Episode 702: Nigeria, You Win! : Planet Money One night, Lariat Alhassan heard an ad on the radio. It said the Nigerian government was offering millions of dollars to people with business ideas, practically no strings attached. She gave it a go.
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Episode 702: Nigeria, You Win!

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Episode 702: Nigeria, You Win!

Episode 702: Nigeria, You Win!

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In 2011, Lariat Alhassan had a paint business in Abuja, Nigeria. She sold house paint. She sold industrial paint. She sold textured paint. She sold paint that fills in the cracks in your wall. The paint company was called Larclux Paint, and it was really, really small.

LARIAT ALHASSAN: The employee I had was just me. I was the production manager. I was the marketer. I was the delivery person. I was the everything (laughter) except the security.

GOLDMARK: That was the whole company - her and a security guard.


And being so small was a problem because customers would try out her paint, and they would say this seems great. I want to place a big order. How about I come down to your office, and we'll sign the papers?

GOLDMARK: Which is where things would get awkward because she didn't have an office.

ALHASSAN: And I kept telling them no, no, no, you call me whenever you want. I will just be there or be there.

GOLDMARK: She just had her car. And when clients would see that, they would say, I'm sorry. And that's when they would back out. She needed the office to keep the clients. But she needed the clients to be able to afford the office. She felt trapped, stuck.

KING: And then one day she was at home listening to a little music.

ALHASSAN: Music has a way of helping me a lot. So I had this little radio in my room then that I would always listen to to help me get over my emotions. It was at my bedside. So I was listening to it, and there was this announcement.

GOLDMARK: This ad comes on, and it was like the radio was talking right to her.

KING: It was an ad for what seemed to be some sort of program to help small businesses grow bigger.


UNIDENTIFIED MAN: It may be small today, but it won't be after YouWiN! the Youth Enterprise and Innovation competition. YouWiN! is a nationwide jobs creation project organized by the federal government to empower your Nigerians.

GOLDMARK: The government was having a nationwide contest where it would be giving away millions of dollars to people trying to start businesses. No experience necessary, no strings attached. Just go to the website and sign up.

KING: Lariat heard this ad and she knew immediately what it was, a scam.


GOLDMARK: Hello, and welcome to PLANET MONEY. I'm Alex Goldmark.

KING: And I'm Noel King. Today on the show, the story of that ad and what was behind it.

GOLDMARK: It was not a scam.


GOLDMARK: OK, so that ad? Not a scam. I met the person behind it.

NGOZI OKONJO-IWEALA: My name is Ngozi Okonjo-Iweala.

GOLDMARK: She goes by Dr. Ngozi, and she was the finance minister for Nigeria at the time. And she looked out and she was facing this big problem, unemployment.

KING: There are 8 million young people in Nigeria who need jobs. That's like a quarter of all youth.

GOLDMARK: But the thing about those young people is they are super go-getters, right? What you need to know about Nigeria is that it has this culture just filled with people like Lariat selling paint out of their cars or sewing old clothes into new styles.

KING: Yeah, they're very entrepreneurial.

OKONJO-IWEALA: Everybody wants to run something, start their own business, be their own boss. We've got a country that is so entrepreneurial. But the people - the entrepreneurs often operate in an informal way. A lot of them are young people, and they want to expand their businesses. Some want to create new businesses, but don't know how.

GOLDMARK: They're hitting this wall, money. They need more of it. But the thing is it's really hard to get a small business loan in Nigeria.

KING: Maybe you go to a bank, and you try. But think about it from the point of view of the bank. Most of these businesses are one person. They're really small, and it's hard for a bank to tell a good one-person paint company from a bad one-person paint company. They all look really risky.

GOLDMARK: So banks either charge high interest rates or they just don't give out the loans at all. And that one-person business ends up stuck at one person.

KING: Breaking this logjam is a big economic puzzle. If you can figure out how to get a small business to become a medium business that can then become a large business, it means you can help solve a lot of other problems, like Dr. Ngozi's big problem.

OKONJO-IWEALA: We had a large unemployment problem with - especially with young graduates. And these are people who are ripe to be encouraged as entrepreneurs.

GOLDMARK: She had this idea. She thought, since what these entrepreneurs need is money, why don't we just give them money? Just find tiny businesses and then hand them piles of cash.

KING: What if you gave Lariat, the woman who sells paint, $50,000? That's a lot of money. That's about 10 times what Lariat would normally make in a year.

GOLDMARK: So Dr. Ngozi takes this idea, and she starts shopping it around within the Nigerian government. And right away, some questions come up.

OKONJO-IWEALA: How will we monitor these people? How will we make sure they don't fall by the wayside, they just get the money and divert it to some other use?

GOLDMARK: If banks have a tough time handing out the money to small businesses, how is the government going to decide which are the right people to hand it out to?

KING: Dr. Ngozi says don't worry, don't worry. Here's how we're going to do it. We're going to have a contest, a massive nationwide contest.

