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Financial Sector

More bank competition in Gulf countries could be a boon for small businesses

Pietro Calice's picture


Against the backdrop of low oil and gas prices and fiscal consolidation, economic diversification and private sector development is a top policy priority for the countries of the Gulf Cooperation Council (GCC).

 
Supporting small- and medium-sized enterprises (SMEs) is central to this agenda.
 
Formal SMEs in GCC countries account for 25% of jobs, which is significantly below the global average where SMEs account for 40% of employment.

Inadequate access to finance, especially bank lending, is constraining SMEs in GCC countries. Only 11% of SMEs have access to credit and some 40% of SMEs cite a lack of financial access as a major constraint.
 

Bank competition in the GCC is among the lowest in the world. Strict entry requirements, restrictions on bank activities, relatively weak credit information systems, and a lack of competition from foreign banks and nonbank financial institutions all contribute to weak competition in the banking sector.
 
By conducting fieldwork and reviewing available literature, we have analyzed what rules and regulations may be impeding bank competition in the GCC SME lending markets as well as the institutional framework for competition policy underpinning those rules and regulations.

Can mobile money increase investment by businesses?

Asif Islam's picture

Investment is one of the pillars of private sector development. The acquisition of assets enables firms to increase their capacity and improve their efficiency, unlocking avenues of growth. Promoting firms’ growth is especially critical in Sub-Saharan African countries that have predominantly low levels of economic development and high rates of poverty. Against this backdrop, there has been a rapid increase in mobile money use - that is the use of mobile phones for financial transfers. At the end of 2015, mobile money services were available in 93 countries -with a total of over 411 million registered accounts and 134 million active users (GSMA, 2015). Many of these users are firms that increasingly rely on mobile money to pay bills, suppliers, and salaries or to receive payments from customers. While numerous advantages of the permeation of mobile money has been explored,  including lower transaction costs, little research has been done to investigate the far-reaching benefits that lowering transaction costs could entail, such as increasing firm investment. To fill this void, we recently completed a study on the effect of mobile money use on firm investment in three countries – Kenya, Tanzania and Uganda.

Finance numérique : quoi de neuf en Afrique de l’Ouest ?

Estelle Lahaye's picture
Cette page en : English
Photo: Philippe Lissac, 2011 CGAP Photo Contest


Même si la route reste encore longue, l'Union économique et monétaire ouest-africaine (UEMOA) a accompli des progrès intéressants en matière d’inclusion financière en développant ses services financiers numériques (SFN).

Ahead of the next Habitat conference, the urban world we want

Sameh Wahba's picture


There is no better way to mark this year’s World Cities Day than reflecting on the adoption of the New Urban Agenda at the recent Habitat III conference in Quito. The agenda reaffirms the political commitment to sustainable urbanization and provides a framework to guide global urban development over the next 20 years, based on a shared vision of cities that are inclusive, safe, resilient and sustainable.

In an era of rapid urbanization and climate change, managing urban growth sustainably and building cities that work is indeed one of our most pressing development challenges.

Already, more than half of the global population — nearly 4 billion people — live in urban areas. Two decades from now, that number will grow to 5.5 billion — more than 60 percent of the world’s population. At the same time, the total built-up area of the world’s cities is expected to be double by 2030 what it is today, if not more.

Because urban-planning decisions lock cities in for generations, what policymakers decide in these two decades will make or break cities’ sustainable future for the rest of this century. With that in mind, one may ask: What will the world look like when Habitat IV takes place in 20 years?

I can imagine two opposite ends of the spectrum.

Powering Sub-Saharan Africa – A fresh take on an old problem

Masami Kojima's picture
Man looking at electricity meters in Bamako, Mali 
Pic: Aarthi Sivaraman/World Bank

“If there is one thing that could really help my business, it would be reliable power supply,” said David, a small business owner in Lagos, on my recent trip to Nigeria.
“I agree. If only …,” echoed another.

And not without reason.

Africa lags every other region in the world when it comes to electricity access for its people. Only one in three Sub-Saharan Africans has access to electricity. That’s less than half of the rate of access in South Asia, the region with the second-lowest access rate. If we were to measure access to “reliable” electricity, then those numbers would be even more dismal.

