David - I defer absolutely to the high level of sophistication of your impact benefits analysis (!) - i.e. the calculation of the numerator of your rate of return. However I could not get a good understanding of the cost - i.e. the denominator. I.e. what is the (social) cost of the impact benefits.
If we don't take the cost into account then we of course we might be saying simply that if you give an entrepreneur $50,000 his business is likely to be in better shape in three years time than one that does not get the $50,000 under most scenarios - which would not be surprising.
Please could you explain What is the denominator?
1. just the value of the business grants?
2. 1. plus BPC management costs?
3. 2. plus transaction costs to winning (and losing) entrepreneurs?
4. 3. plus matching investment from the entrepreneur?
5. 4. plus contributed investment funds (funded by outside loans, equity)?
And if it is 1. or 2. how much of the overall return benefits are attributable only to the grants? Could we assume a crowding-in effect which attributes the complementary investment also to some extent to the grants ?? (I see that you have found no crowding in effect overall but it seems likely to have happened in some cases).
Getting back to the numerator how have you accounted for benefit externalities that might show up in linkages and associated technological spillover effects, which are arguably key to the development of industry, banking and business services etc? (That is, indirect effects that cannot be accounted for through performance of the treatment or control group enterprises). OR how do you allow for possible contamination of the control group by technological spillovers generated by enterprises that receive awards?? (Apart from the fact hat Nigeria ia a big country and businesses may not meet face to face).
Id really appreciate understanding this since it is key to the validity of the rate of return analysis and by extension the value of business plans.