PSD Blog - World Bank Group

Sustainable banking awards: who's winning what?

The Financial Times and IFC announced shortlists of potential winners for the 2008 Sustainable Banking Awards. The awards recognize financial institutions that have led the way in integating their policies with social, environmental, and corporate governance objectives. Below is a sample the categories and the shortlisted candidates, the full list is available here.

Sustainable Bank of the Year

• Banco Real, Brazil
• Citi, US
• HSBC, UK
• Rabobank, Netherlands
• Standard Chartered, UK

Sustainable Deal of the Year

• BlueOrchard Finance, Switzerland/Morgan Stanley, US (microfinance loans)
• Calyon, France (solar thermal power plants)
• Citi, US (financing for rural housing)
• Glitnir Bank, Iceland (geothermal power generation)
• Merrill Lynch, US (carbon finance to reduce deforestation)

Banking at the Bottom of the Pyramid

• ASA, Bangladesh
• Banco Bradesco, Brazil
• ICICI Group, India
• Opportunity International, UK
• Wizzit, South Africa

More cell phones, better grain prices

We already know that cell phone technology has enabled lots of people in remote areas to access bank accounts and government services. But here is a new one: a recent paper creates a model that predicts that cell phones in Niger will lead to a reduction in price dispersion. This would be true since cell phones enable grain traders to perform searches for better prices in areas where it would otherwise be too costly to search.

Interested? Register online for a discussion with the author held by the Center for Global Development in Washington, D.C.

Is there life after oil?

In light of a record labor force growth in parts of the Middle East, some question the ability of Arab countries to accommodate this demographic bulge and create enough jobs for the population.

Haward Pack and Marcus Noland – the authors of "The Arab Economies in a Changing World" - argue that relying oil hefty revenues alone won't solve the problem.

Becoming more globally competitive is the way for the future, they say, but it won't be easy given China's established dominance in the manufacturing and India's in the services industry and the region's overall difficult business climate.

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.

Bright but jobless

Though today's 15-to-24-year-olds are overall the best educated generation of youth in history, they often have to struggle the most in the job market, finds the World Youth Report 2007.

This age group which makes up 25 percent of the global working-age population also accounts for nearly 44 percent of the unemployed.

More on the subject: four new working papers on youth and employment in the Middle East.

New Islamic bonds index open

HSBC together with the Dubai International Financial Exchange (DIFX) launched a group of indices that track Islamic bonds. "There are concerns about the perceived lack of liquidity and transparency in this market. These indexes will cover that missing link," said James Milligan, HSBC's head of fixed income trading in the Middle East.

The new indices, housed in Dubai, cover almost $14 billion of listed sukuks and are a competitor to London, Malaysia and Bahrain – all hoping to become a leader in Islamic finance.

See also GEMLOC, the brand new World Bank – IFC initiative for local currency bond market development.

MDGs: a new picture

With the countdown half-way through, the data on the Millennium Development Goals are finally available via interactive maps. The timeline feature (step 3 on the map) tracks progress on any of the eight goals, throughout 189 countries.

Low-cost cell phones pay off

Amidst research on the transformative effects of mobile phones on developing communities, companies in emerging markets are adding hundreds of millions of customers a year. From Nokia's third quarter earnings report:

Sales of [cell phones] rose 45.1 percent, to 19.3 million devices, in Africa and the Middle East, while rising 37 percent in China, to 18.9 million, and 41.1 percent in the rest of the Asia-Pacific region, to 29.5 million.

Islamic finance for big and small

Reuters reports on a burgeoning interest from bankers to provide Islamic microfinance to the millions without adequate access to money. Out of 1.2 billion Muslims around the world, over 400 million are poor.

The well-to-do have also something to celebrate – a new platform for Islamic hedge funds. Though Shariah law prohibits charging interest, trading debt, short-selling or speculation – the bread and butter of a typical hedge fund - Shariah Capital together with Barclays Capital created an alternative which uses equity long-short and market-neutral strategies acceptable to observant Muslims.

Doing Business 2008 report is out now

At 00:01 GMT, the World Bank released its annual ranking of the ease of doing business in 178 economies.

Ordered by the time and cost required to set, run and close a business, Eastern Europe and Central Asia were the fastest reforming region this year. Latin America and East Asia were the slowest, with the exception of China, who implemented new private property rights and a new bankruptcy law.

Business climate rankings matter to women. Higher scores correspond to a higher number of women entrepreneurs and employees in an economy. Forty-one percent of women in Rwanda run a small business but only 18 in the Democratic Republic of Congo, where women need their husbands' consent to start a business.

