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Financial Sector

Maximizing finance for development works

Hartwig Schafer's picture
People in Saint-Louis, Senegal. © Ibrahima BA Sané/World Bank
People in Saint-Louis, Senegal. © Ibrahima BA Sané/World Bank


Massive investment is needed to meet the ambitious goal of ending extreme poverty and boosting shared prosperity by 2030. By some estimates it could cost as much as $4.5 trillion a year to meet the Sustainable Development Goals (SDGs), and obviously, we will not get there solely with public finance. And there’s the rub: Countries will only meet the SDGs and improve the lives of their citizens if they raise more domestic revenues and attract more private financing and private solutions to complement and leverage public funds and official development assistance. This approach is called maximizing finance for development, or MFD.

Key lessons for policymakers from China’s financial inclusion experience

Jennifer Chien's picture

Woman with child in People’s Square in Yanting, China
Over the past 15 years, China has emerged as one of the world’s financial inclusion success stories. While much attention has been paid to the rapid innovation and massive scaling of Chinese fintech companies, China’s successes in financial inclusion reach beyond fintech. Account ownership has increased significantly and is now on par with that of other G-20 countries. One of the largest agent banking networks in the world has been established. And a robust financial infrastructure has been developed that underpins these successes.
 
So what can policymakers in other countries learn from China’s experience? While China is in some ways a unique environment, there are still valuable lessons to be learned from both its successes as well as its remaining challenges.
 
A new report released last week -– Toward Universal Financial Inclusion in China: Models, Challenges, and Global Lessons - provides a wealth of data and information about the various initiatives and efforts that have contributed to China’s advances in financial inclusion. The report, which was jointly written by the People’s Bank of China and the World Bank Group, also outlines remaining challenges and distills lessons for policymakers in other countries.

Sustainable Development Goals and the role of Islamic finance

Abayomi Alawode's picture
 bigstock/joyfull
Malaysia is home to a vibrant Islamic banking sector. Islamic finance has grown rapidly in the past two decades and it now stands as a potential contributor in supporting the Sustainable Development Goals. Photo: bigstock/joyful

Islamic finance has the potential to play a crucial role in supporting the implementation of the Sustainable Development Goals (SDGs). In the face of significant financing needs for the SDGs, Islamic finance has untapped potential as a substantial and non-traditional source of financing for the SDGs.

The growth of Islamic finance has been rapid at 10-12% annually over the past two decades. By 2015, the industry had surpassed US$1.88 trillion in size. Islamic finance has emerged as an effective tool for financing development worldwide, including in non-Muslim countries, and may prove to be an important contributor towards realizing the SDGs. 

The Third Annual Symposium on Islamic Finance was held in Kuala Lumpur in November 2017, co-organized by the World Bank Group, Islamic Development Bank, International Center for Education in Islamic Finance (INCEIF) and Guidance Financial Group to explore the potential contributions that Islamic Finance can make to achieving the SDGs.

Making taxes work for the SDGs

Jan Walliser's picture
Also available in: Français
Graphic: World Bank Group

Taxation plays a fundamental role in effectively raising and allocating domestic resources for governments to deliver essential public services and achieve broader development goals.

Why providing pre-seed and seed capital is the essential step to bringing West Africa and Sahel’s entrepreneurs to the next level

Alexandre Laure's picture

"In Chad, young people increasingly turn to innovative entrepreneurship but often become demoralized when confronted with the common issue of lack of early-stage financing.” This is how Parfait Djimnade, co-founder of Agro Business Tchad, a leading e-commerce agribusiness and social enterprise in Chad, described the challenge many aspiring entrepreneurs face in securing the necessary capital to fund and grow their start-ups, specifically in the Sahel and West Africa.

The frustration Parfait highlights is common across the Africa region, where more than 40 percent of entrepreneurs cite access to finance as the major factor limiting their growth, according to World Bank Enterprise Surveys. West African start-ups and innovative young SMEs are indeed facing the classic ‘valley of death’ — the space between where the entrepreneur’s own resources from family and friends (“love money”) gets depleted and when the company is financially viable enough to attract later-stage investment and financing available on the market. The shortage of financing in the market starts from the pre-seed stage (US$20,000) to early-venture capital stage (US$1 million).

Maximizing finance for sustainable urban mobility

Daniel Pulido's picture
Photo: ITDP Africa/Flickr

The World Bank Group (WBG) is currently implementing a new approach to development finance that will help better support our poverty reduction and shared prosperity goals. This crucial effort, dubbed Maximizing Finance for Development (MFD), seeks to leverage the private sector and optimize the use of scarce public resources to finance development projects in a way that is fiscally, environmentally, and socially sustainable.
 
There are several reasons why cities and transport planners should pay close attention to the MFD approach. First, while the need for sustainable urban mobility is greater than ever before, the available financing is nowhere near sufficient—and the financing gap only grows wider when you consider the need for climate change adaptation and mitigation. At the same time, worldwide investment commitments in transport projects with private participation have fallen in the last three years and currently stand near a 10-year low. When private investment does go to transport, it tends to be largely concentrated in higher income countries and specific subsectors like ports, airports, and roads. Finally, there is a lot of private money earning low yields and waiting to be invested in good projects. The aspiration is to try to get some of that money invested in sustainable urban mobility.

Which countries face corporate balance sheet vulnerabilities? a novel monitoring framework

Erik Feyen's picture

The debt of the nonfinancial corporate sector in emerging and developing economies (EMDEs) has risen significantly since the global financial crisis, raising concerns about financial stability and spillover risks. While monetary easing in developed economies has allowed EMDE corporates to raise substantial financing from global capital markets, the sharp decline in commodity prices since 2014 and lower growth prospects across EMDEs have weighted on their firms’ profitability and debt service capacity.

The current global environment raises questions. How vulnerable is the current financial situation of the EMDE corporate sector?  How has it evolved since the global financial crisis?

Eco-Industrial Parks 2.0: Building a common global framework

Sinem Demir's picture
Eco-Industrial Park in Republic of Korea. @KICOX
Eco-Industrial Park in Republic of Korea. @KICO

Eco-industrial parks (EIP) refers to putting in place serviced industrial infrastructure conducive to attracting new investments, especially in manufacturing, while at the same time promoting environmental sustainability.
 

Is acceleration the panacea for scaling growth entrepreneurs? Reflections from XL Africa

Natasha Kapil's picture

The World Bank Group’s infoDev program has been working in Africa for years, helping to strengthen the ecosystem for digital entrepreneurs and seeding digital incubators in Kenya, Senegal, and South Africa. Start-ups in these “mLabs” have developed or improved more than 500 digital products or services, and some 100 early stage firms raised over $15 million in investments and grant funding. But is this the answer to scaling growth entrepreneurs on the continent?

Why investors must take a chance in the world's most fragile countries

Stephanie von Friedeburg's picture
Microfinance in DRC. © Anna Koblanck/IFC
Microfinance in DRC. © Anna Koblanck/IFC


Fragility, conflict and violence affect more than two billion people across the globe. And while poverty on the whole is declining, that's not the case in countries affected by conflict.

It is these countries plagued by near-constant political and economic instability that are often the ones most in need of private investment. Yet they are also the places few private investors are willing to go. The risks seem to outweigh the rewards.


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