PSD Blog - World Bank Group

Small Business Finance - What Works, What Doesn't?

May 5 and 6 saw an interesting research conference here in DC on Small Business Finance, looking at which banking practices and government interventions help foster small businesses' access to external finance. Twelve interesting papers and a stimulating panel discussion addressed an array of issues, ranging from banks' lending techniques over competition, government policies to informal and trade credit. Many papers and speakers questioned conventional wisdom on what we know and what policies are helpful.

Small Business Finance - What Works, What Doesn't?

May 5 and 6 will see an interesting conference on small business finance here in Washington DC, covering topics from lending techniques, innovations, the impact of market structure, government interventions and alternatives to bank finance.

Credit Guarantee Schemes - all over the globe - and here in DC

From this week's Partial Credit Guarantee Conference, we learned that credit guarantees have become the direct intervention mechanism of choice of SME credit activists. Almost all of the OECD countries have them, as well as many developing countries. Multilateral and bilateral donors support them throughout the developing world.

While government is heavily involved in funding and management of these schemes, loan assessment and recovery are mostly undertaken by the private sector, mostly by the lenders - and perhaps for the better, as schemes where the government is in charge of choosing borrowers and recovering loans have typically higher loan losses.

Partial Credit Guarantees - is there an additionality effect?

The ultimate success criterion for credit guarantees (as for other government interventions) is whether they increase access and/or reduce costs for constrained enterprises. Methodologically, that is a difficult question, as proper identification of the causality is a challenge.

Several papers at the World Bank's Partial Credit Guarantee Schemes conference are addressing the issues. One paper finds that participants in mutual guarantee schemes in Italy pay lower interest rates than non-participants, but are also less likely to default. Peer evaluation and monitoring seems to play a role, similar as in the microfinance group lending schemes.

Partial Credit Guarantees Conference

The World Bank will host a conference on Partial Credit Guarantee Schemes this week (March 13-14, 2008) in Washington DC. Credit guarantee schemes play an important role in the distribution of credit risk, can improve access to finance and stimulate private sector development.

All the conference papers are now available. Presentations and discussions as well as the two panels promise to turn this into an interesting and informative event. Co-organizer and blogger Thorsten Beck will keep you updated.

Can the private sector teach development?

Professor William Duggan argues in his book, Strategic Intuition: The Creative Spark in Human Achievement, that disciplines such as psychology, military history, and business strategy may collectively teach strategies that could be used by development agencies in order to ensure success. He discusses this idea in depth on his blog.

Bill Easterly will join Duggan at the Center for Global Development on March 12, for a discussion on how lessons from the private sector may enhance development success.

Innovative thinkers wanted

The 2008 Global Development Marketplace competition's theme is "Sustainable Agriculture for Development."

This competition is an avenue for creative thinkers to turn their ideas for sustainable agriculture in developing countries into reality. The grand prize: $200,0000 in grant funding. Applications are open until March 21, 2008.   

Web 2.0 ideas for the World Bank, anyone?

A colleague down the road is collecting ideas for Web 2.0 business models and services that could be adopted by the World Bank Group. Here are some initial thoughts and there's a number of projects well on their way.

So if you have any suggestions or recommendations help brainstorming and leave a comment below. (By the way, if you happen to be a developer, you might want to move from thought to action at the Social Innovation Camp in April).

The business of carnival

Rio de Janeiro is the home of Brazil's best 14 samba schools, some with individual budgets of up to $2.5 million.  As the floats get bigger and bigger requiring the work of more and more artists, Rio's Department of Labor recognized the business potential of the famous street party. 

Nassim Mehedff, the subsecretary of the Labor Department, explains why the city began providing free classes that teach people how to make costumes:

Now [the carnival] is becoming an industry, entertainment industry. They provide jobs and income for people during the whole year, not only a kind of two or three day festivity

Winning at the bottom of the pyramid

Long before Bill Gates gave his "creative capitalism" speech at Davos, the Financial Times and the IFC had been spreading the word through the annual FT/IFC Sustainable Banking Awards.

Although it is tough to compete with Gates when it comes to getting media attention, this year's awards will include a new category: "Banking at the bottom of the pyramid," which will acknowledge financial institutions that create innovative products to serve the poor.

The deadline for submissions is February 29. Details on their Web site.

Partial credit guarantee scheme

Though credit guarantee schemes can improve access to finance and distribute credit risk, questions remain about their impact on credit constraints, small bank lending, entrepreneurship, SME finance, and on non-guaranteed lending.