Interestingly, though Brunei, Liberia and Luxemburg joined the list, nothing has changed on the very top or the bottom. As in the year before, Singapore ranks the first and the Democratic Republic of Congo as the last of the list. Egypt became the top reformer but Georgia, with its provocative media campaign, still holds a high spot. And while almost all countries, including Belarus, registered some positive reforms, Venezuela and Zimbabwe bucked the trend.

For complete listings and to create your own rankings visit the Doing Business site.

FDI in 2011

The Economist Intelligence Unit together with the Columbia Program on International Investment released the World Investment Prospects to 2011 which forecasts FDI flows for 82 countries over the next five years. Eight out of top twenty recipient countries will be in emerging-markets.

The report focuses on political risk, and Jeffrey Sachs analyzes ways to address growing risks in the energy sector.

The graph shows predicted inflows to Asia + China:

Little book, lots of data

Whether it's a county's GDP, its total tax rate or the cost of a three-minute telephone call to U.S. – this pocket-sized reference book has it all.

It's a must have for all development wonks.

Iraqi loans, Ugandan software

The Iraqi Finance Ministry announced a roll out of a lending program to local SMEs. The ministry will secure and subsidize loans capped at $40,000.

In the past, Crystal Clear Solutions, a Ugandan software developer, provided products for many Iraqi microfinance institutions.

Here are the snapshots of: the loan program, the software, and the business environment.

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.

First Global Peace Index - the texture of peace

The Economist Intelligence Unit launched today a study ranking 121 nations by their 'absence of violence.' The 24 indicators include internal and external factors such as levels of violence within a country, organized crime, the number of people in prison, and military expenditure.

A number of Nobel laureates, including Joseph Stiglitz, backed the study which named Norway and New Zealand as most peaceful and Iraq and Sudan as the least. For a complete ranking click here.

No longer taboo – Islamic bonds

The sharia finance industry has been expanding ever since the oil crisis of the 1970s. Last year Sukuks grew 9 times faster than international corporate bonds and are expected to triple by 2015 to almost $3 trillion.

The UK might be the first country in the West to issue sharia-compliant government debt.

Third Arab World Competitiveness Report

The World Economic Forum released a national competitiveness survey for 13 Arab countries. The United Arab Emirates ranked as the most competitive and Mauritania as least competitive economy in the Arab world.

The report calls for a rapid reform in education, finding that quality of education does not meet the needs of private sector in the area.

See also how the region compares to the rest of the world in the time and cost necessary to start a business.

Islamic finance blog

Thanks to the magic of our blog statistics, I just noticed a fantastic blog on Islamic finance. It doesn't quite fit on our blogroll (not really PSD), but I wanted to share anyway.

Invest Halal is written by Blake Gould, Executive Director of the Institute of Halal Investing, a non-profit think-tank "devoted to the demystification of Islamic banking, finance & investing." The Institute is launching a newsletter this month - I'm sure it will be a great read.

Vote in Changemakers competition

One week left to vote in the current Changemakers competition - Entrepreneuring Peace: Innovations in Managing Group Conflict. A few entrants of note:

• Peacemaker, the serious game featured in the New York Times and PSD Blog last August.
• A proposed Palestinian Shippers' Council, to encourage Palestinian-Israeli private sector dialogue.
• Participatory theatre for conflict transformation in the Democratic Republic of Congo

(Disclosure/small world: in a strange twist of fate, Changemaker's executive director was my brother's best friend in college. Also, his name is Charlie Brown, and he really had a dog named Snoopy. That is all.)

Freshly delivered information on FDI

UNCTAD's World Investment Report 2006 is out, and it shows that 2005 was a banner year for foreign direct investment. Notable inflows went to:

• the United Kingdom - the single largest recipient with an eye-popping $165 billion
• the European Union - with almost half the world total and 141 mega-deals over $1 billion
• Sub-Saharan Africa - with a record (but still meager) $11 billion, mostly in natural resources thanks to the commodity boom
• the Middle East and North Africa - where investment jumped 74% over 2004 numbers

See Global Insight for an executive summary of the report. (Good tip, RGE Monitor.) Also, Bill Jamieson in London takes a more nuanced look at the big numbers and tells us to take them with the appropriate dash of salt.

One laptop per Libyan child

The $100 laptop story continues. Looks like Libya could be the first country to give one laptop to each of its 1.2 million schoolchildren. From FP Passport:

In return for its $250 million investment, Libya will get one server per school, a team of technical advisers, satellite internet service and other infrastructure. Scheduled to be completed in June 2008, the project could make Libya the first nation in which all school-age children are connected to the Internet through educational computers. Looks like Moammar Gadhafi is making good on his agenda to open Libyan society.

