Syndicate content

Financial Sector

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?

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.

Improving the Odds of Being Formally Financially Included in Senegal

Siegfried Zottel's picture

While most adults in developed countries have an account at a bank or another formal financial institution, this is not the reality in many developing countries, including Senegal. A recent World Bank Group (WBG) Financial Capability Survey revealed that less than one in five Senegalese adults (17%) report owning an account at a formal institution, which includes banks, microfinance institutions, or e-money agents. While Senegal’s financial inclusion levels are similar to those in other lower-middle income economies, the country lags behind the average inclusion rate among Sub-Saharan African economies.

Learning from Korea: The Story of Korea’s Credit Guarantee Agency

Simon Bell's picture
Image: CC Pixabay

South Korea today has the fourth largest economy in Asia, is a member of the OECD’s “Rich Club,” and is part of the G20.  Despite sharp economic shocks emanating from the Asian financial crisis in the late 1990s, the global financial crisis in 2008, and the more recent slowdown in the Chinese economy – Korea has bounced back and continues to grow.

So it’s hard to imagine that some 70 years ago, Korea’s future looked very bleak – and akin to many of the excruciatingly difficult post-conflict environments that we face today.

To briefly summarize Korea’s post-World War II history: a 1947 report on Korea commissioned by U.S. President Truman concluded, “South Korea, [as] basically an agricultural area, does not have the overall economic resources to sustain its economy without external assistance …. Prospects for developing sizeable exports are slight ….. The establishment of a self-sustaining economy in South Korea is not feasible.” Then the Korean War compounded these problems – resulting in massive damage to both the north and the south – with destroyed infrastructure, a loss of skilled workers, a million South Koreans killed, and as much as one-quarter of the country’s population refugees. 

We have many lessons to learn from Korea – particularly as our institution, the World Bank, increasingly focuses on post-conflict and fragile environments.

Although South Korea is known for its large scale “Chaebols,” which have dominated much of its political and economic life – less well known is the considerable support that the government has provided to small and medium scale enterprises (SMEs).  As in most countries, Korean SMEs play a pivotal role in the national economy, accounting for 99% of all enterprises (3 million SMEs), over 80% of all employees (10.8 million employees), and almost 48% of total national production.

“Teach a man to fish…” - Sustainable Solutions in Afghanistan’s Rural Economies

Mohammad Shafi Rahimi's picture
An Afghan woman uses her skills to make artificial flowers for sell. Photo Credit: Rumi Consultancy/ World Bank.

Earlier this year, I visited a meeting of a Village Savings and Loan Association in Doghabad village and was impressed with the confidence and leadership women showed. Addressing the association, Karimi, who is a member, said: “Do not wait for men to come and decide for you, be the makers of your own community.” She encouraged women to take an active role in the association’s weekly meetings, and come prepared with business proposals and requests for loans. Like Karimi, numerous individuals who have participated in the Afghanistan Enterprise Development Program (AREDP) programs act as inspirational leaders in mobilizing people and gaining trust in the program.

It’s possible to end poverty in South Asia

Annette Dixon's picture

October 17 is the international day to end poverty. There has been much progress toward this important milestone: the World Bank Group’s latest numbers show that since 1990 nearly 1.1 billion people have escaped extreme poverty. Between 2012 and 2013 alone, around 100 million people moved out of extreme poverty. That’s around a quarter of a million people every day. This is cause for optimism.
But extreme poverty and the wrenching circumstances that accompany it persist. Half the world's extreme poor now live in sub-Saharan Africa, and another third live in South Asia. Worldwide nearly 800 million people were still living on less than $1.90 a day in 2013, the latest year for which we have global numbers. Half of these are children. Most have nearly no education. Many of the world's poor are living in fragile and conflict afflicted countries. In a world in which so many have so much, it is unacceptable that so many have so little. 

Pathways to profits for micro and small enterprises

Bilal Zia's picture

Numerous research studies on micro and small firms from around the world have shown that (a) microenterprises are ubiquitous; and (b) only a very small percentage of such firms scale up to become SMEs.

The obvious question is why?

It is not for want of help. Each year billions of dollars in aid is given to developing economies to help entrepreneurs establish and grow their ventures.  Yet evidence suggests that this money is having little impact in some of the key areas it is directed towards improving.

Take microcredit for example. A recent review of six randomized evaluations from four continents suggests that, while microcredit has some benefits, it has not led to the transformative improvements in business performance and poverty reduction widely expected.

What did we learn from real-time tracking of market prices in South Sudan?

Utz Pape's picture

Economic shocks can be painful and destructive, especially in fragile countries that can get trapped into a cycle of conflict and violence. Effective policy responses must be implemented quickly and based on evidence. This requires reliable and timely data, which are usually unavailable in such countries. This was particularly true for South Sudan, a country that has faced multiple shocks since its independence in 2011. Recognizing the need for such data in this fragile country to assess economic shocks, the team developed a real-time dashboard to track daily exchange rates and weekly market prices (click here for instructions how to use it).