On March 13, 2008 at the World Bank, speakers will present the latest empirical evidence from developed and developing countries on the subject.

The two-day conference held in Washington, D.C. is free and open to public on a first come, first serve basis. To register please send an email to Colleen Mascenik at cmascenik@worldbank.org.

Davos 2008

It's that time of year again. In the sleepy alpine town of Davos, business, government and civil society leaders have come together for the 38th annual World Economic Forum. This year's theme is "The Power of Collaborative Innovation."

The forum has its own blog and the past events are availalbe through webcasts. See also Forbes ask CEOs the Davos question: "to go or not to go?"

Youth and prosperity in the Middle East

At the time when European societies are rapidly aging, 30 percent of the population in the Middle East is between ages 15 and 29 – the largest proportion of youth in the region's history.

On January 7, 2008 at the Brookings Institution, experts will discuss whether this 100 million of young men and women are a demographic gift or a potential for social and economic problems.

Flashbacks at Bali

Walking into the Bali Convention Center, you know that you have become a fixture in the world of international sustainable development when the UN security guard welcomes you with a broad smile and a "how have you been." You swore as a younger woman and an activist you would never become one of those grey haired incrementalists around the negotiating halls.

And then you look around and you see your old friends, all with traces of grey at the temples, reporting, representing UN agencies, working the trade agenda, running think tanks, hanging out on the west coast of the US with other ageing activists and having fun being still irreverent, or slightly proud that Michael Crichton may have based his caricature of the evilly powerful NGO on you.

Looking around you see a remarkable repository of knowledge, not just of the substance of the negotiations, but of the social anthropology of summitry. Of the personal that makes up the political and the history of institutions, a history that often impedes collaboration and undermines trust.

Straight from the Climate Change Conference in Bali

Our own code-breakers in Bali, Lucie Giraud and Rachel Kyte, kindly agreed to keep us abreast of the developments on the ground throughout the second half of the United Nations Climate Change Conference.

In the meantime see the World Bank's official conference site and the list of delegates.

We'll keep the track of their dispatches below.  Comments are encouraged.

• Lucie - Money on trees
• Lucie - A public/private partnership to the moon
• Rachel - Flashbacks at Bali
• Rachel - Disciplined financial mechanisms
• Lucie - A low hanging fruit?
• Rachel - A roadmap for international financial institutions

We are looking for experimental research in entrepreneurship

The 2007 World Bank Entrepreneuship Database finds significant relationships between entrepreneurial activity and the quality of the enabling environment. The bank and the Kauffman Foundation are now jointly offering funding of up to $35,000 for research projects that will study what contributes to greater entrepreneurship and formal sector participation.

Research proposals are due by January 15, 2008. A pre-conference is scheduled for fall 2008 and the main conference for 2009. Detailis are here.

AIDS day 2007

Two days before December 1, the World Bank observes the World Aids Day – this year Magic Johnson will give the keynote address. 

Earlier last week, in a new report the UN revised down, by 6.3 million, the number of people that the agency estimates are infected worldwide from 39.5 to 33.2 million.  This 16 percent decline has more to do an improvement of the quality of data - previously high-risk groups in India and five Sub-Saharan African countires (Angola, Kenya, Mozambique, Nigeria, and Zimbabwe) were overrepresented - than in overall health.

Microfinance congress in New York

Starting May 14, 2008, New York will host a three-day event for microfinance practitioners and those interesting in entering the field. Both IFC and CGAP representatives will be there.

Private sector in Latin America

Former heads of state from Mexico, Peru, and Spain, along with international business leaders, will discuss the role that private sector plays in adding to the competitiveness of the region.

The event will take place on November 27, 2007 in Washington, DC at Georgetown University. RSVP is required.

After m-banking comes m-government

Last year, the total number of mobile technology users was estimated at 2.7 billion, compared with only 1.1 billion of those with Internet access. Some countries have been experimenting with "mobile government" (M-Government) to deliver public services to citizens who are unable to go online but have a cell phone – estimated at least 22 percent of people in developing countries.

Nearly 60 percent of India's government services can be delivered through a cell phone, says R. Chandrashekar, India's Additional Secretary and a keynote speaker at an upcoming event "Mobile Government: The New Frontier in Transforming Public Services."

The event is open to the public and will take place on Thursday, November 29, 2007 at 8:30am at the World Bank. Can't make it? Follow it here through a live webcast.

Update: the summary of the conference is here and the video clip here. 

Launch of World Bank competitor postponed

Business News Americas, a subscription-based news service, reports that the launch of Banco del Sur – a new development bank for South America – will be delayed for another month.

