Income gains without sustainability? Evaluating matching grants for smallholder farmers in Chipili District, Zambia

Abstract

One of the most common programs to boost smallholder farming enterprises in Africa is a matching grant program, although there has been mixed evidence of whether short-term increases in income can be translated into long-term sustainability of enterprise. This study explores the effect of matching grants on household income, savings, and sustainability of smallholder farming businesses in the sustainable operation of Chipili District in the long term. This study is anchored in the Sustainable Livelihoods Framework (SLF), which posits that access to productive assets and financial capital enhances livelihood outcomes only when supported by institutional structures and enabling environments. The study analyzes post-grant enterprise continuity based on a survey that was undertaken on 352 respondents and evaluates the potential demographic factors contributing to enterprise continuity. Econometric models such as logistic regression and propensity score matching are utilized in the analysis to determine the causal effect of matching grants on household savings and income. The findings suggest that the matching grants raised household income and savings by a significant margin in the short term, but merely 19.6 percent of beneficiary enterprises continued to operate after the grant, and 80.4 percent of these enterprises stopped their operations. The demographic characteristics were found not to have a statistically significant relationship with the survival of the enterprise. The study concludes that matching grants are useful for improving short-term household welfare but are not enough to ensure long-term business sustainability. It recommends strengthening post-grant mentorship, improving access to markets, supporting value chain participation, and providing continued extension services to help smallholder enterprises remain sustainable over time.