South Asia plays a key role in the global development arena, with the world’s largest working-age population, a quarter of the world’s middle-class consumers, the world’s greatest number of poor and undernourished people, and several fragile states of global geopolitical importance.
... See More + This study aims to identify countries that have demonstrated notable success in applying new e-money technologies and innovative thinking in providing first entry points into the financial system for poor and vulnerable population segments. Case studies are used to emphasize detailed contextual analysis of certain critical conditions and their relationships to the success or failure of these interventions. Although new technologies and innovative methodologies in the finance industry are numerous, the study narrowly focuses on e-money initiatives such as mobile money, interoperable and multifunctional automated teller machines (ATMs), and prepaid debit cards for social grant programs as the first entry points to financial inclusion. The focus is on analyzing the provision of cost-effective, reliable, and safe access to basic cash-in/cash-out, utility, and bill payment services to financially unserved or underserved people through the selected e-money interventions. This study also aims to identify new approaches to improving financial inclusion in South Asia. It documents innovative uses of technology in the form of digital financial services operating within a balanced regulatory environment that can be key to improving financial inclusion.
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This newsletter includes the following headings: (i) taking stock; (ii) major data releases; (iii) activity and inflation; (iv) trade and finance; (v) financial markets; and (vi) commodity prices.
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In 2016, village elders banned mobile phones for unmarried women in a community in Gujarat. The male elders had decided that there is no benefit to unmarried women’s access to a phone and that such access is a nuisance to society.
... See More + Any unmarried woman found using a phone is fined, and anyone reporting them receives a reward.These social norms negatively affect women’s ability to benefit from outside economic opportunities—in turn, many women are not able to access and use financial services that would help them. It is imperative that organizations working on women’s financial inclusion understand the social norms that limit women’s access to and use of financial services and the degree to which these norms can be shifted to achieve development goals. This requires going beyond supply-side solutions that focus on investments in financial services providers. The focus should be to better understand the social norms at play and to devise strategies that engage a broader range of stakeholders at different levels of the market needed for more impactful change.This Brief is intended for funders, practitioners, and policy makers who are committed to women’s financial inclusion and economic empowerment. It introduces basic concepts of social norms change theory, reviews current practices regarding gendered approaches to financial inclusion, and explores how lessons learned from other sectors that are embedding norms changes in their design can be applied to women’s financial inclusion programming.Understanding the social norms at play and the potential influence they may have on financial inclusion programing is not always straightforward, given the hyperlocality of informal rules, which can differ dramatically by context, even within the same country.Common norms, such as restrictions on women’s mobility and safety, intra household decision-making, and unpaid work and perceptions of appropriate roles for women in the community, tend to restrict women’s access to and use of finance. Knowing exactly how norms apply in any given context and the opportunities for shifting behaviors through both normaware and norm-transformative efforts will be critical for closing the gender financial inclusion gap.is important that programs specifically targeting women incorporate a social-norms dimension to any upfront diagnostic work to look beyond classic supply side constraints to access and use of financial services.Diagnostics that explore how women use existing financial services, expectations around women as financial actors, perceptions around access, and ownership ofnew technology will be critical to designing programs that bring together men and women to promotedevelopment goals that benefit the entire community. A client-centric approach, where practitioners and donors collaborate with organizations that understand social norms change and experiment to imbed this learning into future programming will be essential as their thinkabout impactful and transformative approaches to women’s financial inclusion.
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It is 2025. Imagine that everyone around the world is using a broad range of affordable financial services that meet their various needs, full financial inclusion.
... See More + This has contributed to a new wave of prosperity that is bringing greater economic and social progress. Financial services are central to the lives of everyone, allowing people to participate in the economy, access services, seize opportunities, build resilience, and pursue their dreams. Global development trends indicate that the number of people living in extreme poverty is likely to continue to decline as incomes continue to rise in many parts of the world. Globally, the wellbeing of individuals seems to be improving. Yet, inequality has become a new challenge. Most poor people work in the informal sector. This plays a vital role in economic growth, but many of these workers do not have social protection and job security. Over the next decade several major forces will fundamentally shape most countries’ economic, social, and political conditions, including financial services for the poor.
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Working Paper 119217 JUN 01, 2017
Lahaye,Estelle Marie; Abell, Thomas E.; Hoover, James K.Disclosed
Indonesia has exhibited strong macroeconomic performance, but developmental needs remain significant. To raise the living standards of a large population dispersed over thousands of islands, Indonesia must address several key challenges, including a sizeable infrastructure gap, relatively low productivity, and rising inequality.
