. Defining indicators of change 3. Measuring changes in indicators

4. Estimating attributable changes

5. Capturing wider changes in the system or market 6. Tracking programme costs

7. Reporting results

8. Managing the system for results measurement”

Steps 1 and 2 can be articulated at this stage of the thesis while the other steps will be discussed under the methodology chapter.

Articulating the results chain: The results chain is the beginning of assessing attribution. By assessing what changes are expected at each level, the study can build up a plausible story of attribution of the programme intervention being studied. The diagram below depicts the programme logic/results chain associated with the theory of change of Microloan Scheme of Bank of Agriculture.

Figure 3.1: Results chain for the Evaluation of MSME Finance Policy Programme group Intervention Input

Microloans Firms invest moreOutputs _Employment

Increases and enhances LED Outcome

Turnover and /profits increase

Identical enterprises in the same rural area

Control group No programme intervention No change in productivity No change in turnover Impact No change in Employment

High

Opportunities

Low High

Capabilities Figure 3. 2: Typology of MSE Growth Profiles Source: Nitcher and Goldmark (2005)

Defining Indicators of change: In the context of young firms, it is assumed that significant increase in employment is an indication of noticeable demand for the firm’s products or services. Preference for growth in employment is therefore viewed as a good indicator of the firm’s healthy growth. Most traditional approaches to results measurement overlook the wider changes in the market –

although this is where the best impacts and scale are often to be found. The DCED Standard consequently encourages programmes to attempt to capture these wider changes so that they do not under-report their performances.

It is assumed that financial inclusion can enhance job creation and in turn inclusive growth. In other words, job creation can be achieved if MSMEs, especially those that have the capacity for productivity have access to finance. However only a small proportion of microfinance borrowers are seen to develop into “transformational

“Ponies”

Lack Capabilities to Harness Existing

Opportunities

“Gazelles”

Fast Growth Enabled by Opportunities and Capabilities “Tortoises” Lack Opportunities and Capabilities “Caterpillars” Lack Opportunities to Apply Existing Capabilities

subsistence level. Nitchter and Goldmark (2005) suggest that gazelles (small and growing businesses) as depicted in the blue section of Figure 3.2 are likely to experience high growth as enabled by their access to opportunities and capabilities.