GOLDMARK: Anyone who wants to can submit a business plan, a few sheets of paper with an idea, a budget, a chart or two...

KING: And we'll read them. We'll pick out the best ones, and we'll hand out those piles of cash.

GOLDMARK: The president of Nigeria, Goodluck Jonathan, he liked the idea. And he said go figure it out.

KING: There were a lot of challenges. First off, this is a country where the government has a hard time even keeping the electricity on. And now they're going to vet tens of thousands of business plans? Even people within the Nigerian government were thinking, how are we going to pull this off?

OKONJO-IWEALA: There was a really strong debate. First of all was these people have never written business plans. Are we really going - how are we going to manage to have large numbers of people to do this at scale? It's one thing if you say you're going to invite 40 people, 50. But we're talking of thousands of - how will we ever succeed?

GOLDMARK: The logistics were going to be one problem. But then there was this other problem, corruption.

KING: Corruption is not unheard of in Nigeria. So how do you make sure that the officials running the contest don't just give the money to their connections, to their friends and family?

OKONJO-IWEALA: That only people who are connected get a chance and ordinary people will not. That was the even bigger skepticism.

GOLDMARK: They had to figure out a fair way to give out the money and a way that looked fair, too.

KING: They found judges outside of the government and outside of Nigeria to do the grading. And they decided also to take the names off of the applications so the judges wouldn't know who was who.

GOLDMARK: But that still left the question, how do you predict which business will succeed? Who do you give the money to?

KING: And this is where they brought in David McKenzie.

DAVID MCKENZIE: My job - I work in the research group at the World Bank. And so sort of I typically come in when there are - people have got an idea and they want to know, does it work?

GOLDMARK: Mckenzie had an interesting idea for how to pick the winners. Just do it randomly. Sure, he said, you could look at their business plans, maybe pick out the few that seem great, throw out the terrible ones. But after that, just pick at random. Don't waste time trying to rank them all.

MCKENZIE: I likened it, when I was discussing it with them, to - I used to be a professor at Stanford. And I said I was on graduate admissions committees there. And you would have 800 people apply. There'd be 400 people you'd say no way, we don't want those in our program. Maybe 10 people would really stand out.

But then the next sort of 200 or 300 people, it's very hard to tell them apart. And I think it's very much like this with businesses, with, you know, people with potential ideas. Maybe you get one or two that really stand out. You get a lot that just seems, you know, nonsensical.

But then there's just a lot where, you know, they all seem reasonably strong on paper. You know, how do you choose amongst them?

GOLDMARK: So he's arguing just don't choose.

KING: Right. We're picking at random. But that's like the opposite of what a contest is supposed to do, right? A contest is supposed to pick winners. Like, you can't even call it a contest. It's like a - it's like a - something else. Like, it's like a - like a contest lottery. It's like a clottery (ph), you know, or like a lontest (ph) or...

GOLDMARK: But maybe that's the best way to help people. Or at least it's efficient because that big massive clump in the middle, there's, like, no difference in between them.

KING: Right, exactly. Exactly.

GOLDMARK: Plus McKenzie's real plan here is if you do it randomly, you can actually measure it like a medical trial. And we'll know if this whole thing works.

KING: So, OK, they decide they're going to pick a lot of the winners at random.

GOLDMARK: They gave the contest a name, the YouWiN! Competition.

KING: YouWiN! exclamation point.

GOLDMARK: (Laughter) And they started to get the word out with ads.

KING: They blanketed the country with radio and TV ads.


UNIDENTIFIED MAN: I'm like most entrepreneurs. I dream big, big. But reality - reality. But you know what? The Youth Enterprise with Innovation in Nigeria YouWiN! changed my story.



GOLDMARK: So those ads are all over the country. And Lariat Alhassan, that woman we met earlier who was selling paint out of her car, she's listening to the radio. She's in her bedroom, and she is hearing those ads over and over and over again.

ALHASSAN: I heard it for the first time. I ignored it. I heard it the second time. I ignored it. But the third time, something in me said, Lariat, why don't you pick up this opportunity? Try. Try and see. It could work out for you.

GOLDMARK: She took out her old laptop, she plugged in her modem, and she went online and she applied. So did 24,000 other people. And Lariat, she made the first cut. So she and 6,000 other people, they get invited to the next phase. This is where she would have to write that real proper business plan.

KING: Lariat got some help with this part. The government called all of the semifinalists together and they put them through these business trainings. Lariat says hers was like this big packed concert hall. There were all kinds of applicants. There was a baker who didn't have the right kind of equipment...

GOLDMARK: A chicken farmer who said he wanted to expand into catfish and snail farming...

KING: (Laughter) There was a guy running a computer school.

GOLDMARK: There were musicians, dentists, all kinds of people with ideas for all kinds of businesses.

ALHASSAN: Boy, it was intense from morning 'til evening.

GOLDMARK: So it's a big seminar, four days.


GOLDMARK: But you do get lunch.

ALHASSAN: Yes, and breakfast.

GOLDMARK: (Laughter).

ALHASSAN: Breakfast and lunch (laughter).

