This Saturday, June 16, we celebrate International Day of Family Remittances to recognize “the significant financial contribution migrant workers make to the wellbeing of their families back home and to the sustainable development of their countries of origin.”
Which is why
In recent years, the international remittance services industry has been subject to the so-called “de-risking” phenomenon. Banks believe that anti-money laundering and counter financing of terrorism (AML/CFT) regulations and enforcement practices have made serving money transfer operators (MTOs) too risky from a legal and reputational perspective. For banks, the profit of serving MTOs is not considered sufficient to justify the level of effort required to manage these increased risks.
In November 2016, we published the “Practical Guide for Measuring Retail Payment Costs”, an innovative methodology that can be customized to country needs and circumstances, without losing the international comparative dimension.
The guide enables countries to measure the costs associated with retail payment instruments, based on survey data, for the payment end users, payment service/infrastructure providers, and the total economy. The guide also enables countries to derive projected savings in shifting from the more costly to the less costly payment instruments.
Photo: Arne Hoel
Description: Fish market and vegetable market, Nouakchott. The daily catch is brought here by the fishermen’s wives and family members to sell the fish.
As the World Bank Group’s flagship publication, Doing Business, celebrates its 15th edition, Mauritania continues to thrive as a major reformer in investment climate policy. The country was highlighted in the Doing Business 2016 report among the top 10 reformers worldwide and the current 2018 report shows that Mauritania outperforms the regional average.
Following a downward trend between 2010 and 2014, Mauritania has been steadily improving its ease of doing business performance. Figure 1 shows how, in just three year, a series of reforms that began in earnest during 2015, were key to help the country jump a remarkable 26 places from 176th in 2015 to 150th this year in 2018.
Blockchain is the subject of considerable hype, thanks largely to the rise (and fall and rise...) of high profile digital currencies. Beyond this spotlight, development experts and innovators are exploring whether the technology behind cryptocurrencies can be leveraged to advance gender equality.
Blockchain is a distributed ledger technology that facilitates peer-to-peer transactions without using an intermediary. (The technology is also notoriously difficult to follow, but we find this brief video helpful and this talk explains blockchain well, if you have a bit more time.) Put simply, the system is maintained by collaboration, code and sometimes competition. Many experts refer to Google Docs to explain the concept: multiple users can access the same document simultaneously and they can all see the changes. This feature potentially makes it suited for validating records and processing financial transactions in the absence of strong institutions.
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.
"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).
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.
The World Bank Group has helped strengthen the ecosystem for digital entrepreneurs and seed digital incubators in several countries around the world, including Kenya, Senegal, and South Africa, just to name a few. 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?
A new project combining skills across the World Bank Group and IFC is taking advantage of disruptive advances in the energy and finance sectors to address these longstanding challenges for SMEs.
Current access to electricity remains woefully low and is a major impediment to economic growth. More than half of Africa’s population isn’t connected to the energy grid and has no access to reliable power. At the same time, fewer than 50% of adults have an account with a formal financial institution.
In recent years, however, two important developments have made it possible to begin addressing these challenges:
- Off-grid energy solutions—notably solar power—have fallen dramatically in price with new business models working to scale them
- New digital-based financing mechanisms, such as crowdfunding, cryptocurrencies, peer-to-peer lending, psychometric testing, big data, and blockchain have emerged as tools for under-served finance markets.
There are strong parallels in these advances for both sectors. Whereas both energy and finance are traditionally provided by large-scale, centralized service providers—state-owned electricity utilities and large commercial banks, respectively—new solutions have effectively decentralized and democratized the provision of these services. Now a range of smaller,