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Africa

A cheap intervention that helped partially formalize firms and increased profits – just don’t ask about taxes

David McKenzie's picture
Governments have at least four reasons to try and bring firms into the formal system:
  1. To broaden and increase the tax base
  2. To enable firms to access the formal economy and help spur firm growth through the potential benefits of being formal (such as access to financial services and government contracts)
  3. To increase the sense of rule of law by having the default be that everyone is obeying the law
  4. To have firms provide information about themselves to the state, which can help the government better understand the structure of the economy and to better target business programs.

The most common way of trying to achieve these aims has been through regulatory reforms that make it easier for firms to formalize. This has taken the form of “one-stop-shops” which have been implemented in at least 115 countries and which enable firms to register both as a business and as a tax entity all at once. However, a number of randomized experiments that have followed such reforms have seen very few informal firms formalize. This raises the question of whether regulatory simplification alone is not enough, and whether trying to achieve all of the above four goals with one instrument causes none of them to be attained.

Separating business and tax registration, and an experiment in Malawi
In a new working paper (replication data) (joint with Francisco Campos), we conducted an experiment with informal firms in Malawi that aimed to test whether governments can bring firms into at least part of the formal system and thereby achieve at least some of the above goals, and whether firms need additional help to realize the benefits of becoming formal.

Giving people control over their data can transform development

Nandan Nilekani's picture
Suguna, one of the many women who has benefited from Aadhaar– her digital identity. © Bernat Parera
Suguna, one of the many women who has benefited from Aadhaar– her digital identity. © Bernat Parera

In Para village of Rajasthan, India, Shanti Devi’s livelihood depends on wages earned through MNREGA (India’s rural employment guarantee program) and a pension for her and her disabled husband. Eight years ago, a postman would deliver this cash to any household member he found. Sometimes she did not receive the full amount because a relative would claim her money. Even when she did, women like Shanti Devi did not have a secure way to save it because she was unbanked. Opening a bank account needed an individual identification card which many women lacked.

Today, Shanti Devi’s life has changed because of Aadhaar – her digital identity. All of her cash benefits are transferred directly into her bank account, which she was able to open with her Aadhaar number and her fingerprint. She can make and receive digital payments, with any person or business, even without a smartphone. With her ID, she is now fully empowered to exercise her rights, access services and economic opportunities. Most of all, she is afforded the dignity to assert her identity.  

Where camels walk on water

Tesfaye Bekalu's picture

Camels can walk on water. I wouldn’t have believed if I hadn’t seen it with my own eyes. And if you don’t believe me, well, just look at the picture below to see camels walking on water in Somaliland!


Yes, it looks like sand, but there is water right underneath their hooves. This is the brilliance of sand dams and subsurface dams, where sand effectively serves as a temporary reservoir cover, protecting the precious water underneath from evaporating under the blazing sun. Sand dams provide low-cost, low-maintenance, and replicable rainwater harvesting technology.

On World Mental Health Day: A call to invest in interventions for young people

Patricio V. Marquez's picture
Image: WHO World Mental Health Day 2018

Many of us have vivid memories of the joy and excitement of young adulthood, but this can also be a time of stress, apprehension and fear of the unknown. For many young people, this unease can lead to acute anxiety, severe depression or substance use disorders, if not recognized and managed.

Young people living in environments where they face death and suffering daily, such as in West Africa during the Ebola epidemic of 2014-2015, in post-tsunami or earthquake-affected areas, or in countries experiencing extended conflict and violence, are particularly vulnerable to mental distress and illness.

This year’s World Mental Health Day, on Oct. 10, recognizes this critical time in life with the theme “Young People and Mental Health in a Changing World.” Many changes occur during adolescence and the early years of adulthood, but they are not always acknowledged or treated.

From drought to resilience: Africa’s livelihoods in transition

Raúl Alfaro-Pelico's picture



When it does not rain, people starve.

