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Private Sector Development

Have 'Special Economic Zones' Entered the 21st Century Yet? A Tale of Two Cities

Martin Norman's picture

At the World Free Zone Convention in Izmir, Turkey, which I attended in December, an important question was asked:  Have "Special Economic Zones" entered the 21st Century?  Evidence shows that, in many ways, they have – but in many instances we are still seeing across the globe the same isolated economic enclaves with few linkages to the local market and little economy-wide impact.

More than ever, special economic zones (SEZs) are on the defensive, despite the fact that the more than 3,500 SEZs worldwide have provided employment for more than 60 million people.

I believe that two zones, in particular, can shed light on the factors of success and failure in SEZs today:  Shenzhen, China, which is almost universally considered to be a success story, and the Calabar Free Trade Zone in Nigeria, which has failed to live up to its original projections. 
 

Knowledge-Sharing Boosts Development Know-How, as Practitioners and Policymakers Meet in Mombasa

Qursum Qasim's picture

Karibu Mombasa!

With those words, the World Bank Group’s network on Financial and Private Sector Development (FPD) this week kicked off a major knowledge and learning conference on development in Mombasa, Kenya. More than 250 participants – private-sector innovators, government policymakers and development practitioners from throughout the Africa region as well as from the Bank Group’s headquarters in Washington – came together to share ideas about cutting-edge innovations in delivering services; to brainstorm with colleagues on development strategy for Africa; and to consider new tactics to help meet the practical, everyday needs of Africans.

Delivering strong value for the Bank Group’s client countries was the theme of Klaus Tilmes, the network’s Acting Vice President, as the group envisioned the impending FPD transition into two new Global Practices: Trade & Competitiveness and Finance & Markets. Inclusive growth and inclusive finance – which are vital elements in achieving the Bank Group’s mission of eliminating extreme poverty and building shared prosperity – are the twin and complementary themes through which the two new practices will aim to help their clients meet the development challenge.

Promoting inclusive growth and creating jobs – as engines of growth, as key areas of cooperation between the public and private sectors, and as the backbone of the Bank Group’s approach to promoting a world free of poverty – was the conference’s first-day theme. In this context, youth and female unemployment are priority issues for Kenya and for other African countries – from the perspective of equity, certainly, but also from the perspective of social cohesion.

Increasing the Impact of Financial Education: Approaches to Designing Financial Education Programs

Andrej Popovic's picture



Recent evaluations of a number of worldwide financial education programs reported widely varied outcomes. While some found evidence of effectiveness, others reported mixed or no evidence. Yet an increasing number of developing countries are putting financial education strategies in place or are expanding financial education programs. The quality of design of such strategies and programs is therefore crucial.

Financial education programs can be ad hoc targeted interventions, aimed at addressing specific financial education gaps, or they can be more comprehensive approaches through financial education or literacy strategies that aim to address a number of priorities. Regardless of the approach – which depends on the local context – financial education programs have a higher likelihood of greater positive impact if they are based on reliable diagnostic tools and focused on clearly defined and sequenced priorities.
 
Over the past two years, the Financial Inclusion and Consumer Protection team at the World Bank Group has conducted substantial technical and diagnostic work in the area of responsible finance. For example, we have developed methodologies for financial capability surveys and impact evaluation, and we have conducted a series of diagnostic reviews in the area of consumer protection and financial literacy on a global scale.

Competitive Cities: Which Are They, and Why Should We Care?

Alexandra M. Cech's picture

With the majority of the world’s population now urban, cities are rising in prominence. Growing attention is being paid to cities’ potential to increase incomes and create jobs – whether through financial services and electronics manufacturing in Chennai, regionally integrated manufacturing around Guangzhou, or social and physical transformation in Medellin. Less prominent cities are asking how they can attain better economic performance. Hence economic competitiveness has become a preoccupation for city leaders – by which we mean a city’s ability to spawn, expand and attract businesses that create jobs for its residents, and to enlarge the overall economic pie.
 
So, how do cities make themselves more competitive? This year, the World Bank is investing in a Competitive Cities Knowledge Base (CCKB) initiative – a joint project between the World Bank Group’s departments working on Private Sector Development and Urban Development. The project includes in-depth case studies of economically successful cities across all continents. According to our current analysis, six of the most interesting cities for this work will be Bucaramanga (Colombia), Patna (India), Bandung (Indonesia), Agadir (Morocco), Kigali (Rwanda) and Izmir (Turkey). We are in the process of confirming these conclusions before beginning each of the case studies.


