Diversifying livelihoods to build resilience beyond coffee
Village Enterprise aims to improve the living conditions of households in extreme poverty through its evidence-based poverty graduation model. In Ethiopia’s Kaffa Zone, HARVEST combines financial inclusion, entrepreneurship training, seed capital, and ongoing mentoring, enabling 8,100 households in coffee communities to increase and diversify incomes beyond coffee and build long-term economic resilience.
Approach
The project delivers Village Enterprise’s 12-month graduation model to coffee growing communities, supporting households in extreme poverty to launch and sustain micro-enterprises through:
- Rigorous targeting of ultra-poor households using the Poverty Probability Index (PPI)
- Formation of Business Savings Groups to promote community-managed finance
- Business and financial literacy training
- Seed capital grants (USD 300 per three-person business group)
- Ongoing mentoring and coaching
Participants launch income-generating activities such as livestock rearing, cereal farming, vegetable production, beekeeping, and retail shops – reducing reliance on coffee alone.
The program aims for the following outcomes:
- 15% increase in annual household income by 2028
- 50% increase in number of distinct income sources per household
- 20% higher asset stock value
EVALUATION & LEARNING
The project will be externally evaluated by Innovations for Poverty Action (IPA) in partnership with the Ethiopia Policy Innovation Research Center (PIRC) through a randomized controlled trial (RCT).
The evaluation assesses:
- Impacts on household consumption, assets, income diversification, and wellbeing,
- Downstream effects on coffee-related investments,
- Spillover effects on non-participating households in extreme poverty.
Spillover effects will be measured using a randomized saturation design in which the program is offered to either 100% or 50% of eligible households in a village, depending on the village’s randomized assignment. We will also include control villages where no program activities take place during the study period.
This approach lets us compare outcomes across different levels of program coverage and understand both direct impacts on participating households and any effects that extend to non-participants – evidence that will inform scalable models for poverty reduction in coffee-producing regions in Ethiopia and beyond.
Initial results from the impact evaluation are expected at the beginning of 2029, with long-term results being published by mid-2030.
What excites us about this partnership
We are excited to bring a tested, evidence-based graduation approach to coffee growing communities and learn if and how income diversification supports investments in coffee. We are looking forward to partnering with like-minded evidence-driven organizations like Village Enterprise, IPA and PIRC, which strive to strengthen impact and improve cost-effectiveness through the use of outcome data and emerging evidence. Village Enterprise has shown that standardization and adaptability can go hand in hand – ensuring high-quality implementation while effectively responding to diverse and complex local contexts.
Projected Return – Model Explanation
The forecast SROI of 2.5 (range: 2.0 – 6.2) draws on two RCTs of Village Enterprise’s graduation approach in Uganda and Kenya, which found income increases ranging from 7% to 17%. The income effect and baseline household income are the assumptions that most strongly influence the SROI — we apply the more conservative RCT estimate as our base case. Under more optimistic but empirically grounded scenarios the SROI could reach up to 6.2.
Project-specific baseline data from Kaffa Zone will be available in late 2026 and will inform an updated model.
All model figures represent present values over 10 years, discounted at 10%, deflated to 2021 EUR.
Read more about our SROI methodology here.