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access to finance

The promise of digital banking for Nepal’s remote areas

Farhad Ahmed's picture
Rural maintenance workers engaged in culvert maintenance at Parsa District. Credit: World Bank

On a fine Tuesday morning Roghan Devi, a routine road maintenance worker from Dhanusha district visits the local branch of Mega Bank - a commercial bank in Nepal, to receive her monthly salary. She was notified about this through a text message in her mobile phone. Just a few years back, it was unimaginable for her, and for most of the women from her community, to have a personal bank account.
 
This initiative is part of a World Bank-supported Strengthening National Rural Transport Program (SNRTP) project that works in 33 districts employing over 1,800 routine maintenance workers- over 70% of them are women - to enhance the availability and reliability of transport connectivity for rural communities. To support this initiative, SNRTP forged a joint collaboration with the private sector. 

Government procurement – a path to SME growth?

Simon Bell's picture
A tile factory in Ghana. Photo: © Arne Hoel/The World Bank


In many countries Government is the biggest procurer of goods and services, which makes them an attractive client for small and medium scale enterprises (SMEs) seeking to get a leg up in business.

Recognizing the important role that the public sector plays as a purchaser of goods and services, as well as the critical role SMEs have for the economy, Governments frequently use Public Procurement to incentivize, support and otherwise sustain local SMEs.

Also, as in many of our client countries, where the vast majority of SMEs are informal, the lure of a significant Government contract can serve as a strong motivator to register and formalize – bringing these companies in from the shadows.

But there is also a significant downside in many countries. Cash-strapped governments frequently don't pay their bills on time and, in some countries, payment delays of 12 months or even two years are not uncommon. Such delays can seriously compromise the position of a small scale enterprise which – with limited access to formal bank financing – relies critically on cash flow from its clients to sustain its business. A six month delay in receiving payment on a contract can easily put a small firm out of business.

Access to finance and job growth

Maria Soledad Martinez Peria's picture

The recent global financial crisis has highlighted the impact of credit markets on the real economy, in particular on employment. While an extensive literature exists on how finance can affect corporate investment and overall economic growth, comparatively little is known about the effect of finance on labor market outcomes. 

In a recent paper, entitled “Access to Finance and Job Growth: Firm-Level Evidence across Developing Countries” Meghana Ayyagari, Pedro Juarros, Sandeep Singh and I use comprehensive firm-level data across a large set of developing countries to analyze the impact of access to finance on job growth and the heterogeneity in this relationship across firm size.[1] In particular, we study the differential impact of access to finance on MSMEs’ ability to create jobs relative to that of larger firms.

Unlocking innovation in the Middle East through financial inclusion

Simon Bell's picture


I recently attended an SME Conference in Jordan around SME Finance and Employment – extremely important issues in a troubled region.  All participants agree that much more needs to be done to address the lack of jobs in the region and to increase financial access at all levels, to individuals, households and small and medium scale enterprises (SMEs).

The Middle East remains the most financially excluded region in the world despite being a middle income region.

Only 4% of unbanked adults in the Middle East say that they don’t have an account because they don't need one. In other words, it is clear there is widespread unmet demand for financial services.

A person living in the Middle East is less likely to have a bank account than is a low-income person living in Africa or South Asia, and significantly less likely than a person living in Latin America, Eastern Europe or East Asia from comparable middle income country or region. This poses a dilemma – why?

Could the digital revolution get more women into work?

Leora Klapper's picture

The most recent International Women’s Day focused on accelerating gender parity, which makes it a perfect time to highlight the urgent need to boost women’s economic participation worldwide. One way of doing that is by tapping into the power of digital payments and digital financial services.

Making the invisible billion more visible: the power of digital identification

Vyjayanti T Desai's picture
There are an estimated 1.5 billion people around the world, largely in Asia and Africa, who do not have an officially recognized document to prove their identity.  In Sub-Saharan Africa, more than a third of its population faces this challenge and over 40% of births (in the 0-4 age group) are left unregistered. 
 