... See More + The authorities recognize that the financial sector needs to play a central role in overcoming such challenges. The authorities have been pursuing an ambitious agenda to promote financial sector deepening and to strengthen financial oversight and crisis management. Despite substantial progress since the last FSAP, the financial sector is not yet sufficiently able to fund development needs or boost inclusive economic growth. To promote sustainable financial sector deepening and inclusion, the authorities could consider a more coordinated, cross-cutting approach by addressing root causes. To promote inclusive economic growth and strengthen financial markets, the authorities pursue a diverse policy mix which includes: expansion of the KUR credit guarantee program with an interest subsidy add-on; a deposit interest rate ceiling; requirements for non-bank financial institutions to hold debt issued by the government and state-owned enterprises; and moral suasion to lower bank lending rates. However, these measures may not prove effective in achieving sustainably higher growth and financial deepening.
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Financial Sector Assessment Program (FSAP) 119777 JUN 01, 2017
The development objective of Financial Inclusion and Infrastructure Project is to contribute to increasing access and usage of digital payments and other financial services for households and businesses in Pakistan.
... See More + This project has three components. 1) The first component, Direct Support to the NFIS Implementation, aims to provide direct support to implementation of the NFIS in line with the priorities laid out in the NFIS action plan. This component is divided into three sub-components as follows: (i) Improving Financial and Market Infrastructure to Facilitate the Uptake of DTAs; (ii) Improving Access and Usage of Digital Payments and Digital Financial Services (DFS); and (iii) Enhancing NFIS Secretariat Capacity and Project Management and Monitoring. 2) The second component, Supporting Expansion of Access Points for Financial Services, aims to support investments, capacity building and analyses that will drive financial access points. 3) The third component, Improving Access to Microfinance and to Financial Services for Micro, Small, and Medium Enterprises, has the following subcomponents: (i) Improving Access to Microfinance and to Financial Services for Micro Enterprises; and (ii) Improving Access to Financial Services for Small and Medium Enterprises.
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Malaysia has achieved one of the highest levels of financial inclusion among Southeast Asia countries, due in part to policies taking advantage of mobile phones and banking agents to expand access.
... See More + The report looks at specific actions, programs, and strategies that have contributed to enhance financial inclusion in the country and highlights key learnings to benefit low- and middle-income countries with similar ambitions. The report also notes that there is no single factor that can explain Malaysia's success in financial inclusion. The progress that Malaysia has achieved is the result of efforts undertaken by authorities and the financial sector industry over the past 20 years. The country has been able to achieve sustainable growth of its financial system over a long period of time, reconciling two policy objectives, namely "financial stability" and "financial inclusion", in a successful manner so far. Malaysia faces two main challenges in terms of financial inclusion. First Malaysia will need to reach out to the remaining under-served population. Secondly, a major challenge is how to ensure that the people with access to financial services actually make active use of their accounts.
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This is a statement by The Honorable Taro Aso, Deputy Prime Minister and Minister of Finance, at the ninety-fifth meeting of the Development Committee held on April 22, 2017.
... See More + While the need for assistance from IDA is increasing as we progress towards the Sustainable Development Goals, many donors are facing severe fiscal constraint which leads to limited capability to provide development assistance. He is very pleased that IDA18 concluded with a remarkable package to deliver strong support for developing countries despite these circumstances by utilizing the loan contribution scheme from the previous replenishment and by introducing a new innovative financing mechanism to allow IDA to access capital markets. He welcomes the report on the progress in the Forward Look commitments, and ask for further efforts towards becoming a better Bank, as an important stepping stone for discussions towards becoming a stronger Bank. The world is facing a wide range of complicated development challenges. He expects the WBG to tackle these challenges by convening powers of various donors, other international organizations and private sector, with the multilateralism of the WBG as a core value.
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This is a statement by H.E. Alfredo Thorne Vetter, Minister of Finance, at the ninety-fifth meeting of the Development Committee held on April 22, 2017.
... See More + The current international context of stronger economic activity worldwide is a positive outcome; nevertheless, it is characterized by higher policy uncertainty, growing protectionist sentiment, and expectations of weak growth potential in the medium term. This takes place amid increasingly complex global challenges, slow and uneven economic growth, rising inequality within countries, aging populations, forced displacement and humanitarian challenges resulting from protracted fragility and conflict-related crises, increased intensity and frequency of climate change-related natural disasters, regional famines and pandemics, among others. The firm commitment of The World Bank Group (WBG) to reach its twin goals, eradicating extreme poverty by 2030 and boosting shared prosperity in a sustainable manner, becomes even more relevant, and it is certainly shared by and a reference for our countries. We welcome the three ways in which the WBG plans to achieve the twin goals: first, by working to accelerate inclusive and sustainable economic growth; second, by helping countries invest more effectively in people; and third, by fostering resilience to global shocks and threats.
