On a recent visit to provincial treasury offices to learn about the Financial Management Information Systems, or FMIS, that members of our Governance teams helped introduce, the conversation turned to cows.
Staff compared switching from manual pen-and-paper to an automated state-of-the-art public finance management system as akin to making a cow watch television. Cows, they explained, are as unfamiliar with television as some treasury staff are with computers, the internet, and FMIS.
Fortunately, the relevance of the analogy was short-lived. Treasury staff have overcome the learning curve and the new system has proven to be helpful. I consistently heard praise about the system’s usefulness because it provides useful financial information, reduces the amount of repetitive work, and generates timely reports. That is a big change.
Now that the 2017 edition of International Debt Statistics (IDS) has been released, as a member of the team who put these statistics together, I thought I would look back at what the data tells us about financial flows into the Middle East and North Africa (MENA) region.
According to IDS 2015 data, net financial flows (debt and equity) to all low and middle income countries were only one third of their 2014 levels ($1,159 billion). In particular net debt flows turned negative (-$185 billion) for the first time since the 2008 financial crisis, while foreign direct investment (FDI) showed a marginal increase of $7 billion from $536 billion in 2014. These phenomena were observed in all regions but MENA.
The net debt inflows into the MENA region diverged from global trends. The inflows increased 84 percent from 2014. On the other hand, FDI recorded its lowest level since 2010.
Both Malaysia and India are countries steeped in innovation with a strong desire to foster new, innovative start-up enterprises.
With a global focus on providing more support to Small and Medium Scale Enterprises (SMEs) – and recognizing that – Asian countries are keen to learn from each other’s experiences. These efforts have taken on a greater priority in India under the leadership of Prime Minister Modi and his “Make in India” and “Start-Up India” campaigns.
, which is one of the most widely recognized impediments to SMEs, particularly for start-up enterprises. Through the $500 million MSME Growth Innovation and Inclusive Finance Project, the World Bank supports MSMEs in the service and manufacturing sectors as well as start-up financing for early stage entrepreneurs. The start-up support under this project ($150 million) is for early stage debt funding (venture debt) which isn’t well evolved. (Unlike India’s market for early stage equity which is considered to already be reasonably well developed.)
As part of this project, the World Bank and the Small Industries Development Bank of India (SIDBI), recently held a workshop in Mumbai to allow market participants to learn from one another, and particularly about Malaysia’s successful support for innovative start-up SMEs. The workshop’s participants included banks, venture capital companies, entrepreneurs, fintech companies, seed funders and representatives from the Malaysian Innovation Agency (Agensi Inovasi Malaysia – AIM).
Students of systemic banking distress point to concentration in specific asset classes or sectors as one of the most important factors explaining these crises. The last two global crises are good examples: the simultaneous overexposure of several banks to the U.S. mortgage market initiated the global financial crisis `07–`08 and the overexposure of several banks to sovereign debt of distressed European countries severely deepened the European debt crisis of `11–`12. Given the importance of risk concentration in banking it is therefore surprising how little empirical evidence is available on the relationship between sectoral concentration and bank performance and stability. This absence of research is mainly explained with a lack of data. In recent work, we introduce a new methodology to measure sectoral specialization and differentiation and relate these measures to bank performance and stability (Beck, De Jonghe and Mulier, 2017).
- Financial Sector
Shortly after the Soviet invasion in 1979, the World Bank suspended its operations in Afghanistan. Work resumed in May 2002 to help meet the immediate needs of the poorest people and assist the government in building strong and accountable institutions to deliver services to its citizens.
As we mark the reopening of the World Bank office in Kabul 15 years ago, here are 15 highlights of our engagement in the country:
- Sustainable Communities
- Urban Development
- Social Development
- Public Sector and Governance
- Private Sector Development
- Migration and Remittances
- Law and Regulation
- Labor and Social Protection
- Information and Communication Technologies
- Global Economy
- Financial Sector
- Climate Change
- Agriculture and Rural Development
- South Asia
Earlier this month, development banks from around the world took stock of where they stand and where they see their efforts having the greatest impact at a meeting organized by the World Bank and Brazil’s development bank, BNDES.
As the world struggles in narrowing that gap. They can help to crowd-in the private sector and anchor private-public sector partnerships, particularly for infrastructure financing.
However, misusing development banks can lead to fiscal risks and credit market distortions. To avoid these potential pitfalls, , operate without political influence, focus on addressing significant market failures, concentrate on areas where the private sector is not present, monitor and evaluate interventions and adjust as necessary to ensure impact, and, finally, be transparent and accountable.
Two themes characterized the discussion at the meeting: . To support Small and Medium Enterprises (SME) finance, development banks use partial credit guarantees while letting private lenders originate, fund, and collect on credit. In markets with limited competition, development banks support the creation of an ecosystem of specialized Micro, Small, and Medium Enterprises (MSME) lenders to which they provide a stable funding source.
Top tip: if you’re in a meeting discussing anything to do with finance, at some point look wise and say ‘you do realize, blockchain is likely to change everything.’ Of course, there is always a terrifying chance that someone will ask what you actually mean. Worry not, because IDS has produced a handy bluffer’s guide to help you respond. Blockchain for Development – Hope or Hype?, by Kevin Hernandez, is the latest in IDS’ ‘Rapid Response Briefings’ series, (which itself is a nice example of how research institutions can work better around critical junctures/windows of opportunity). It’s only four pages, but in case even that is too onerous, here are some excerpts (aka a bluffer’s guide to the bluffer’s guide).
‘What is blockchain technology?
At its heart, the blockchain is a ledger. It is a digital ledger of transactions that is distributed, verified and monitored by multiple sources simultaneously. It may be difficult to think of something as basic as the way we keep and maintain records as a technology, but this is because record-keeping is so ingrained in daily life, albeit often invisibly. The ubiquity of ledgers is in part the reason why blockchains are held as having so much disruptive potential. Traditionally, ledgers have enabled and facilitated vital functions, with the help of trusted third parties such as financial institutions and governments. These include: ensuring us of who owns what; validating transactions; or verifying that a given piece of information is true.
In a previous blog we related how South Asia as a whole had improved the performance of its container ports since 2000 but had still struggled to catch up with other developed and developing regions. But within that picture, some ports did better than others.
For example, Colombo in Sri Lanka, the fast-expanding Mundra and Jawaharlal Nehru Port in India and Port Qasim in Pakistan all improved the use of their facilities in the first decade of this century. India’s Mumbai and Tuticorin were among those that fell behind. Colombo also improved its operational performance by almost halving the share of idle time at berth, while Chittagong (Bangladesh) and Kolkata (India) had the longest vessel turnaround times in the region.
Knowing how specific ports perform and the characteristics of ports that perform well and those of ports that perform poorly helps policymakers design interventions to support underperforming ports.
In the report “Competitiveness of South Asia’s Container Ports” we identified three interrelated policies to improve the performance of the container ports, a key element in one of the world’s fast-growing regions: increasing private participation in ports, strengthening governance of port authorities and fostering competition between and within ports:
Islamic finance assets represent only around 1% of the global financial market, so how can tapping into these funds help close the $452 billion annual infrastructure finance gap in Emerging Markets and Developing Economies? The percentage may be small now, but the Islamic finance market is growing at an impressive pace—and not just in Muslim-majority countries.