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Public Sector and Governance

How Islamic finance can boost infrastructure development

Joaquim Levy's picture
Also available in: العربية | Français
Queen Alia International Airport, Jordan. © littlesam/Shutterstock
Queen Alia International Airport, Jordan. © littlesam/Shutterstock

In many developing countries, there are glaring gaps in the quantity of infrastructure per capita. For example, power generation capacity per person in these countries is only one-fifth that of advanced economies. We know that expanding infrastructure investment in economic and social services is an effective way both to promote inclusive growth and to foster local resilience to global shocks. In particular, investment in quality, sustainable infrastructure helps finance the transition towards a low-carbon, more environmentally friendly economic model. This happens notably in the renewable energy and low-emission transport sectors. Given the scale of resources needed to address the infrastructure investment gap, mobilizing the private sector for this goal has become imperative, especially in countries where financial transactions in banking and capital markets follow Islamic law (or shari’ah) principles.
 
The conventions of Islamic finance are particularly suitable for infrastructure development. They define an asset-oriented system of ethical financial intermediation built on the principles of risk-sharing in lawful activities (halal) rather than rent-seeking gains. This “entrepreneurial” approach by investors requires a high degree of transparency and creates incentives to monitor projects more carefully, which, in turn, strengthen the efficiency in building and operating infrastructure.

Maximizing finance for development works

Hartwig Schafer's picture
Also available in: العربية | Français | Español
People in Saint-Louis, Senegal. © Ibrahima BA Sané/World Bank
People in Saint-Louis, Senegal. © Ibrahima BA Sané/World Bank


Massive investment is needed to meet the ambitious goal of ending extreme poverty and boosting shared prosperity by 2030. By some estimates it could cost as much as $4.5 trillion a year to meet the Sustainable Development Goals (SDGs), and obviously, we will not get there solely with public finance. And there’s the rub: Countries will only meet the SDGs and improve the lives of their citizens if they raise more domestic revenues and attract more private financing and private solutions to complement and leverage public funds and official development assistance. This approach is called maximizing finance for development, or MFD.

Steps to increase cooperation between national development banks, the private sector and multilateral banks

Ceyla Pazarbasioglu's picture
Also available in: Español | Français | العربية



The program of events at the just concluded 2017 World Bank-IMF Annual Meetings was rich, and covered a range of topics instrumental to the World Bank Group’s work.

However, the event closest to my heart was on the role national development banks (NDBs) can play to close the staggering financing gap needed to reach the Sustainable Development Goals, nicknamed going “from billions to trillions” of dollars.

Since the SDGs were announced, the international development community has been looking at ways to tap into new funding venues, attract the private sector and build relevant private-public sector partnerships.

National development banks are important: they are key in attracting and mobilizing private sector funding.

Why ending violence is a development imperative

Ede Ijjasz-Vasquez's picture
Also available in: Español

Each year, about half a million people are killed by intentional homicide. That means one life is lost to violence per minute worldwide.

Latin America and Caribbean is among the hardest hit by chronic violence. Today, the region still sees an average rate of 24 homicides per 100,000 inhabitants—more than twice the World Health Organization (WHO)’s threshold for endemic violence.

If violence is an epidemic, youth are—by far—the largest risk group. In Latin America, the homicide rate for males aged 15-24 reaches 92 per 100,000, almost four times the regional average. Young people aged 25-29 years, predominately males, are also the main perpetrators of crime and violence, according to an upcoming World Bank report. 

Endemic violence also translates into less productivity, poorer health outcomes and high security costs. The cumulative cost of violence is staggering—up to 10% of GDP in some countries—with negative long-term consequences on human, social, economic, and sustainable development.

Ending violence is not only a must for law and justice, but also a development imperative.

The good news is that violence can be prevented. For example, cities like Medellin in Colombia and Diadema in Brazil have dramatically reduced homicide rate over the last few decades, thanks to tailored solutions backed by robust data analysis and a “whole-of-society” approach.  

In this video, we will discuss why violence is an important development issue, how countries and cities can effectively fight violence and crime, and what the World Bank and its partners are doing to ensure security and opportunity for all—especially youth and the urban poor. 

Related:

 

My advice for future policymakers: See the public’s success as your success

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

Students line up to wash their hands before eating at Kanda Estate Primary School in Accra, Ghana. © Dominic Chavez/World Bank

The most important word in "public policy" is "public" — the people affected by the choices of policymakers.