 

Sri Lanka - Resplendent Island, Raring to Deliver

Parth Shri Tewari's picture


Sri Lanka conjures up different images in the minds of different people: lush green tropical canopies, steaming cups of aromatic tea, and hardworking fishermen in their dinghy boats.

For me, the country also packs enormous promise for growth and development. There is not the slightest doubt that Sri Lanka will have to come clean and deal with the aftermath of its prolonged civil war. However, at a fundamental level, there is a sense of hunger in its people to rebuild their lives and their country. The new-found peace that engulfs the population is cherished by most, and is part of dinner conversations especially with foreigners like me.




Sri Lanka already holds a strong position in certain agricultural and industrial exports, like tea or uncut diamonds. Combine this with its strategic location – situated at the crossroads of major shipping routes connecting South Asia, East Asia and the Middle East – and you have a potent combination, a promise waiting to be fulfilled.

I recently spoke at an event organized by the country’s top business newspaper, the Daily Financial Times, in partnership with the well-regarded Colombo University MBA Alumni Association. The focus of the forum was the country’s emerging six-hub strategy – Maritime, Commercial, Knowledge, Aviation, Energy and Tourism: the cornerstone of its further economic development.

The euphoria leading up to the event was palpable. The ceremonial drums and lighting of the auspicious lamp to evoke good omen created the perfect ambience. I was nervous, not because of stage fright, but because I was about to present a contrarian viewpoint to private-sector and public-sector experts, while sharing the stage with the Minister of Economic Development and the Governor of the Sri Lanka’s Central Bank. Even though my arguments were well-thought-through and fact-based, it was going to be a delicate dance, as I was about to communicate some tough arguments against the implementation of the full-blown six-hub strategy.

Partager les expériences pour renforcer l'égalité hommes-femmes en Afrique subsaharienne

Paula Tavares's picture



Le 27 Février, un atelier régional de haut niveau a débuté à Lomé (Togo), avec la participation des ministres en charge de la promotion de la femme et des représentants de 11 pays d'Afrique de l'Ouest et Centrale. Le thème principal de l’atelier était le rapport du Groupe de la Banque mondiale, « Les Femmes, l’Entreprise et le Droit 2014 : Lever les obstacles au renforcement de l’égalité hommes-femmes ». Un dîner de bienvenue précédant l'ouverture officielle de l'événement a révélé le dynamisme des ministres participants - toutes des femmes -, de même que les réalités et enjeux communs à leurs nations. La plupart se réunissaient pour la première fois et cette occasion unique a permis le partage des expériences et des points de vue sur les lois, les normes culturelles et les rôles traditionnels au sein de la famille.

Les discours d'ouverture de l'atelier reflètent bien l'importance de l'égalité hommes-femmes pour la région. En accueillant l'événement, Monsieur Hervé Assah, Représentant Résident de la Banque mondiale au Togo, a noté que : « Sous-investir dans le capital humain que constituent les femmes est un véritable frein à la réduction de la pauvreté et limite considérablement les perspectives de développement sur le plan économique et social ». Ces préoccupations ont été reprises par la Ministre de l'Action Sociale, de la Promotion de la Femme et de l'Alphabétisation du Togo, Mme Dédé Ahoéfa Ekoué, qui a souligné l'importance de la participation des femmes dans la société et dans l'économie, à la fois au Togo et dans le monde. Le ton était donc donné pour cet événement de deux jours, qui visait à la fois à mettre en évidence les récentes réformes adoptées par les pays de la région et à promouvoir le partage d'expériences, les défis et les bonnes pratiques entre les participants pour promouvoir l'inclusion économique des femmes.

Female Entrepreneurship: What Support Programs Should Do (and What They Should Avoid Doing)

Xavier Cirera's picture
Take a look at the nine points listed below, and think about the various support programs for women entrepreneurs that you may be familiar with. Have you seen these factors before?
 
  • Ignore gender differences
  • Create curriculum around PowerPoint (Stand and deliver)
  • Emphasis on existing idea or opportunity
  • Use of big business examples
  • Use of industry standards
  • Reliance on banks as start-up funds
  • Primarily including male instructors and speakers
  • Assumptions about firm size
  • Assumptions about linearity of growth


This is a list of what NOT to do when designing and implementing successful support programs for women entrepreneurs, as suggested by Prof. Patricia Greene of Babson College at a recent presentation at the World Bank Group. Her seminar was the first in a series on "Women Entrepreneurs: A New Approach to Growth and Shared Prosperity."