The inauguration, which had been rescheduled for tomorrow from the original June 2007 date, will now take place on December 5.

Some folks at the Inter-American Development Bank, its closest rival, think Banco del Sur might go… south.

Second Life for Doing Business

The Doing Business team will present its 2008 report - which ranks 178 economies on the ease of doing business - to the Second Life residents at the Activ8 Island Theater tomorrow at 3pm GMT (11am eastern).

If you're an avatar, don't forget to bring your questions and come early, seats are available on a first-come, first-serve basis. Those without an established online presence will be able to listen to the entire event here.

World Bank at annual meetings

At the boards of governors of the World Bank and the IMF meet between October 20th and 22nd in Washington to discuss the work of both institutions, it is a good time to reflect on the evolution of the World Bank Group.

Ray Suarez, from the Public Radio International, looks at the lessons learned from the past 60 years and the bank's work today. The 50-minute program features Francois Bourguignon, the bank's chief economist, and William Easterly, its chief critic. And speaking of the direction for the future, don't miss the article describing Robert Zoellick's efforts to extend financial risk management services to poor countries.

Can Africa surpass Japan?

If a single African country were to incorporate the best practices that are already in place across the sub-Sahara region, it would rank eighth worldwide. This was one of the observations that business leaders made last Friday at an award ceremony for the top two African reformers – Ghana and Kenya.

World Bank, DFID, Business Action for Africa and Unilever sponsored the presentation. Click here for the full list of the Doing Business 2008 top reformers.

And the vote is in…

Alexis Sampson and Michael Jarvis sum up this year's International Business Forum:

The lights dimmed in the Preston Auditorium and the tension rose as the results were calculated. Having generated and then prioritized host of recommendations over the course of the IBF, delegates voted to rank their final top ten. Despite the risky reliance on electronic voting machines, the system worked and the results were reassuringly conclusive.

Switch off your TV and go read a book

Alexis Sampson, Kathrin Frauscher and Michael Jarvis report on the IBF:

"Switch off your TV and go read a book" this was the simple message displayed on screen for 15 minutes each afternoon as part of an MTV Brazil social awareness campaign. It was also the closing clip of a montage of social messages played for IBF participants. In explaining his motivation in running such campaigns, MTV Brazil's CEO, Andre Mantovani, emphasized the crucial educational role that companies have, particularly in the media sector. He called for more business leaders to be brave enough to support social actions in spite of profit pressures and occasional employee skepticism.

Business and the rules of the game: from rule takers to rule makers?

Over the next two days, Alexis Sampson and Michael Jarvis, both from the World Bank Institute, will be your eyes and ears at the ongoing 12th International Business Forum (IBF) in Washington, DC. Here is their first post:

"The stakes for business are as enormous as they are complex," asserted Lenny Mendonca of McKinsey and Co. during this morning's opening session of the World Bank's IBF, "defining businesses' proper role will challenge business executives to adopt a new awareness of social problems in real time, even before they have fully emerged as critical issues in the public debate."

This was the challenge issued to the 300 leaders from 50 countries meeting here at the Bank today and tomorrow.

Business for governance and MDGs

On October 9 and 10, the 12th International Business Forum in Washington, DC will reflect on the role that businesses can and should play in shaping the regulation in the global business arena.

This year's focus is on two main issues: business action on climate change, and private sector's role in curbing corruption.

Participating companies include ABN AMRO, Britannia Industries, Cafédirect, CEMEX, MTV Brazil, Nestlé, Newmont Mining, SAP, Shell, Siemens. The World Bank Institute and InWEnt organize the conference.

Measuring bank regulation and supervision

After the release of the third round of the Bank Regulation and Supervision Database in July, on October 26 a workshop will take place where academics, bank supervisors, and market participants can discuss the strengths and shortcomings of this data, and the resulting policy implications.

Partial credit guarantee schemes - experiences and lessons

The answer to all SME Financing problems or risky schemes with large contingent fiscal liabilities?

The World Bank, jointly with the Journal of Financial Stability and the Rensselaer Polytechnic Institute, is organizing a conference on this topic on March 13 and 14, 2008 here in Washington, D.C. to take a closer look. Researchers are invited to submit papers by October 15.

With the deadline on September 30

PSP-One – a program to increase provision of health services by private sector in developing countries - seeks submissions for their upcoming online conference: "social marketing in the developing world." The nine topics range from HIV/AIDS to public/private partnerships and serving the customers at the bottom of the pyramid.

