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Financial Sector

An update on Bhutan’s economy

Tenzin Lhaden's picture
Accelerating the reform momentum after the 2018 elections is key to consolidating and furthering Bhutan’s development
Accelerating the reform momentum after the 2018 elections is key to consolidating and furthering Bhutan’s development. Credit: World Bank

Bhutan is one of the smallest, but fastest-growing economies in the world.
 
Its annual average economic growth of 7.6 percent between 2007 and 2017 far exceeds the average global growth rate of 3.2 percent.
 
This high growth has contributed to reducing poverty: Extreme poverty was mostly eradicated and dwindled from 8 percent in 2007 to 1.5 percent in 2017, based on the international poverty line of $1.90 a day (at purchasing power parity).
 
Access to basic services such as health, education and asset ownership has also improved significantly.
 
The country has a total of 32 hospitals and 208 basic health units, with each district hospital including almost always three doctors.
 
The current national literacy rate is 71 percent and the youth literacy rate is 93 percent.
 
The recent statistics on lending, inflation, exchange rates and international reserves (Sources: RMA, NSB) confirm that Bhutan maintained robust growth and macroeconomic stability in the first half of 2018.  

Gross foreign reserves have been increasing since 2012 when the country experienced an Indian rupee shortage.
 
Reserves exceeded $1.1 billion, equivalent to 11 months of imports of goods and services, which makes the country more resilient to potential shocks.
 
The nominal exchange rate has been depreciating since early 2018 (with ngultrum reaching Nu. 73 against the US dollar in early November).

Doing better business to fight poverty

Duvindi Illankoon's picture
The new Doing Business ranking places Sri Lanka at 100 out of 190 economies, compared with 111 last year. This year Sri Lanka made it easier for businesses to register property, obtain permits, enforce contracts and pay taxes. Credit: World Bank

End Poverty Day fell on the 17th of October. Two weeks later, the new Doing Business rankings come out for this year.

If you’re wondering what the link is, here’s a quick summary: business-friendly regulations can be instrumental in lowering poverty at the national level.

This is one of those happy instances where economics, common sense and the data align.

A better regulatory environment encourages more businesses to register and expand, bringing more employers to the economy.

Then the market responds- not only do these employers create more jobs, but also going to offer better jobs to attract capable workers to their companies.

Ultimately, a reliable source of income is the catalyst to moving out of poverty.

Sounds too simple? Trust the numbers.

Commitment to reforms improves business climate in South Asia

Hartwig Schafer's picture
 
Rikweda, an Afghan fruit processing company in the Kabul Province is well on its way to restoring Afghanistan as a raisin exporting powerhouse—a status the country held until the 1970s when it claimed about 20 percent of the global market. Credit World Bank


Imagine a state-of-the-art processing plant that harnesses laser-sorting technology to produce a whopping 15,000 tons of raisins a year, linking up thousands of local farmers to international markets and providing job opportunities to women.
 
To find such a world-class facility, look no further than Rikweda, an Afghan fruit processing company in the Kabul Province that’s well on its way to restoring Afghanistan as a raisin exporting powerhouse—a status the country held until the 1970s when it claimed about 20 percent of the global market.
 
In Afghanistan’s volatile business environment, let alone its deteriorating security, Rikweda’s story is an inspiration for budding entrepreneurs and investors.
 
It also is an illustration of the government’s reform efforts to create more opportunities for Afghan businesses to open and grow, which were reflected in the country’s record advancement in the Doing Business 2019 index, launched today by the World Bank.
 
Despite the increasing conflicts and growing fragility, and thanks to a record five reforms that have moved Afghanistan up to the rank of 167th from 183rd last year, the country became a top improver for the first time in the report’s history.
 
And Afghanistan is not the only South Asian country this year that took a prominent place among top 10 improvers globally.
 
India – which holds the title for the second consecutive year – is a striking example of how persistence pays off, and the high-level ownership and championship of reforms are critical for success. Its ranking has improved by 23 places this year and puts India ahead of all other countries in South Asia. This year, India is ranked 77th, up from 100th last year. 

Boosting entrepreneurship in rural Afghanistan

Miki Terasawa's picture
Also available in: دری | پښتو
The Afghanistan Rural Enterprise Development Project has linked rural producers, inlcuding saffron farmers with markets to create businesses and provide employment opportunities to many Afghan women and men.
The Afghanistan Rural Enterprise Development Project has linked rural producers, including saffron farmers with markets to create businesses and provide employment opportunities to many Afghan women and men. Photo Credit: AREDP/ World Bank.