Financial Inclusion Up Close in Rwanda

Douglas Randall's picture

You don’t have to spend very long in Rwanda before you start to be impressed by the financial inclusion landscape in this country – not only by the progress made over the past several years, but by the scale of ambition for the rest of this decade and beyond.

The government has set a target of 90 percent financial inclusion by 2020 and the evidence of progress toward this goal is everywhere: Advertisements for mobile-money products are painted and plastered onto almost every available surface and, if you know what to look for, it doesn’t take long to spot an Umurenge Savings and Credit Cooperative (Umurenge SACCO) – Rwanda’s signature financial inclusion initiative.

Six years ago, the 2008 FinScope survey found that that 47 percent of Rwandan adults used some type of financial product or service, but just 21 percent were participating in the formal financial sector, which was at the time made up mostly of banks but which also included a handful of microfinance institutions and SACCOs.

Largely in response to these figures – and in particular to the large urban/rural divide illustrated by the data – and the government set out to establish a SACCO in each of the country’s 416 umurenges, or sectors. The Umurenge SACCO was born.

Rethinking SME Finance Policy – harnessing technology and innovation

Douglas Pearce's picture
Conventional SME finance policies are designed to address conventional constraints to SMEs accessing the financial services which they need to manage risks, meet supply orders, and invest in new technologies and market opportunities. Yet technology and innovative approaches are transforming the business of SME finance, mitigating conventional challenges and risks and in some cases presenting new risks. Continuing with only conventional policy responses may be duplicative and waste resources, and may also fail to address emerging risks.  This has important implications for the World Bank Group’s approach to SME Finance.

Information asymmetry raises the costs and risks of providing financial services, and therefore reduces access and leads to higher pricing of financial services for many SMEs. Yet data availability is rapidly expanding, and data brokers are increasingly able to address information asymmetry.
  • “Big Data” Analytics - the analysis of alternative data sets such as cell phone histories and transactional data, represent new ways for assessing the creditworthiness of enterprises currently without access to finance. For example, Experian MicroAnalytics (global) and Cignifi (Brazil, Ghana, Mexico, US) deliver credit scoring based on airtime usage. This type of approach could open up access to credit for mobile payments customers in the developing world.  ZestFinance (US) combines data from thousands of potential credit variables, gleaned from alternative credit databases and web crawling to offer a ‘big data underwriting model’.
  • With increasing technology and internet access, the expansion of “digital footprints” allow for alternative ways to assess borrower creditworthiness and spot and prevent identity fraud. For example DemystData (Hong Kong, US) and Lenddo (Colombia, Mexico, Philippines) use online reputation and social media analytics.
  • The lack of financing sources available to many SMEs, linked to constraints in the use of collateral and the availability of information, is cited as a major concern in the World Bank’s Enterprise Surveys. Typical policy responses include secured transactions frameworks (collateral laws, movable assets registries), credit lines, state banks, partial credit guarantee schemes, and encouraging competition and diversification.

Treasure-Hunting for Women Entrepreneurs

Qursum Qasim's picture



Pick any country in the developing world.

Say, Pakistan.

Where are the women entrepreneurs in Pakistan?

They start and manage digital-content creation firms serving international clients. They are sole proprietors of construction businesses bidding for government projects. They supervise tailors and embroiderers in windowless storage rooms that double as stitching units. They export high-end gems and jewelry around the world.

Women entrepreneurs in Pakistan lead cutting-edge, innovative businesses – but there are far too few of them. The recent Global Entrepreneurship Monitor report finds that only 1 percent of Pakistani women are engaged in entrepreneurship – the lowest proportion in the world.

Pakistan is not alone in its dismal ratio of growth-oriented (or indeed any kind of) women entrepreneurs. Even in the developed Asian economies of Korea and Japan, only about 2 percent of women are entrepreneurs. Sub-Saharan Africa does much better in this regard, with 27 percent of women, on average, engaged in entrepreneurship -- but they are mostly involved in low-productivity sectors of the economy.

Women entrepreneurs, in Pakistan and globally, have narrow networks of friends and family who provide them with some initial capital to start their small businesses, with little expectation of further financial support. Their export customers are located wherever they have extended family. And they rarely feature in local chambers of commerce activities.

Banks are often reluctant to extend lines of credit to, provide working capital to or lend to women-led enterprises. This makes it difficult for these enterprises to pursue growth. Perhaps this is why the average growth projections for women-led enterprises are seven to nine percentage points below those for their male counterparts.

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