Two decades ago, when I interned at the French Embassy’s economic mission in Moscow, I was asked to look into bankruptcy laws and their implementation. The Embassy wanted to advise French companies on how to get business done in the new Russia—we are talking mid-1990s—when there were no reliable guidebooks on how to navigate the transition to a market economy.
So I was asked to read recently approved, Western-inspired bankruptcy laws, given a phone book and asked to find two dozen companies around Moscow. I was to meet with their CEOs and find out how insolvency and bankruptcy procedures actually worked in practice.
I came away with one key finding: In fact, the distortions brought about by hyperinflation, bartering and the transition from Soviet to Western accounting meant the liquidity and solvency ratios that underpinned the institution of bankruptcy had essentially become meaningless.
Since the beginning of time, women have been at a disadvantage when looking for financial loans. One reason is that women have less control over land and assets that can be used as traditional collateral. This puts a real damper on her ability to launch an enterprise or, even when she manages to launch one successfully, to take it to the next level.
In Africa, women’s entrepreneurial knack is self-evident to anyone who sets foot on the continent—just look at any roadside! So, this problem is likely quite costly and holding back development. Can we solve it somehow?
As it happens, the Entrepreneurial Finance Lab, an entity that spun off from Harvard’s Center for International Development in 2010, has developed a tool using something called “psychometric testing”, which measures personal characteristics such as knowledge, skills, education, abilities, attitudes and personality traits as a means to predict how likely it is a person will pay back a loan. And it is proving quite effective. Could this be a way to finally help find a solution for women who don’t have any credit history or hold formal title to assets that are traditionally accepted as collateral?
The World Bank Group’s Global Practice for Finance and Markets (GFMDR) started thinking seriously about this, and worked to see it if it could be integrated in a Bank-funded project in Ethiopia (the Women Entrepreneurship Development Project, US$50m). Francesco Strobbe leads the project team, and started to discuss the issue with us in the World Bank’s Africa Region Gender Innovation Lab (GIL). “I thought this was a great opportunity to test some innovative measures to see if we could reach a real breakthrough with much potential for women entrepreneurs—in Ethiopia and elsewhere.”
For the first time in history, the majority of people now live in cities, and . This rapid urbanization is a phenomenon almost entirely concentrated in developing and emerging countries- in fact, , and at a much faster pace than developed countries urbanized in the past.
What does this ‘metropolitan century’ mean for cities, governance, and development?
From a business perspective, local disputes can lead to more than US$20 million per week in losses for large-scale mines. To say nothing of the broader costs – in terms of lives lost and development stymied – when local discontent develops into violent conflict.
In response, a growing number of mining companies and governments have rolled out “Community Development Agreements” (CDAs), an umbrella term covering formal arrangements for local development between a company and designated communities. CDAs can run the gamut of the community-company relationship, including among other areas, socio-environmental impacts, benefit sharing, employment, monitoring and grievance redress.
CDAs have spread quickly in national law and policy. with nine countries currently in the process. The CDA model, it seems, is an emergent “best practice” and initiatives ranging from the Ruggie Principles to the International Council on Mining and Metals have reiterated their value.
I like entertaining my western friends with stories of growing up in the post-communist Kazakhstan limbo, when everything ended, but nothing had yet started. Stories of how my friends and I would collect old newspapers to trade for books and Moscow magazine subscriptions. And later on, selling empty milk bottles back for some cash to buy candy and chewing gum in the newly opened Chinese shops. The audience goes “oohh” and “ahh”, and oh do I feel like I’ve seen a lot and know what life is like!
I have to admit – attending the Fragility Conflict and Violence (FCV) Forum 2015 that took place at the World Bank HQ last week was an experience that changed my perspective on hardships of life in developing countries. There are developing countries and then there are fragile and conflict-affected countries.
As such, reforming procurement systems can prove transformational for development in any country.
In Georgia, the introduction of e-procurement (Ge-GP) is a good example of how strong political will and commitment can be critical in the context of reforming public procurement. Within a year, the State Procurement Agency of Georgia (SPA) designed, developed, and tested an e-procurement system, and eventually moved to the mandatory use of e-Procurement, fully replacing paper-based tenders.
A few weeks ago, the UK’s Department for International Development (DFID) concluded a three-day visit to the Bank with a presentation by its Chief Economist, Stefan Dercon. ‘Aid is Politics’ traversed the big picture debates in economics, politics and development with ease, but the focus was the practice of aid.
Once we’re on the ground at scale, we become part of the politics. Not only do domestic politics shape the impact of our interventions, our programs today affect politics tomorrow. Economic policy, although seemingly about ‘removing market failures and correcting distortions’, impacts upon the distribution of rents or income, at times adversely affecting political equilibria by benefitting already powerful groups.
Since walking away from politically fraught environments is not an option (aid practitioners are “the intervention squad”), we need to constantly analyze, adapt programing to politics, be creative, make political engagement endogenous, and try to nudge aspects of the political settlement to a better place.
Although Stefan gave a lively presentation, what struck me was not the content -- over the last decade, a virtual consensus has formed in development praxis that political drivers shape development outcomes, and that effective interventions require both deep understanding of the distribution of power and resources in a given country and the flexibility to adapt to changing context. Most striking was the mission underlying Stefan’s comments.
From civil wars in Mali and Iraq to urban crime in Central America, perceptions of injustice are central to fueling violence and fragility. While we in the development community increasingly recognize that legitimate and effective justice institutions are crucial to inclusive growth in these contexts, we have often struggled to support them. The World Bank is at the forefront of developing new ways of understanding justice challenges as well as practical means to address them.
A panel on “New Approaches to Justice in FCV,” part of the 2015 Fragility Forum, highlighted new ways of understanding and responding to justice challenges.
In the last ten years, China’s public procurement market has grown tenfold reaching an estimated $270 billion in 2013. Such significant growth has made the improvement of the public procurement system an imperative for the Chinese Government.
In the context of China’s commitment to enhance its procurement system, it is also seeking to accede the World Trade Organization’s Government Procurement Agreement (WTO GPA). As China looks to necessary procurement reforms, the World Bank has partnered with the Ministry of Finance to support these efforts, which have the potential to have transformational impact.