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Significant strides have been made in connecting the world’s low-income populations and micro and small businesses to financial services. Yet, after decades, there are still large gaps in access, use, product offering, and quality of services.
... See More + Several segments remain overlooked (e.g., rural populations, women, ethnic minorities, smallholder families, specific business sectors, etc.). Many countries still struggle with undeveloped financial systems, even when excluded populations gain access to financial products and services, many financial offerings are poorly designed, understood, or used. In the past, development actors assumed that access to capital was the main barrier to scaling financial inclusion, but over time, local bank financing and savings mobilization have increased, and foreign funding continues to grow (including through microfinance investment vehicles [MIVs]) (Soursourian and Dashi 2016). Other barriers that hinder financial inclusion include, among others, deficient market infrastructure, limited technological innovations, and restrictive policy and regulatory environments.
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Brief 119215 MAR 01, 2017
Moretto,Louise Marie; Scola Gahwiler,Barbara Bernadette MariaDisclosed
The development objective of Financial Sector Development Policy Loan (DPL) Project for Albania is to strengthen the resiliency of the banking sector and the regulation and supervision of nonbank financial institutions.
... See More + The DPL is structured around three pillars: (a) adopting policy measures to reduce nonperforming loans (NPLs) and enhance the financial safety net, (b) strengthening regulation, supervision, and resolution regime of banks and Savings and Credit Associations (SCAs), and (c) strengthening the regulation and supervision of investment funds. This operation directly contributes to the Country Partnership Framework (CPF) 2015-2019 Focus Area 1 objective to improve financial stability. The first focus area includes three CPF objectives that aim to support Albania’s efforts to improve fiscal sustainability, strengthen public investment management, and improve financial stability. The World Bank has been providing substantial support to Albania in recent years, through several development policy operations and the objective of this operation is to enhance Albania’s competitiveness through improving the investment regime, facilitating trade, and making it easier to do business.
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A comprehensive financial inclusion whose goal is to bank every household in India. The effort, dubbed the Prime Minister’s Jan Dhan Yojana (PMJDY), was launched in August 2014.
... See More + India has a long history of government efforts to promote financial inclusion and, while some progress has been made, only about half of adults had bank accounts before PMJDY was launched (InterMedia 2016).This program led to the opening of 260 million accounts in just over two years. While there is some uncertainty around how many of these accounts were for first-time account holders, a survey conducted in mid-2015 indicates adult bank account ownership increased to 63 percent (InterMedia 2016).PMJDY did not come out of thin air; it is made possible by a number of key enablers in the Indian system. High level of government involvement in implementation/execution. Prime Minister Modi announced the plan in his first major national speech and has since demonstrated sustained commitment to its success. As the owner of the program and primary shareholder in India’s large public-sector banks, the government has been able to stay close to PMJDY implementation and execution. The prime minister’s office has remained active in monitoring its progress.The Indian banking system is made up of 26 public-sector banks, 25 private-sector banks, 43 foreign banks, 56 regional rural banks, and several thousand smaller cooperative banks, according to India Brand Equity Foundation (IBEF). While private-sector banks gain more market share each year, public-sector banks hold about 70 percent of banking assets (IBEF 2016). Public-sector banks accounted for almost 80 percent of PMJDY accounts and hold the same share of PMJDY deposits. According to PMJDY, in 19 of 28 states all households have a bank account and in the remaining nine states over 99 percent of households have a bank account. PMJDY offers a new approach to government-promoted financial inclusion that leverages new infrastructure and capabilities and aims to learn from earlier low use of accounts. As a result of the prime minister’s decision to remove most of the currency notes in circulation and promote digital payments, consumers have been strongly pushed to deposit old notes into their accounts, which in turn has given the PMJDY effort a major boost. This recent change on top of all the other efforts under PMJDY since August 2014 are creating a lot of new banking activity. It is unclear whether this can or will be sustained. It will be important to watch and learn from how these accounts fare in the months and years ahead.
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The Financial Sector Reform and Strengthening Initiative (FIRST) is a multidonor program aimed at supporting low- and middle-income countries in building stable, more efficient, and inclusive financial systems.