This is the reality for many farmers in the Sahel—and across the globe—and the situation is only becoming more dire due to climate change. Yet, during a recent visit to Garin Madougou, a village in Dokoro, a district in Niger, we saw that lack of rainfall does not have to lead to food insecurity.

Helping Every Teacher Be Their Best

Jaime Saavedra's picture
Ecoles Oued Eddahab school in Kenitra, Morocco. Photo: World Bank

In every country, there are dedicated and enthusiastic teachers who enrich and transform the lives of millions of children. Silent heroes who often lack proper training, teaching materials and are not recognized for their work. Heroes who defy the odds and make learning happen with passion, creativity and determination.

Tackling the drivers of East Africa’s surprising earthquake risk

Ana Campos Garcia's picture
A view of East Africa’s Rift Valley, home to the world’s largest seismic rift system. Photo : J. Waturi/World Bank


With all the other hazards facing Africa, it’s easy to forget that East Africa is home to the 6000-km long Rift Valley System—the largest continental seismic rift system on earth. The sub-region covers 5.5 million km2 and is inhabited by about 120 million people.

The Rift Valley is not subject to the high-magnitude earthquakes that we see along subduction zones, such as those in the Ring of Fire—the area in the basin of the Pacific Ocean known for its many earthquakes and volcanic eruptions—which can produce catastrophic consequences, as we’ve just seen in Indonesia. In the Rift Valley, residents have not experienced a high-magnitude earthquake in their lifetime, leading many people to deduce that the seismic risk is low or non-existent.

A new chapter for Sub-Saharan Africa’s mini grids industry

Sunita Chikkatur Dubey's picture
A new solar hybrid  mini grid, built by ACOB Lighting in Nigeria’s Bayan Fada community, will generate power for about 1,350 people. Photo: Alexander Obiechina, CEO of ACOB Lighting Technology Limited, Nigeria



Alexander Obiechina, CEO of ACOB Lighting Technology Limited in Nigeria is excited to be part of the Africa Mini-grid Developer Association (AMDA) – the first ever association in Africa to bring together stakeholders from the mini grid industry.

ACOB Lighting Technology has been operating in Nigeria since 2016 and with AMDA’s launch in April, Obiechina believes that his company will benefit from this collective platform by increasing access to finance, gaining investors’ confidence and learning from each other’s experiences. This opportunity for him and many other local mini-grid developers couldn’t have come at a better time, as Nigeria is planning to implement 10,000 mini grids to achieve its goal of achieving universal access to energy by 2040.

The UN and the World Bank working together in crisis-affected situations

Franck Bousquet's picture
Girls School in Sanaa. © UNICEF Yemen
Girls School in Sanaa. © UNICEF Yemen


Creating sustainable peace and development solutions for countries affected by conflict, crisis and violence is a global responsibility for the international community.
 
At the United Nations General Assembly this week, the UN and the World Bank, together with the International Committee of the Red Cross (ICRC) launched the Famine Action Mechanism (FAM), the first global partnership dedicated to preventing famine. With support from the world’s leading tech companies, the FAM aims to use data and state-of-the-art technology to pair decision-makers with better, earlier famine warnings and pre-arranged financing. Our work on the FAM is the latest example of how our organizations are joining forces to reduce the risk of global crises.

How antimicrobial resistance (AMR) stewardship is a critical part of strong health systems

Uzo Chukwuma's picture


Under the East Africa Public Health Laboratory Networking Project, diagnostic capacity has been strengthened through the construction of state of the art laboratories. © Miriam Schneidman / World Bank Group 2018


My interest in public health began in childhood and was marked by my experiences growing up in a low-income country with limited public health infrastructure. I felt firsthand the impact of an inadequate public health system when a beloved cousin succumbed to AIDS. My mother suffered a prolonged, resistant infection with complications after invasive surgery, and my family constantly battled malaria due to drug resistance or counterfeit drugs.


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