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Financial inclusion: Stepping-stone to prosperity

Sri Mulyani Indrawati's picture
Also available in: 中文 | العربية | Français | Español

In Pakistan, Salma Riaz, right, shows Saba Bibi how to use her new cell phone to receive payments. © Muzammil Pasha/World BankTwo and a half billion people in the world do not have access to formal financial services. This includes 80% of the poor — those who live on less than $2 a day. Small businesses are similarly disadvantaged: As many as 200 million say they lack the financing they need to thrive.

This is why we at the World Bank want men and women around the world to have access to a bank account or a device, such as a cell phone, that will let them store money and send and receive payments. This is a basic building block for people to manage their financial lives.

Why is this so important? Financial inclusion helps lift people out of poverty and can help speed economic development. It can draw more women into the mainstream of economic activity, harnessing their contributions to society. And it will help governments provide more efficient delivery of services to their people by streamlining transfers and cutting administrative costs.

A step out of poverty

Studies show that access to the financial system can reduce income inequality, boost job creation, and make people less vulnerable to unexpected losses of income. People who are "unbanked" find it harder to save, plan for the future, start a business, or recover from a crisis.

Being able to save, make non-cash payments, send or receive remittances, get credit, or get insurance can be instrumental in raising living standards and helping businesses prosper. It helps people to invest more in education or health care.

Are women traveling into a safer 2015?

Priyali Sur's picture
Also available in: العربية | Français | Español
NEW DELHI—It happened outside a plush mall in Gurgaon, a booming financial and industrial hub just southwest of the Indian capital.  A 21-year old woman, a newcomer to the city, hopped into a shared taxi after finishing her second day at work. “Only when the driver started taking me through deserted streets did I realize that this was his personal car and not a shared taxi,” she tells me of that night two years ago. “He took me to a lonely place, hit me, threatened me, and raped me. I wish I knew it wasn’t a cab. I wish there was a safe way to travel.”
 

Supporting Entrepreneurs: Breaking Down Barriers for Access to Finance

Irene Arias's picture
Also available in: Español

​Small and medium sized companies are the backbone of Latin America’s economy. They represent more than 90 percent of all enterprises in the region, generating over half of all jobs and a quarter of the region’s gross domestic product. They are essential to economic growth, yet their success is often blocked by one key obstacle: lack of credit. Nearly a third of companies in the region identified lack of credit as a major constraint, according to recent surveys.

Take the case of Sonia Arias, who owns a small textile business in Medellin, Colombia. When she opened her business seven years ago, she took an informal loan that left her with sky-high interest rates and little cash to reinvest. “When I was paying these loans,” she said, “it felt like we were being hit with a stick.”

5 Ways Marine Parks Benefit People

Amanda Feuerstein's picture
Photo via Shutterstock​Marine Protected Areas will be a topic for discussion at the IUCN World Parks Congress, which is opening today in Sydney.  And it should be: MPAs—which are marine spaces that restrict human activity and manage resources to achieve long-term conservation of nature—are one of the many tools for better ocean management.  This is one of the reasons the World Bank Group supports efforts to establish MPAs in countries including Indonesia and Brazil.

Every MPA is not created the same; some allow fishing and some do not, some are small and some are large, some are connected and some stand alone. When they are well planned and well executed, MPAs can help feed communities, protect jobs and boost biodiversity in the ocean. Here are the top five reasons why MPAs can be GREAT!

1. Spill Over Effects

The benefits of an MPA extend far beyond the boundaries of protection. When well planned, MPAs act as the home base for migratory species. These species use the protected area to reproduce, feed or congregate. But they do not stick around for long. This is called the “spill over effect” and it is hugely beneficial to local fishing communities. Even if fishing is restricted inside the MPA, just outside the border the fish are more numerous and far larger. For example, in Indonesia, community income increased 21 percent in 258 villages near a network of six protected areas.

Opening the Green Bond Market in Mexico

Mauricio González Lara's picture
Also available in: Español

“Growing a Green Bond Market in Mexico: Issuers and Investor Summit” was held Oct. 27 in Mexico City, organized by the International Finance Corporation (IFC), the Asociación de Bancos de México, HSBC, and Crédit Agricole. The timing could not have been better. Although the first green bonds were issued in the last decade, their popularity has exploded in recent years. According to estimates, the market will be a $40 billion one this year, a figure that represents a fourfold increase relative to last year.

A green bond is a financial market debt instrument. Its uniqueness lies in the commitment of the issuer to channel the funds raised exclusively toward green projects, that is, projects that have a positive impact on climate change and involve both renewable energy and energy efficiency.

Measuring Development Success in Difficult Environments

Laura Ralston's picture

The challenge of moving from conflict and fragility to resilience and growth is immense. More than half of the countries counted as low income have experienced conflict in the last decade. Twenty per cent of countries emerging from civil conflict return to violence in one year and 40% in five years.