KING: Afterward, Lariat went home. She drafted a budget. She made some sales projections. This was a full comprehensive business plan, just like she learned in the training. By the time she was done, it was more than 10 pages long. And then she submitted it, and she just waited.

GOLDMARK: And yup, she's the likable character at the start of our show, you knew it had to be coming. She won.

ALHASSAN: I felt - I couldn't even control my emotions. And I went jumping on my bed (laughter) until my sister would say, what's wrong with you? Have you won - have you won a lottery? And I said yes, yes, yes (laughter).

KING: Lariat got 10 million naira. That is about $65,000. And this is a huge amount of money. It's like more than 10 times what she would earn in a year.

GOLDMARK: She used it to hire some people. She got some salespeople, she got some marketing people. She got those people a car so they could get around town and get the word out. She got a delivery truck so it wasn't just out of her trunk anymore.

KING: And she rented a proper showroom. She tricked it out with some furniture she was really proud of. No doubt about it. This changed her business.

ALHASSAN: Yes, yes, because I can confidently say now please come to my office. Oh, we are in so-and-so place. Oh, you can come here. Oh, what time? Oh, yes, I'll be ready for you. Oh, I'll be waiting for you.

KING: Now, you can look at this and say of course she was able to do this. She was given $65,000.

GOLDMARK: Not even a loan, just gave her a pot of money.

KING: The real question is how is her business doing a year from now, two years from now?

GOLDMARK: How do all the others do, the dentist and the chicken farmer who wants to expand into catfish?

KING: And the World Bank looked at this. Because some of the winners had been chosen randomly, they could evaluate it like a real experiment. They could compare people who got the money to people who didn't.

GOLDMARK: The results were published this past year, and they're pretty remarkable. Chris Blattman is an economist at Columbia University who studies how to get people out of poverty in the developing world.

CHRIS BLATTMAN: I remember reading it and my eyes kind of popping out of my head. And then reading it a little bit more in depth because I thought no, no, no, this isn't possibly true. And getting into the details and getting so excited I just shot off a blog post right away.

GOLDMARK: That's how he deals with unexpected joy.

KING: (Laughter).

GOLDMARK: Here's what the report said. It looked at Lariat and the 1,200 other winners of the YouWiN! Competition. And it found they had created 7,000 jobs, real jobs that stuck around for years. So the whole thing cost $60 million.

And that, do the math, comes out to a cost of $8,500 per job created, which may mean nothing to anybody else. But to people who look at these things and study them like Chris Blattman, he says that is really impressive. And that is why he picked this as the title of this blog post.

BLATTMAN: "Is This The Most Effective Development Program In History?" Question mark.

GOLDMARK: Blattman said the thing that stood out to him is that the winners, as a group, used the money pretty well, even though a lot of them were these one-person businesses and they got more money than they'd probably ever seen in their whole life, even though a lot of them were picked kind of at random. He just expected that a lot more of them would fail.

BLATTMAN: I guess you - I have this idea that entrepreneurship is a little bit more rare. And yes, they screen people for business plan competitions and there are all these stages. But even so, they - there wasn't this magical X factor that is really, really rare. It might be something that's a lot more common. So it just struck me that this could apply in a lot of places possibly.

GOLDMARK: That you could do this kind of program somewhere else.


KING: Nigeria has kept the YouWiN! Competition up and running. In fact, it's expanding it. It is still just a few thousand jobs, and this is a country of 170 million people.

GOLDMARK: But Chris Blattman, other economists who follow these things, are really excited to see who else might copy it.


GOLDMARK: You've heard of another smart plan to fight poverty that we might have missed or anything else in your world that you think we should cover, send it to us at planetmoney@npr.org.

KING: If you like PLANET MONEY, the best way to show it is to tell a friend about us. Send them your favorite episode on Facebook or Twitter or wherever. Tag us so we can see what you're liking these days. We're @planetmoney.

GOLDMARK: I'm @alexgoldmark.

KING: And I'm @noeleking.

GOLDMARK: Our show today was produced by Sally Helm and Jess Jiang. And big thanks to Jeff Mosenkis at the Institute for Poverty Action for all his help on this one.

KING: Also, here's an update from an episode we did a couple weeks ago, Episode 695: Put A Chip On It.

GOLDMARK: In that episode, we told you about the chips on your credit card. And we asked you to tell us how long it takes when you dip your credit card at a store. Hundreds of you took out the stopwatch at the cash register. And the average time it took you to dip your credit cards was just about 13 seconds. Thanks for sending that in.

KING: Last up, if you're looking for another show to listen to, one of our favorite NPR podcasts is back. Invisibilia season two is coming. The preview is out today.

GOLDMARK: In this season, Invisibilia will take us to an oil rig, a McDonald's in Russia, all kinds of interesting places and help us see the world in a different way. Check out the trailer on NPR One or at npr.org/podcasts.

KING: I'm Noel King.

GOLDMARK: And I'm Alex Goldmark. Thanks for listening.

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