According to the NYTimes, Gadhafi might even be contemplating the purchase of laptops for Chad, Niger and Rwanda.

To follow every blip on the low-cost computing screen, visit infoDev's collections of initiatives (planned, real and discontinued) and related news stories.

Two new serious games

Seems like every time I hear someone describing the development of African business, crumbling or nonexistent infrastructure is cited as a major limiting factor. Similarly, you can't talk about healthcare in Africa without mentioning the delivery systems on the ground. A new game, The Transaid Challenge, puts you behind the wheel of a four wheel drive and asks you to deliver health supplies to remote African villages. My problem was not so much with the potholes as with my (apparently very limited) hand-eye coordination.

You may have read about Peacemaker in the NYTimes recently, a game where you try to bring peace to the Israeli-Palestinian conflict. YouTube has an excellent 3 minute video featuring the Carnegie Mellon team who created Peacemaker and images from the game. Timely and much more sophisticated than the other serious games we've written about.

No jobs, no peace?

Last week the Jordan Times reported that the government has put in place a task force to simplify business regulations, to help stimulate entrepreneurship and jobs. The IFC is supporting this effort, as well as similar exercises in Lebanon - although I guess that one will be on hold for a while. When the fighting has faded from the headlines and diplomacy has taken over - which we hope will be soon - the battle to provide an enabling environment for small businesses to enter the formal sector needs to be engaged in full. See a post last week on how these businesses can aid peacebuilding.

The Doing Business report shows that many Middle East countries rank relatively poorly in the league tables. Although improving the prospects for people to find jobs and start businesses may not be enough to secure lasting peace in the Middle East, it is unlikely that it can be achieved without some improvement in economic opportunities. When the immediate humanitarian needs of dealing with the current crisis are past, the work of improving the business environment will require working closely with local officials and private firms to make lots of little changes which will simplify prospects for legal, formal sector economic activity.

This is the important work of implementing the Doing Business agenda. It doesn't take lots of money or aid; mostly it requires political and administrative commitment by government and local officials, and good dialogue between the private and public sectors. And it makes a huge difference: in the first few months of 2006 the number of businesses newly registered in Lima rose by 7 times compared with the same period last year, after similar reforms.

Governance and private investment in MENA

Empirical results show that governance plays a significant role in private investment decisions. This result is particularly true in the case of "administrative quality" in the form of control of corruption, bureaucratic quality, investment-friendly profile of administration, and law and order, as well as for "political stability." Evidence in favor of "public accountability" seems, however, less robust. The estimations also stress that structural reforms-such as financial development and trade openness-and human development affect private investment decisions directly, and/or through their positive impact on governance.

From the new working paper, Governance and Private Investment in the Middle East and North Africa. Also see PGP on poverty reduction in MENA.

Update: See the upcoming workshop "Between Society and the Market: Novel Approaches to the Business History of the Middle East."

Global Development Finance 2006

The 2006 Global Development Finance report came out today.

Net private capital flows to developing countries reached a record high of $491 billion in 2005, driven by privatizations, mergers and acquisitions, external debt refinancing, as well as strong investor interest in local-currency bond markets in Asia and Latin America… The surging flows, including record bank lending and bond issuance, among others, coincided with 6.4-percent economic growth in the developing world last year, more than double the 2.8-percent growth in developed countries.

Middle East World Economic Forum

The World Economic Forum on the Middle East is this weekend. Podcasts and webcasts and more available online.

Update: Forumblog is there. See this first post by Rachid Mohamed Rachid, Egypt's Minister of Trade and Industry.

Sharia safe investing

How do you reach an Islamic business community that does not approach mainstream banks? Two new funds in the UK hope to have found an answer by offering capital funding that complies with Islamic sharia law. As reported in the latest issue of Clear Profit, there are three main ways investors generate a return on capital under sharia law. The first by leasing assets to it, the second by sharing in profits. The new funds will both rely on the third way - a process known as "murabah".

Murabah lenders sell a consignment of a tradeable commodity worth the cash value required by the borrower plus an agreed profit for the lender, for which payment is deferred for the period of the loan. The borrower immediately sells the commodity to release the cash.

The two new funds have initial capital of around £250m. It remains to be seen how popular (and profitable) the funds will prove for investors, but this could be a growth market.