Worryingly, the rate of access has been increasing at a mere 5 percentage points every decade, against population growth of 29 percent. If something is not done to dramatically change this trend, Africa will not see universal access to electricity in the 21st century. This is a seriously worrying prospect as the world races toward a 2030 deadline of universal access to electricity.

The target of achieving universal access by 2030 by the U.N.’s Sustainable Energy for All initiative and the billions of dollars committed by the U.S. government’s Power Africa plan underline the urgency of the situation. As a reminder, more than 1 billion people around the world still live without access to electricity and 600 million of those live in Africa.

So, are Africa’s utilities financially equipped to respond to this call?

Land records go digital in Punjab, Pakistan

Mary Lisbeth Gonzalez's picture

Pakistan land records

The Government of Punjab started computerization of rural Land Records with the overall objective to improve service delivery and to resolve the overall dispersed nature of land records. The transaction costs were very high for the poor during the old days of patwari system. Women were denied their land rights and the low mobility of land markets contributed to preserving the highly unequal distribution of land and, therefore, opportunities to improve people’s livelihoods.
 
Before the Land Records Management Information System (LRMIS) was set up, the Board of Revenue (BOR),​Government of Punjab, operated a land record maintenance system which involved several levels of administration: the district, Tehsil, Qanungo circle, and Patwar circle. At the lowest administrative level of the records system – the Patwar Circle – are the Patwaris, who were not only responsible for preparing community maps and issuing land records, but also for many social, political, and administrative tasks. Administrative tasks included keeping weather records, collecting crop harvest information, reporting crimes, and updating the voter registry. Imagine 8,000 Patwaris maintaining the land records – usually very small holdings -- of about 20 million land owners. The Patwaris, who were the custodians of these confidential and important records, kept this information in a cloth bag called Basta.
 
LRMIS has been performing really well. The Project was rolled out in all 36 districts of Punjab. The Project has successfully tested linkages between the land records system and the deeds registration system. The biggest achievement of the project is that the time required to complete transactions has been reduced from 2 months to 45 minutes. Land record services are now provided on an automated basis throughout all 150 Tehsil Service Centers. There are many contributing factors to the success of the Project:

Easy business exit is as important as easy business entry

Simon Bell's picture



How to identify and support fast-growing firms that can take off, create jobs, and yield significant value in a short period of time is one of our biggest dilemmas in nurturing private sector development in emerging markets. 
 
The Sustainable Development Goals (#8) include the need for decent jobs as an important developmental priority, and small and medium size enterprises (SMEs) are expected to create most jobs required to absorb the growing global workforce.
 
But many young firms will fail; by some accounts more than half of new firms won’t make it to their second birthday. 
 
However, despite the high rate of firm failure, research from the US and evidence from India, Morocco, Lebanon, Canada and Europe shows that it’s largely young firms that create the bulk of net new jobs (net jobs are jobs created minus jobs lost) and lasting employment opportunities.
 
In addition, even when a firm survives beyond the first two years of operation, there are no assurances it will become a fast-growing firm -- a gazelle. 
 
Although estimates vary widely, the share of gazelles -- fast-growing firms that generate a lot of value-added and jobs -- is thought to be only between 4% to 6% of all SMEs, and, possibly, even less in many emerging countries.
 
All this makes creating favorable conditions for entrepreneurship a priority. 
 
Easing business entry -- the time and cost involved in establishing a new enterprise -- is extremely important.  As the annual Doing Business report shows, many countries have made a lot of progress on this indicator over the past decade.  
 
But business exit is an equally critical piece of the puzzle.

Islamic finance in Malaysia: Filling the gaps in financial inclusion

José de Luna-Martínez's picture



In the past decade, the Islamic finance industry has grown at double digits despite the weak global economic environment. By 2020, the Islamic finance industry is projected to reach $3 trillion in total assets with 1 billion users. However, despite its rapid growth and enormous potential, 7 out of 10 adults still do not have access to a bank account in Muslim countries. This means that 682 million adult Muslims still do not have an account at a banking institution. While some Muslim countries have high levels of account ownership (above 90 percent), there are others with less than 5 percent of their adult population who reported having a bank account.


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