While the use and production of reliable evidence has become more common in much of the international development debate and in many developing countries, these inroads are less prevalent in fragile and conflict-affected situations (FCS). Programming and policy making in countries affected by conflict and prone to conflict is often void of rigorous evidence or reliable data. It is easy to argue, and many do, that it is impossible to conduct rigorous evaluations of programs in conflict-affected states. However, in spite of the very real challenges in these environments, such evaluations have been conducted and have contributed valuable evidence for future programming, for example in Afghanistan, the DRC, Colombia, northern Nigeria and Liberia.

My unit Center for Conflict Security and Development, (CCSD) is teaming up with the Department of Impact Evaluation (DIME), as well as the International Initiative for Impact Evaluation (3ie), and Innovations for Poverty Action (IPA), in a series of activities to enhance the evidence base on development approaches to peace- and state-building challenges. A first goal is to scope out where our evidence base is thinnest: what are the programs and interventions that remain least tested, but have theories of change suggesting great potential? We are hoping to take stock of what we and other donor institutions have been doing in this area of development, and map this into what we have learnt and what we most need to learn more about. USIP, USAID, IRC as well as leading academics in this field and IEG, are kindly helping in this endeavor, and we hope to be able to share some initial findings at our fragility forum later this year.

Stunting: The Face of Poverty

Sri Mulyani Indrawati's picture
Globally, 165 million children under age 5 suffer from chronic malnutrition – also known as stunting, or low height for age. Much of this damage happens in pregnancy and the first two years of a child’s life. It means a child has failed to develop in full and it is essentially irreversible – which means that the child will have little hope of ever achieving her full potential. 
 
The evidence tells us that malnutrition costs lives, perpetuates poverty, and slows economic growth. We now know that nearly half of all child deaths globally are attributed to malnutrition. I have seen in my own country, Indonesia, how stunting caused by malnutrition has diminished too many children’s futures before they even begin. Malnourished children are more likely to perform poorly in school and drop out earlier than their better-nourished peers, limiting their future earnings. Data from Guatemala show that boys who had good nutrition before age 3 are earning nearly 50% more as adults, and girls had a greater likelihood of having an independent source of income and were less likely to live in poor households.
 
Malnutrition diminishes not only the futures of individuals, but also of nations. Recent estimates suggest that as much as 11% of gross national product in Africa and Asia is lost annually to the impact of malnutrition. To end extreme poverty and promote shared prosperity, the world must commit to end child stunting due to malnutrition. I will be joining leaders from around the world in London this week to focus on this critical challenge.
 

Gas Flaring: Let’s Light Up Homes Rather than the Sky

Rachel Kyte's picture

Gas flaring. Credit: ShinyThings/Creative Commons

Ten years ago, the World Bank and the government of Norway launched an ambitious project to drastically reduce greenhouse gas emissions from a source few people thought much about. If you’ve driven past oil fields at night, you’ve seen the flames from gas flaring. But you might not have realized just how much greenhouse gas was being pumped into the dark – and how much of a natural energy resource was being wasted in the process.

Half a dozen major oil companies joined us in 2002 in creating the public-private Global Gas Flaring Reduction partnership, and we began working together to reduce the flaring. More than 30 government and industry partners are on board today.

Together, we have achieved a great deal in just the first decade.

Cost-Effective Conservation

Rachel Kyte's picture

También disponible en español

The success of the Amazon Region Protected Areas Program (ARPA) drew a crowd here in Hyderabad at the UN Convention on Biological Diversity meeting. This effort by the government of Brazil – supported by the World Bank, the Global Environment Facility, WWF, and the German Development Bank (KfW) – is protecting almost 60 million hectares of rainforest, an area roughly the size of France and Belgium combined.

Speakers from the governments of Brazil and Germany, as well as from the GEF and foundations, all agreed that ARPA’s results are impressive: Between 2004 and 2006, ARPA accounted for 37 percent of Brazil’s substantial decrease in deforestation, and the program’s first 13 new protected areas will save more than 430 million tons of CO2 emissions through 2050.

Longreads: Future Foods, Car Index, Mexico's Middle Class, Gen U and Africa's Era of Unemployment

Donna Barne's picture

Find a good longread on development? Tweet it to @worldbank with the hashtag #longreads.

 

Amid Olympics chatter, concern continues to grow over extreme weather and rising food prices, with many tweeting this week about IRIN’s “Food: Price Shock Hotspots.” BBC News Magazine  looks at possible future climate-friendly food stuffs —including insects, lab-grown meat, and algae—in “Future Foods: What Will We Be Eating in 20 Year’s Time?” Demand for protein is expected to expand along with the global middle class—which may be as large as 600 million people in G20 developing countries, according to a Carnegie Endowment paper, "In Search of the Global Middle Class." Authors Uri Dadush and Shimelse Ali argue their "Car Index" of the number of cars in circulation provides "a relatively good measure of the number of middle-class households." A  BRIC economy is the subject of the Washington Post’s "Returning Migrants Boost Mexico’s Middle Class" -- a look at how immigrants’ savings are being used back home. In Africa, progress could be hampered by jobless growth and growing numbers of jobless young people, according to "Generation U – Africa’s Era of Unemployment."

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