... See More + FIRST’s technical assistance (TA) grants support national policy-making and regulatory bodies in designing appropriate financial sector policies and building capacity to regulate, supervise, and develop the financial sector. In addition to supporting individual countries, FIRST also supports regional initiatives, taking advantage of its global reach, cross-sectoral focus, and ability to draw on solutions adopted in one country for application in others. FIRST was created following the East Asian financial crisis and has since distinguished itself as an effective catalyst for broader reform programs through its targeted TA interventions, as well as a source of vital support for developing and implementing financial sector strategies. In fiscal 2016, FIRST approved five programmatic engagements spanning all three areas of financial sector reforms that the Programmatic Window targets—financial stability, financial inclusion, and market deepening. Jointly with the Finance and Markets Global Practice of the World Bank and in consultation with regional stakeholders, FIRST developed the Principles for Public Guarantee Schemes for Small and Medium Enterprises, which have been endorsed globally by all the regional associations of credit guarantee schemes.This annual report records the challenges and achievement of FIRST for the year 2016.
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Access to finance is a challenge in Bangladesh, where only 40 percent of the adult population holds a bank account at a formal financial institution.
... See More + This is a major problem for the working poor, many of whom migrate from villages to towns, cities, and even overseas in search of work, and who have no choice but to use informal options to send money home. Some find an acquaintance willing to carry cash on the journey to their home village; others work with middlemen who charge high fees. bKash was established in 2010 as a joint venture between money in motion limited liability company (LLC) - an American company that invests in start-ups that advance financial inclusion - and Bangladesh rural advancement committee (BRAC) Bank, a commercial bank in Bangladesh focused on small and medium enterprises. It has played a major role in building Bangladesh’s mobile financial services industry from scratch and is the country’s leading player, accounting for 75 percent of the market. bKash operates as a BRAC Bank subsidiary and now counts the International Finance Corporation (IFC) and the Bill and Melinda Gates Foundation as minority shareholders.
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In the aftermath of the 2007/08 financial crisis, and lacking sufficient coordinated guidelines or legislation, measures to address failing financial institutions in European Union (EU) Member States were taken at national level.
... See More + In an effort to improve cross border coordination as well as to reduce future dependence on public money, the European framework for managing the failure of financial institutions was reformed, building upon the financial stability Board’s key attributes. From January 1, 2015, all EU Member States were required to transpose the Bank Recovery and Resolution Directive (BRRD) into their national law. A key element of the new powers is the bail-in tool, requiring banks to recapitalize and absorb losses from within, which was made mandatory as of January 1, 2016. These case studies have been selected as examples of how some EU countries tackled the resolution of several failing European banks. The focus of the case studies is on the application of bail-in features, i.e. statutory private loss absorption outside liquidation. Most cases studies also describe other measures used to deal with distressed financial institutions, including but not limited to government guarantees, capital injections, liquidity supports, and the creation of asset management vehicles to put the bail-in into perspective. The authors hope that, nevertheless, these real life examples of European banks’ resolutions provide a useful and interesting source of reference. For more details on resolution under the BRRD, the authors invite the readers to refer to the FinSAC Guidebook Understanding Bank Recovery and Resolution in the EU: a Guidebook to the BRRD.
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The objective of the Multi Donor Facility for Mindanao Reconstruction and Development Project for Philippines is to communities of conflict-affected areas, internally displaced people, and rebel returnees benefit from visible restoration of some basic services of their choice and sustained by more accountable Local Government Units (LGUs).
... See More + The three-month extension will provide sufficient time to complete the remaining subprojects and to wrap up financial and administrative arrangements for project closure. Finally, it will allow time to strengthen the capacity of community-based people’s organizations to sustain the subproject investments. The extension will reduce the grace period between the new project closing date of March 31, 2017 and the current end disbursement date of the Mindanao Trust Fund facility (TF054035) of June 30, 2017 from the standard 6 months to 3 months. This reduction requires exceptional approval of DFI and WFA.
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Even though a large majority of poor households are engaged in agriculture, per capita productivity and real levels of sectoral growth remain low in Madagascar.
... See More + Approximately 80 percent of the population are engaged in agriculture, which provides the main source of income for households, albeit at subsistence levels. Cultivation practices are based on extensification strategies with implications for Madagascar’s fragile natural resource base, rather than improving the productivity of existing farms and land use. To ensure Madagascar’s growth prospects more inclusively benefit the entire population it will be crucial to improve the productivity of the agriculture sector. The first part of the this economic update has the World Bank’s assessment of recent economic developments and the outlook over the short to medium term in Madagascar. The second part of this update focuses on Agriculture and Rural Development.
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This brief highlights findings from CGAP’s annual cross-border funder survey. The 2016 survey reports funding commitments from the largest international funders of financial inclusion, as of 31 December 2015.
... See More + CGAP has conducted the survey since 2008, and in partnership with MIX since 2012. The data from this year’s report come from 54 funders who report to the survey biannually.
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Brief 119213 DEC 01, 2016
Soursourian,Matthew Jacob Klein; Dashi, Edlira; Dokle, EdaDisclosed
