Identifying and Easing Constraints on Microenterprise Location within Kampala, Uganda

This project asks whether business relocation within the city can increase profits for microentrepreneurs in Kampala, Uganda, and if so, then which frictions constrain a firm’s ability to relocate without intervention. In a pilot study of mobile, low capital microentrepreneurs, I find spatial variation in profits across Kampala that persists even after conditioning for typical predictors of business income. While correlational, this spatial variation may indicate that microfirms fail to take advantage of location-based arbitrage opportunities. Half of my sample expresses knowledge of a more profitable business location and perceives low costs (US$1 to US$3 per day) to accessing the alternative location, underscoring the puzzle. I propose a multi-arm experiment that randomly allocates conditional and unconditional cash grants of equivalent value. The conditional grants are available to entrepreneurs upon business relocation, and the unconditional grants vary in disbursement timing. I will measure whether business relocation increases profits and test for the presence of specific frictions.