Mobile phones in MENA

A new publication on the socio-economic impact of mobile phones in the Middle East and North Africa (MENA). Interesting data on the financial and job impact of cell phones, and their special role in Iraq and rural areas.

• Mobile revenues accounted for 5% of the increase in GDP in Bahrain between 2002-04
• In Jordan, the number of employees in the mobile sector increased by 42% over the 4yr period of liberalization
• Many mobile operators represent more than 30% percent of a total stock market – such as Egypt’s Cairo and Alexandria Stock Exchange
• 95% of Iraqis use their phone to ensure the safety of their loved ones, 83% of Iraqis see it as a necessity in life, and 77% said it made life easier.

Key caveat: MTC is a major operator in the region and also the sponsor of the report. See more on risk-prone mobile investors. (ht NextBillion)

Kiva open for business again

Remember Kiva? They are open for business again. Lend to a Bulgarian chokeberry farmer, a Palestinian carpenter or a Senagelese women cooking shrimp with solar cookers.

Risk-prone mobile investors

The New York Times profiles Orascom Telecom, one of the first foreign firms to invest in Iraq. The article touches upon the unique role of cellular companies as first movers into hostile business environments. These early mobile investments are not only important for the tax revenues they bring and the service they provide to government and aid workers – they also provide new governments with an early opportunity to set a good example of dealing with foreign investors. For more on this topic, see a previous discussion.

A final word from Davos

Katherine Marshall, the World Bank’s director and counselor for Development Dialogue on Values and Ethics, attended Davos with the C-100 initiative. She has allowed me to post here an email she sent summarizing her week elbowing with the Davos who’s-who. A wonderful read. It would be great if more directors took the time to pull these sort of notes together after their trips (maybe even post in a blog?). A snapshot:

Mr. Wolfowitz was part of the most exciting discussion on Africa, which included also Bono, Gordon Brown, President Obasanjo and Niall FitzGerald. This session conveyed a sense of urgency and hope, with some sober notes (especially around corruption). Bono as ever added unique and unforgettable soundbites to the discussion - two come to mind: "stupid poverty", and his suggestion that Africa needs not only people who teach them to fish but also teach them to SELL fish. Gordon Brown, in turn, referred to Bono as his "mentor and tormentor".

Read the whole thing – especially if you are interested in the "Council of 100 Leaders" on West-Islamic World Dialogue. Her presentation is also available.

2006: banner year for emerging markets

Capitalization of emerging stock markets set to exceed $5 trillion for first time.

That’s the kick-off to a short note the IFC has put out to celebrate its 50 years. The note provides a great summary of the evolution of emerging markets, the role of the IFC, and the challenges that lay ahead. See also, more graphs, facts and commentary.

Cautiously, Iraqis open for business

24,000 new businesses have been set up in Iraq since April 2003, unfortunately as many as 90% of these new businesses remain idle: without access to finance, reliable electricity or security. Via CSMonitor.

Islamic finance gears up

Mohammed El Qorchi has a good primer on Islamic finance - discussing recent trends, new instruments, and future challenges:

Islamic finance is developing at a remarkable pace. Since its inception three decades ago, the number of Islamic financial institutions worldwide has risen from one in 1975 to over 300 today in more than 75 countries… Yet despite this rapid growth, Islamic banking remains quite limited in most countries and is tiny compared with the global financial system. For it to take off and play a bigger role, especially in the Middle East, policymakers must tackle enormous hurdles—notably on the regulatory front.

Arab Economic Freedom Index

The 2005 version of Economic Freedom of the Arab World is out. The report looks at the economic freedom in 16 Arab nations and “how free enterprise throughout the Arab world is lifting individuals and families out of poverty.” The full dataset is also available. (Via Robert Lawson)

World Bank Arabic newsletter launched

The first World Bank Arabic newsletter has been launched.

.اشترك الآن لتصلك آخر أخبار البنك الدولي

Starved by red tape

Nicholas Kristof (subscription only) has been reading Doing Business, and perhaps my earlier post on red tape in Niger.

Niamey, Niger -- In countries like this, children end up being killed not only by malaria and measles, but also by an insistence on the six-week paid vacation.
This land of mud huts and malnourished babies is the very least developed country on the planet, but local regulations stipulate that companies must give all employees six weeks and two days of paid vacation a year. Not surprisingly, there are almost no employers in Niger...

Microfinance Gateway launched in Arabic

Yesterday http://arabic.microfinancegateway.org/ was launched - to go along with the English and French versions. A great new resource financed by CGAP and the Grameen-Abdul Latif Jameel Initiative. (via NextBillion)