The end of September marks also the closing date for submissions to the IFC – FT Essay competition. The two new jurors are Ngozi Okonjo-Iweala, former Minister of Foreign Affairs of Nigeria and Ernesto Zedillo, former President of Mexico. The main prize includes $20,000 and a chance to make a difference.

Doing Business 2008 report comes out in two weeks, in the meantime have a look at these

Allianz's competitiveness report ranks 17 countries + the Euro area for competitiveness. The publication measures economic performance, growth, and the rigidity of labor and product market regulations and includes selected emerging markets.  Interestingly, Russia placed above India.

From the Cato Institute comes the annual Economic Freedom Report. It uses 42 measures such as voluntary exchange of goods and services, freedom to compete, and security of privately owned property and ranks countries on how well their policies encourage - yes you guessed it - economic freedom. This year's index comes with an interactive map and includes elements based on our Doing Business database.

Let's talk about microfinance technology

Banks and microfinance institutions have been applying new technologies to increase lending volume, reduce costs and reach new customers. Seeking ways to further improve efficiency IFC, CGAP and Visa International will bring lenders and borrowers from over 40 countries to Washington, DC from September 17th to 19th.

If the words: emerging markets, microfinance, credit bureau, or technology apply to your work, this conference is for you.

Saving instead of lending: women's bank

"We know that we cannot eradicate poverty with credit" says Sindy Dastile, managing director of South African cooperative Masimbonge, which finances micro-businesses run by women. Instead, Ms. Dastile calls for creating saving schemes for women.

Women's bank will be a topic on October 15 at the second Pan-African Women's Conference in Johannesburg. In the meantime, see the story on women in finance in the late 18th century.

2007 most innovative development project

The Global Development Network opened the Eighth Annual Global Development Awards and Medals Competition. Considered one of the largest competitions on development research, the contest is open to candidates from developing and transition countries only.

The main criteria include projects' innovativeness and scalability.

Land reform for the 21st century

On Tuesday July 31st at the Cato Institute, Tim Hanstad, the president of the Rural Development Institute (RDI), will discuss how the lack of land rights affects 230 million households worldwide. RDI has land reform programs in seven countries, including China, India, and Indonesia.

Audio and video will be available here.

Microinsurance in Mumbai

Between November 13 and 15, 2007 in Mumbai, India, CGAP and Munich Re will sponsor the third international Microinsurance Conference.

Traditionally, large, commercial insurers have been deterred by high costs and small premiums leaving the poor to rely on informal or mutual schemes for risk management. Responding to the challenge, the conference will focus on new, cost-effective products for low-income groups.

See also last year's report focusing on social vulnerability.

iPhone is out, now is time for iWait

Conan O'Brien's new video shows what makes iPhone the ultimate smart phone. And the Solutions Research Group analyzed the buyer profile of Apple's $500 ipod-cell phone-internet device: 72 percent male, average age 31 and average income $75,600 – 26 percent higher than U.S. average.

The rumored 3 million iPhones, which will be released at the end of the day today, are likely to be sold out. But affluent Apple enthusiasts don't have to take chances with limited supply. The market has found a solution and it runs at about $700.

New blog on Web 2.0 for development

The organizers of the Web2fordev Conference, "the first conference devoted to exploring ways in which international development actors can take advantage of the technical and organizational opportunities provided by Web 2.0" have launched a blog as a warm-up to the event.

P.S. For the latest example of a practical application of Web 2.0 in the development context, see how Google Earth is helping an Amazon tribe defend themselves against illegal loggers and miners. And if you haven't come across it already, Google Earth's Crisis in Darfur project, a collaboration with the United States Holocaust Memorial Museum, is worth taking a look at - and taking action.

The 4-speed world by James Wolfensohn

The former World Bank president calls for an increase of poverty eradication efforts to countries in Latin America and the Middle East, which, despite housing a fifth of the world's population, are "not poor enough" nor "sufficiently large and fast-growing" to sustain the attention of G-8 leaders.

Development Marketplace 2007 - follow it live

Today and tomorrow at the World Bank you'll have an opportunity to see and talk to over 100 finalists competing for $4 million in grants. From new ways to fight malaria, the introduction of high-tech health solutions to rural areas, to nutrition – it's all there.

Can't make it? No need to panic. A brand new blog is reporting live from the scene.

Partnerships for women's health

On May 29, PSP-One will bring private-sector individuals from developing countries and organizations to discuss what motivated them to enter into the partnership, their expectations, the obstacles they encountered and their views on the future of their partnerships.

A reception will follow, and you're invited.