Meet Mohammad Naim, a saffron farmer in Afghanistan’s Herat province.  In 2013, Naim launched a new business, the Taban Enterprise Group after he and his partners received training and attended agriculture fairs nationwide.

Taban cultivates, processes, and markets saffron, and since its founding, it has steadily improved the quality of its saffron and expanded operations. Today, the company employs 120 women annually for seasonal work to harvest and process the valuable crop.
 
This business success story started with small savings pooled together by rural men and women like Naim.
 
Since 2010, the Afghanistan Rural Enterprise Development Project (AREDP) has linked rural producers with markets and helped villagers form savings and credit groups to create businesses or expand their small enterprises.

تقویت تشبثات خصوصی و ایجاد فرصت های کار در روستاهای افغانستان

Miki Terasawa's picture
Also available in: English | پښتو
The Afghanistan Rural Enterprise Development Project has linked rural producers, inlcuding saffron farmers with markets to create businesses and provide employment opportunities to many Afghan women and men.
پروژه انکشاف صنایع روستایی افغانستان  ازتولید کنندگان روستایی، به خصوص کسانیکه در عرصه تولید زعفران مشغول کاراند حمایت مینماید، تا نه تنها محصولات شانرا به بازار ها عرضه نمایند، بلکه خود قادر به ایجاد تشبثات و تجارت های کوچک گردند وزمینه های اشتغال زایی بیشتر را برای زنان و مردان فراهم نمایند. عکس: پروژه انکشاف صنایع روستایی افغانستان/ بانک جهانی

با نعیم یکتن از متشبثین محلی در ولایت هرات، که  در عرصه تولید زعفران مصروف کار است، آشنا شوید. در سال ۲۰۱۳ میلادی، نعیم و چند تن از شرکای او پس از اشتراک در یک سلسله برنامه های آموزشی در بخش زراعت و همچنان اشتراک در چندین نمایشگاه داخلی، تصمیم گرفتند یک شرکت تجارتی را بنام تابان تاسیس نمایند. شرکت متذکره که در بخش های کشت، پروسس و فروش محصول زعفران فعالیت را آغاز نمود، در مدت کم توانست با بهبود کیفیت تولید زعفران و گسترش فعالیت های تجارتی فراتر از مرز های افغانستان شهرت کسب نماید. بطور اوسط سالانه ۱۲۰ زن در این شرکت به منظور انجام کار های فصلی زعفران استخدام گردیده، تا در عرصه جمع آوری حاصلات و پروسس این نبات ارزشمند کار نمایند.
 
موفقیت این سرمایه گذاری با سهمگیری و اختصاص هزینه های کوچک پس انداز و قرضه از سوی چند زن و مرد روستایی مانند نعیم آغاز گردیده است.
 
از سال ۲۰۱۰ بدینسو پروژه انکشاف صنابع روستایی افغانستان تولید کنندگان روستایی را با بازار ها وصل ساخته و همزمان با آن از طریق گروپ های پس انداز و گروپ های قرضه قریه، روستاییان را کمک نموده، تا برایشان تجارت های کوچک ایجاد نموده و یا تشبثات کوچک شان را توسعه دهند.

د افغانستان په کلیوالو سیمو کې د خصوصی تشبثاتو او د کارموندنی د فرصتونو پیاوړتیا

Miki Terasawa's picture
Also available in: English | دری
The Afghanistan Rural Enterprise Development Project has linked rural producers, inlcuding saffron farmers with markets to create businesses and provide employment opportunities to many Afghan women and men.
د افغانستان د کلیوالي صنایعو د پراختیا پروژه له ټولو کلیوالو تولید کوونکو، بالخصوص له هغو بزګرانو څخه چې د زعفرانو د کښټ او پروسس په برخه کې کار کوي، مالي  او تخنیکي ملاتړ برابروي. په دې توګه نه یوازې، چې بزګران به وتوانیږي څو خپل محصولات بازارونو ته عرضه کړي، بلکه خپله به کوچني تجارتونه او تشبثات پرانیزي او د ښځو او نارینه وو لپاره به د کارموندنې فرصتونه برابر شي. انځور: د افغانستان د کلیوالي صنایعو د پراختیا پروژه/ نړیوال بانک

د زعفرانو د کښت چارو کې د هرات ولایت د یوه بریالي متشبث نعیم سره وپیژنئ. په ۲۰۱۳ کال کې نعیم او څو نورو شریکانو یې وروسته له دې چې د کرني په څو ښونیزو برنامو، او کورنیو نندارتونونو کې ګډون وکړ نو د تابان په نامه د یوه سوداګریز شرکت په جوړولو یې پیل وکړ. نوموړی شرکت چې د زعفرانو د کښت، پروسس او خرڅلاو په برخه کې فعالیت کوي، په ډیر کم وخت کې وتوانید د زعفرانو د کیفیت په لوړولو سره  د خپل سوداګریز فعالیتونو شهرت د افغانستان تر پولو واړوي. اوس مهال په منځنۍ توګه دغه شرکت په کال کې ۱۲۰ ښخې د زعفرانو د فصلی چارو لپاره ګوماري، تر څو د دغه ارزښتناک بوټي  د حاصلاتو د راټولولو او پروسس چارې پر مخ بوزي.
 