Having a formally recognized form of identity provides the poor and vulnerable with the opportunity to climb out of poverty. This is critical for achieving a wide range of development outcomes: from opening a bank account and paving the way for broader financial inclusion to accessing education services, tracking childhood vaccinations, and empowering women.  It can also strengthen the efficiency and effectiveness of the state in providing critical services, such as government to person (G2P) payments, and reduce unnecessary waste of resources through better targeting.  
Photos: World Bank / Authors at Flickr World Bank  


 With the advances in technology including biometrics, data management, and the ubiquity of mobile connectivity, there is an unprecedented opportunity to deliver services faster and more efficiently than ever before.  And a country like India has also shown how, with these advances, a unique identity can be done at a scale not previously possible.
 
To reach the transformational potential of digital identification, the World Bank Group launched the Identification for Development (ID4D) initiative to support progress towards identification systems using 21st century solutions.  We are shaping country priorities through technical assistance, financial support and global expertise.  At present we are engaged with approximately 20 countries – either supporting through financial and technical advice, or through our assessment to determine gaps and help develop a forward looking roadmap.    

Here are 3 surprising facts about doing business in fragile environments

Alua Kennedy's picture
It’s a secret to no one that getting things done in fragile and conflict-affected (FCS) situations is more difficult than in normal, peaceful environments.

A recent World Bank report “The Small Entrepreneur in Fragile and Conflict-Affected Situations” looked into the motives and challenges of small entrepreneurs in FCS countries and made a number of interesting discoveries. They found that compared to entrepreneurs elsewhere, entrepreneurs in FCS have different characteristics and face significantly different challenges. FCS enterprises tend to be small, informal and to be engaged in sectors that are trade and service oriented.

Three other things they found are illustrated in the charts below. These findings came as quite a surprise to us. 

1. The primary obstacle for entrepreneurs in FCS countries is poor access to finance 
 


 

A new strategy to address gender inequality

Sri Mulyani Indrawati's picture
The evidence is clear: When countries value girls and women as much as boys and men; when they invest in their health, education, and skills training; when they give women greater opportunities to participate in the economy, manage incomes, own and run businesses—the benefits extend far beyond individual girls and women to their children and families, to their communities, to societies and economies at large.

How 3 banks in emerging economies are banking women

Rebecca Ruf's picture




Photo: GBA Stock Image

As a global community, we’ve made great strides toward achieving the World Bank Group’s goal of universal financial inclusion by 2020. According to the Global Findex, 700 million people gained access to formal financial services between 2011 and 2014. This is equivalent to nearly the entire population of Europe. But the latest numbers from the Global Findex also revealed a startling fact: The gender gap in financial inclusion remains stubbornly intact, with women in emerging economies 20% less likely to have a bank account than men and 17% less likely to have borrowed formally. 

Women who lack access to financial services face a number of related obstacles, including lower income and business growth, lower asset ownership – making it harder to borrow – and lower levels of financial capability. These factors, combined with increasing financial responsibility for their households, make enabling women to fully benefit from financial services an important development objective. Recognizing that commercial banks can and must play a vital role in closing the financial access gender gap, the Global Banking Alliance for Women (GBA) made a commitment in April 2015 with a subset of its members – Banco BHD León of the Dominican Republic, Banco Pichincha of Ecuador and Diamond Bank Plc of Nigeria – to provide financial access to 1.8 million previously unbanked women in Latin America and Africa by 2020. 

Why are payment services essential for financial inclusion?

Massimo Cirasino's picture


Joint Development Bank's ATM, Lao PDR. IFC Photo Collection


While some 700 million people have gained access to a transaction account between 2011 and 2014, there are still about 2 billion adults in the world who lack access to transaction accounts offered by regulated and/or authorized financial service providers. The increased role that non-banks play in financial services, particularly in the payments area, has contributed to making them available and useful to many people who were previously locked out of the financial system. 
 
There is broad recognition that financial inclusion can help people get out of poverty as it can help them better manage their finances. Access to a transaction account is the first step in that direction. A transaction account allows people to take advantage of different (electronic) ways to send or receive payments, and it can serve as a gateway to other financial products, such as credit, saving and insurance.

Payment services are usually the first and typically most often used financial service. Understanding how payment aspects can affect financial inclusion efforts is important not only for the Committee of Payments and Market Infrastructures (CPMI) of the Bank for International Settlements and the World Bank Group, but for all stakeholders with interest in increasing financial access and broader financial inclusion.


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