But who are these people? And what do they care most about? Policies evolve as the concerns of generations change over time. Regardless of whether you are generation X, Y, or Z, people want the same things: prosperity and dignity, equality of opportunity, justice and security.

Panama Canal expansion: A smart route for boosting infrastructure in Latin America

Philippe H. Le Houérou's picture
Also available in: Español
Since it opened in 1914, the Panama Canal has been one of the world’s most important trade assets and a marvel of engineering. Its expansion has doubled the canal’s cargo capacity, adding a new lane and bigger locks that will shake up shipping routes and make seaborne trade less costly and more efficient.
 
© Panama Canal Authority


Panama, already projected to be Latin America’s fastest-growing economy over the next five years, was the big winner when the expanded canal opened its locks on June 26. New port projects and related logistics hubs are in the works to attract global manufacturers and further enhance the country’s competitiveness.

3 reasons why ‘Housing for All’ can happen by 2030

Gloria M. Grandolini's picture


By 2030, almost 60 percent of 8.3 billion people will live in cities, according to UN estimates.

Almost 1400 of the world’s cities will have half a million or more inhabitants.

Cities can connect people with opportunities, incubate innovation and foster growth, but they require urban planning, infrastructure, transport and housing.

Why cultural diversity matters to development

Ede Ijjasz-Vasquez's picture
Culture is an essential component of each and every society. It is the fabric that weaves communities together and gives them their unique identity. Acknowledging and factoring in cultural diversity is essential to working efficiently with our client countries and adapting interventions to the local context.
 
Embracing cultural diversity, especially through the preservation of cultural heritage assets, also brings tangible economic benefits. Preserving or repurposing historic landmarks in downtown cores, for instance, can make cities more vibrant, attract new firms, and foster job creation. In addition, the preservation of cultural assets plays a key part in supporting sustainable tourism, a sector that has significant potential for reducing poverty in both urban and rural settings.
 
On this World Day for Cultural Diversity for Dialogue and Development, Ede Ijjasz and Guido Licciardi tell us more about the role of culture and its importance to the World Bank's mission.
 
If you want to learn more about this topic, we invite you to discover our latest Sustainable Communities podcast.

The way out of poverty and corruption is paved with good governance

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

Woman speaks to World Bank MD and COO Sri Mulyani Indrawati in the Nyabithu District of Rwanda. © Simone D. McCourtie/World Bank

For the first time in history, the number of people living in extreme poverty has fallen below 10%. The world has never been as ambitious about development as it is today. After adopting the Sustainable Development Goals and signing the Paris climate deal at the end of 2015, the global community is now looking into the best and most effective ways of reaching these milestones. In this five-part series I will discuss what the World Bank Group is doing and what we are planning to do in key areas that are critical for ending poverty by 2030: good governance, gender equality, conflict and fragility, creating jobs, and, finally, preventing and adapting to climate change.


Twenty years ago, the World Bank took up the fight against corruption as an integral part of reducing poverty, hunger, and disease. The decision was groundbreaking then and remains valid today. Corruption diverts resources from the poor to the rich, leads to a culture of bribes, and distorts public expenditures, deterring foreign investors and hampering economic growth.

Taxing tobacco and the new vision for financing development

Patricio V. Marquez's picture

As part of the 2016 World Bank Group-International Monetary Fund Spring Meetings held this past week in Washington, D.C., a fascinating panel discussion, A New Vision for Financing Development, took place on Sunday, April 17. Moderated by Michelle Fleury, BBC's New York business correspondent, it included World Bank Group President Jim Yong KimBill Gates, Justine Greening (UK Secretary of State for International Development), Raghuram Rajan (Governor of the Reserve Bank of India), and Seth Terkper (Minister for Finance and Economic Planning of Ghana).
A construction worker takes a break in Timor-Leste. © Alex Baluyut/World Bank The panel was in consensus about the current challenging economic and social environment facing the world as a whole.  That environment includes low rates of economic growth across the world, drastic reductions in the price of commodities that are impacting negatively low-and middle-income countries, rising inequality, frequent natural disasters and pandemics, increased number of displaced populations and refugees due to conflict and violence spilling across national borders and continents, and the ambitious United Nations 2030 Agenda for Sustainable Development, which includes a set of 17 Sustainable Development Goals (SDGs). A question debated in the panel was, Where will the resources be found to address these challenges? This question is critical under the current scenario if countries are to continue to build on the progress achieved over the last decade and maintain previous gains.

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