د دغه پانګه اچونې د بریالیتوب کیسه د سپما او پورونو لپاره د کوچنیو نغدي ونډه اخیستنو  په وسیله د نعیم په شان دڅو نارینه وو او ښخو له خوا پیل شوه.
 
د ۲۰۱۰ کال نه را پدیخوا د افغانستان د کلیوالي صنایعو د پراختیا پروژې، کلیوال تولید کوونکي له بازار سره وصل کړل او همدارنګه د کلي سپما او پورونو د ګروپونو په واسطه یې  له کليوالي خلکو سره مرسته وکړه تر څو ورته کوچني تجارتونه جوړ او کوچني تشبثاتو ته وده ورکړي.

Six ways Sri Lanka can attract more foreign investments

Tatiana Nenova's picture
In 2017, Foreign Direct Investment (FDI) into Sri Lanka grew to over $1,710 billion. But Sri Lanka still has ways to go to attract more FDI.
In 2017, Foreign Direct Investment (FDI) into Sri Lanka grew to over $1,710 billion. But Sri Lanka still has ways to go to attract more FDI. Credit: Shutterstock 


To facilitate Foreign Direct Investment (FDI), Sri Lanka launched last week an innovative online one-stop shop to help investors obtain all official approvals. To mark the occasion, this blog series explores different aspects of FDI in Sri Lanka. Part 1 put forth 5 Reasons Why Sri Lanka Needs FDI. Part 3 will relate how the World Bank is helping to improve Sri Lanka’s enabling environment for FDI.

Sri Lanka and foreign investments read a bit like a hit and miss story.

But it was not always the case.

Before 1983, companies like Motorola and Harris Corporation had plans to establish plants in Sri Lanka’s export processing zones. Others including Marubeni, Sony, Sanyo, Bank of Tokyo and Chase Manhattan Bank, had investments in Sri Lanka in the pipeline in the early 1980s.

All this changed when the war convulsed the country and derailed its growth. Companies left and took their foreign direct investments (FDI) with them.

Nearly a decade after the civil conflict ended in 2009, Sri Lanka is now in a very different place.

In 2017, Foreign Direct Investment (FDI) into Sri Lanka grew to over $1,710 billion including foreign loans received by companies registered with the BOI, more than doubling from the $801 million achieved the previous year.

But Sri Lanka still has ways to go to attract more FDI.
 
As a percentage of GDP, FDI currently stands at a mere 2 percent and lags behind Malaysia at 3 – 4 percent and Vietnam at 5 – 6 percent.

Five reasons why Sri Lanka needs to attract foreign direct investments

Tatiana Nenova's picture
Sri Lanka’s government has recognized the need to foster private-sector and beef up exports to attain the overarching objective of becoming an upper-middle-income economy.
Sri Lanka’s government has recognized the need to foster private-sector and beef up exports to attain the overarching objective of becoming an upper-middle-income economy.

To facilitate Foreign Direct Investment (FDI), Sri Lanka is launching this week an innovative online one-stop shop to help investors obtain all official approvals. To mark the occasion, this blog series explores different aspects of FDI in Sri Lanka. Part 2 will explore how the country can attract more FDI. Part 3 will relate how the World Bank is helping to create an enabling environment for FDI in Sri Lanka.

You may have heard that Sri Lanka is intent on drumming up more foreign direct investments up to $5 billion by 2020. At the same time, the government aims to improve the lives of Sri Lanka’s citizens by generating one million new and better jobs.
 
This isn’t a pipe dream. Thanks to its many advantages like a rich natural resource base, its strategic geographic position, highly literate workforce and fascinating culture, the island nation is ripe for investment in sectors such as tourism, logistics, information technology-enabled services, and high-value-added food processing and apparel.
 
What is foreign direct investment and why does Sri Lanka need it?
 
Very simply, foreign direct investment (or FDI) is an investment made by a company or an individual in a foreign country. Such investments can take the form of establishing a business in Sri Lanka, building a new facility, reinvesting profits earned from Sri Lanka operations or intra-company loans to subsidiaries in Sri Lanka.
 
