PSD Blog - The World Bank Group

Entrepreneurship - the key to prosperity ctd.

World Bank data show a strong correlation between measures of entrepreneurship and income. But how does this relationship come about, and what drives what? Abhijit Banerjee, of Poverty Action Lab fame, gives his take:

It turns out that the businesses of the poor are also poor businesses: The typical business has zero paid employees and no machines in almost every country where we have data and where we have the information to be able to calculate this, what the household earns from the business is less than what they would earn on the lowest end of the labor market. They are in effect buying a job and not [a] particularly good job at that...

Next in line for m-banking services: Papua New Guinea

This past October I participated in a 2-day Mobile Money Summit in Port Moresby, Papua New Guinea. Why Papua New Guinea? There is growing interest among telecom companies and banks there in mobile financial services. Although the meeting was attended by more than 50 people from around the Pacific, the majority of the participants were from companies doing business in Papua New Guinea.

IFC cosponsored the event, along with the Asian Development Bank, Bank of Papua New Guinea, the Business Council of Papua New Guinea and the Port Moresby Chamber of Commerce and Industry. The topics discussed reflected the variety of participants – an overview of mobile banking, regulatory discussions, and success stories from the region. Bank South Pacific also provided us with a demonstration of a mobile banking service. And I spoke during a session on New Solutions: Engaging with Customers and Creating Compelling Products, where I presented a range of business models and discussed technology options for mobile financial services.

How to defeat witchcraft ctd.

I finally found the time to pick up a copy of Economic Gangsters and find out exactly how coauthors Raymond Fisman and Edward Miguel propose to defeat witchcraft. (See my earlier post on Fisman's presentation at the World Bank for background):

[W]e think more foreign aid should explicitly play an insurance role for poor countries. We call this new type of aid Rapid Conflict Prevention Support (RCPS). RCPS aid would kick in for countries experiencing temporary income drops, in much the same way that it's better to see a doctor when you start getting sick rather than waiting for the infection to spread. By the time you've got pneumonia, it's already too late...

...Since sharp and unexpected income drops are the symptoms of conflict vulnerability, donors should time foreign aid to provide relief when these circumstances arise. And this is when RCPS aid would kick in. When underlying economic factors return to normal—for example, when the rains improve the following year, or world coffee prices rebound—RCPS aid could quickly be scaled back as the state's own revenues pick up...

Off the mark on microfinance

Writing in the Ethical Corporation newsletter, Rajesh Chhabara recently opined on the near-term prospects for microfinance in Asia. Their take? Things are just hunky-dory:

Despite the trouble in global financial markets, investors continue to put money into Asian microfinance. A $40m fund aimed at financing start-ups in microfinance was launched in October by the India-based Institute for Financial Management & Research Trust, supported by a group of investors including India’s Icici Bank. In May, ASA International of Bangladesh, ranked number one on the Forbes list of top 50 microfinance institutions, raised $125m in funding – the largest ever by a microfinance institution – through private equity firm Catalyst Microfinance Investors...

What’s your lucky number? For Mongolia, it’s 58.

The hall was large and chilly. But it was also full. Nearly 80 people had come to listen to a presentation on Mongolia’s ratings in the 2009 Doing Business survey. I was happy to see a healthy mix of government officials, private firms, developmental organizations, NGOs and journalists there.

The Doing Business project looks at the business environment in 181 economies using ten indicators that reflect the life cycle of businesses. Then it ranks them. Governments can use the rankings to compare themselves to other countries, or to measure their own progress in business reforms over time.

Mongolia is currently at 58, a slight drop from last year. It is 7th in the East Asia & Pacific Region, well ahead of China (83) and Vietnam (92). Mongolia also outperformed most countries of the former Soviet Union, including Russia (120) and Kazakhstan (70). Quite an achievement!

A short non-commercial break

The PSD blog will go on a short break for the holidays, but we'll be back next Monday. Expect a report from Mongolia, where our intrepid blogger Dave Lawrence recently survived
-37 degree weather, plus more on the transformative possibilities of mobile banking.

New Blogger: Janine Firpo

Mobile banking – everyone is talking about it, but how can we separate hype from reality? I've invited Janine Firpo, President of Sevak Solutions, to help us make sense of this potentially transformative technology. Janine was recently hired by IFC, a member of the World Bank Group, to work with IFC’s regional advisory teams to accelerate the development and large-scale roll-out of mobile money solutions in East Asia and the Pacific.

Janine brings over 24 years experience in technology, international development, and consortium building to her efforts. For the past six years, she has focused exclusively on the role of information and communications technologies in the extension of financial services. She is a pioneer in the implementation of branchless banking solutions and has worked on a range of related issues in Africa, Asia, and Latin America. Welcome!

Permits in everything, Christmas edition

Apparently, Moldovan police have "arrested" a Christmas tree intended for Chisinau's main square. Why, you ask? It did not have the appropriate permits:

Moldovan police have demanded that the driver of a vehicle carrying the city government’s Christmas tree to the main square, produce a license to purchase fir trees as well as a permit from the State Environmental Inspectorate... Representatives of the country’s Forest Management Association, however, say there is no need for such a permit in this case. But police detained the vehicle nonetheless and then said the fir tree is ‘under arrest’.

(Hat tip: Eternal Remont)

Infrastructure takes a hit

So says the Public-Private Infrastructure Advisory Facility, which just released a note based on new data on private infrastructure projects in developing countries:

From Aug to Nov 2008, 31 PPI [public private infrastructure] projects reached financial closure involving investment commitments...for US$17.2 billion in 21 developing countries...Such [a] level of investment in new projects represents a decline of about 40% compared with the level in the same period in 2007.

So far, though, the data suggest the impact is similar to the experiences in Asia in 1997-98. Even worse is yet to come - that is, if the financial markets don't revive sometime soon:

There is a growing pipeline of PPI projects which are trying to raise funds or will do so in the next six to twelve months and could be affected if financial markets do not recover by then. Around 44 projects involving investment of US$34.7 billion, which were not able to secure financing by Nov 2008, are expected to continue looking for finance...Competition to attract financing will increase among projects as a growing number of them attempt to raise financing.

Smiley face, you are doomed

Avid users of instant messaging, beware! Your habit is about to become very expensive. Well, at least if you live in Russia. Apparently, the Russian patent agency has awarded a patent on the ";-)" emoticon to a Russian businessman. (I wonder if they will charge me for this blog post?) Eternal Remont reports:

Russian businessman Oleg Teterin now claims he owns the tradmark to an emoticon:

;-)

That's right people. "Teterin said in an interview with Russian TV channel NTV this week that Russia's patent agency had granted him the trademark to ;-)." He promises to only go after companies, rather than individuals, which use the symbol...for now.

I would normally assume this is a hoax, but having lived in Moscow for a summer, I'm inclined to believe it.

(Hat tip: Veronica Khokhlova at Global Voices Online)