The hope is that these investment inflows will bring good jobs and higher wages for Sri Lankan workers, increase productivity, and make the economy more competitive.  
 
Sri Lanka’s government has recognized the need to foster private-sector and beef up exports to attain the overarching objective of becoming an upper-middle-income economy.
 
Attracting more FDI can help achieve that goal and fulfill the promise of better jobs.
 
Here are five reasons why:

India’s remarkably robust and resilient growth story

Poonam Gupta's picture

India has achieved much in the last decades. Yet an economic deceleration in the past few quarters has generated worried commentaries about India’s growth potential.  However, our analysis of nearly five decades of data finds that India’s long-term growth process is steady, stable, diversified and resilient. Does this lay the groundwork for a more sustained 8% growth in the future? Yes, possibly, but more is needed. Let us elaborate.

First, India’s long-term economic growth has steadily accelerated over a fifty-year period, without any prolonged reversals. Thus, while growth averaged 4.4 percent a year during the 1970s and 1980s, it accelerated to 5.5 percent during the 1990s-early 2000s, and further to 7.1 percent in the past one decade. The acceleration of growth is evident not just for aggregate GDP, but even more strongly for per capita GDP. The average pace of per capita growth was 5.5 percent a year in the last decade. Interestingly, when compared with some of the world’s largest emerging economies, this steady acceleration of growth stands out as being unique to India.

Second, India’s rate of growth has become more stable. This is partly due to the stabilization of growth within each sector – agriculture, industry and services – and partly to the transition of the economy toward the services sector, where growth is more stable. Particularly interesting is the sharp increase in the stability of GDP growth since 1991. Before this, growth accelerated episodically, was punctuated by large annual variations, and often failed to sustain. Thus, growth has not just accelerated post liberalisation, it has also become more stable.

Third, growth has been broadly diversified. Growth has accelerated the fastest in services, followed by industry, and less so in agriculture. Over the long run, India’s growth has been driven by an increasing share of investment and exports, with a large contribution from consumption. Growth has also been characterized by productivity gains – both in labor productivity as well as in total factor productivity.

Finally, growth has been broadly resilient to shocks, both domestic and external. The resilience of India’s growth can be attributed to the country’s large and spatially diversified economy, as well as to its diversified production structure that is not dependent on a few products, commodities, or natural resources. It can also be attributed to India’s diversified trade basket and broad range of trading partners, wherein a slowdown in any one part of the world will not result in a large impact on India.



The resilience of India’s growth process was on display in recent years when the country recovered quickly from the impacts of two major policy events – demonetization and the implementation of the Goods and Services Tax (GST), an important indirect tax reform. We argue that the deceleration to growth rates below 7 percent between Q3 2016–17 and Q2 2017–18 was an aberration, attributed to temporary disruptions in economic activity as the economy adjusted to demonetization and businesses prepared for the implementation of GST. At present, there are indications that the economy has bottomed out and, in the coming quarters, economic activity should revert to the trend growth rate of about 7.5 percent. We project GDP growth to be 6.7 percent in 2017-18 and accelerate to 7.3 percent and 7.5 percent respectively in 2018-19 and 2019-20.

Enabling digital financial inclusion for rural women: emerging findings from India

Shobha Shetty's picture
"Pehle to bank jaane se bhi dar lagta tha, aur ab hum bank wali didi ban gaye hain’’ (Earlier I used to be afraid of stepping into a bank branch but now I am called a bank representative!). These are the words of Nidhi Kumari, aged 24 who hails from a Baheri Village in Darbhanga district of Bihar. You cannot help but notice the pride and new-found self-confidence behind her wide smile.

Nidhi is one of over 1500 Banking Correspondent Agents (BCAs) under the World Bank’s (IDA $500M) National Rural Livelihood Project (NRLP) in India that supports the Government’s National Rural Livelihood Mission (NRLM) in 13 high poverty states.
 
 Jeevika.
Nidhi Kumari at her BC Kiosk serving customers in her village. Photo courtesy: Jeevika.

Agent-based branchless banking in India is not new and has been around for over a decade. Given that there are over 650,000 villages in India and that less than 10 percent of villages have bank branches[i], an ICT-enabled alternate channel is now a dire necessity to enable greater financial inclusion. This agenda got a further boost when the Government of India launched the  Pradhan Mantri Jan Dhan Yojana (PMJDY) in 2014 to boost financial inclusion. To date, over 310 million PMJDY bank accounts (basic savings bank accounts) have been opened with 53 percent of these accounts now being held by women.

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