Search

Since the early 2000s, Ethiopia has been implementing one of the largest land certification and digitalization programs in Africa, underpinned by technological and policy innovations. The reform indicates a promising avenue for increasing the collateralization of land use rights for smallholder households who have been credit constrained. However, there is scant evidence to what extent these reforms have influenced access to credit. To help generate new insights and fill this gap, the study employed administrative data generated from 11 districts’ digital land registers, survey data from 2296 households in 19 districts, key informant interviews, and policy and legal framework review. Descriptive and inferential statistics complemented by qualitative explanations are employed to analyze the results of the study. The results revealed that accessibility of information from the digital rural land registers increased the credit-worthiness of small landholders and reduced transaction costs and risks. The reform related to collateralization of land use rights also incentivizes financial institutions to establish new loan products for small landholders. The study concludes that while the two-stage land certification programs allow smallholders to possess documented land rights, their credit-worthiness may likely remain negligible without further technological and policy innovations. This implies two policy issues: the need to reform secured transaction laws and digitalizing registries for higher land rights trade ability.

Growing research and policy interest focuses on the misallocation of output and factors of production in developing economies. This paper considers the possible misallocation of financial loans. Using plant-level data on the organized and unorganized sectors, the paper describes the temporal, geographic, and industry distributions of financial loans. The focus of the analysis is the hypothesis that land misallocation might be an important determinant of financial misallocation (for example, because of the role of land as collateral against loans). Using district-industry variations, the analysis finds evidence to support this hypothesis, although it does not find a total reduction in the intensity of financial loans or those being given to new entrants. The analysis also considers differences by gender of business owners and workers in firms. Although potential early gaps for businesses with substantial female employment have disappeared in the organized sector, a sizeable and persistent gap remains in the unorganized sector.

Demand is also fueled by other factors: in many emerging economies a ‘demographic dividend’ of young people, the product of significant reductions in child and infant mortality rates—is poised to enter education and work. And, according to the 2014 Millennium Development Goals report, nearly 90 percent of children in developing regions are on track to complete primary education. The shift from agricultural to knowledge-based economies also plays a significant role in creating demand for higher learning. The purpose of the study was to identify key success factors in private sector student lending in order to support IFC in understanding, and potentially making investments, in student lending across a range of emerging markets. The study examined 70 student lending models globally as well as a range of innovative financial models. Detailed case studies were developed for eight compelling and diverse private sector student lending models. The study also highlighted a range of innovative financial models including crowd funding, big box banking, social impact bonds, and other mechanisms. The purpose of this investigation of innovative financial models was to see what leading-edge methods might be at work in other sectors and to see if they might offer inspiration to student lending.

This paper examines whether urban Micro-Finance Institutions (MFIs) consider proxy/ hidden collateral in the absence of physical as well as social collateral to judge the creditworthiness of a borrower. Micro-finance institutes operating in urban slums adopt an individual lending mechanism in several cases since borrowers are not willing to bear joint liability due to the acute problem of migration. Therefore, such urban MFIs that offer individual loans become extra-cautious to minimise default risk. To be specific, we study whether an MFI considers ownership of a 10ftx10ft room in a slum as a hidden selection criterion in a loan programme. Room ownership, on the one hand, indicates stability in a particular location, but on the other hand, it infers income generation capability of an aspirant borrower. We use a primary survey database collected from an NGO, Navnirman Samaj Vikas Kendra that provides micro credit in four slums of north Mumbai in India. We find that the probability of getting selected in a micro credit programme becomes significantly higher if a loan applicant owns a room in a slum compared to one who lives in a rented room. MFIs appear to be more concerned about shielding themselves from default than fulfilling the broad goal of maximising social welfare by reaching the poorest of the poor. We present our study with the caveat that the results may not be generalizable, since they are based on a case study.

European Commission This chapter highlights the growing global and European financial inclusion agenda and provides a brief assessment of vulnerability and labor market outcomes for Roma in Eastern Europe. Financial inclusion is considered by many to be among the main instruments to improve welfare, especially among the poor, which need financial services as much as, if not more, than non-poor, to reduce vulnerability and improve self-employment. Following a brief description of the main data sources used in the analysis, the chapter highlights the very high levels of vulnerability and exclusion among Roma in Eastern Europe and the poor labor market outcomes by any measure, including extremely low employment rates and high informality. Against this background, the following chapters assess financial exclusion among Roma, and self-employment levels and (credit) barriers to starting businesses. The final chapter highlights international experiences promoting comprehensive, incremental approaches to financial inclusion.

The Public Investment Management (PIM) efficiency review is intended to support the Government of Zimbabwe, and in particular the Ministry of Finance, in its efforts to strengthen the efficiency of the public investment system, with the goal of improving the creation, operation and maintenance of public sector capital assets that support service delivery and economic growth. The problems of public investment management are not merely financial but systemic. Budget execution deficit remains a major bottleneck. Due to large backlogs across sectors, capital budget allocation has prioritized completion and rehabilitation of on-going and stalled projects and programs. Currently, public investment projects are mainly financed by the national budget. Regulatory frameworks for public-private partnerships are in place, but sluggish recovery from the private sector has not made it a notable source of financing for capital projects. Foreign loans and grants, and humanitarian aid from donors are not channeled through the official budget. This report is intended to provide the basis for a follow-on discussion with government on possible options and approaches to addressing the identified problems, focusing on those which are the most critical to Zimbabwe's economic recovery and long term development. It is complementary to the action plan, also developed by the team for consideration by the Government of Zimbabwe, which suggests a list of reform actions over the immediate to medium-term to strengthen the regulatory framework and build capacity across central and implementing agencies. The objective of the policy note is to support the Government of Zimbabwe to strengthen the efficiency of PIM system, with an ultimate goal of contributing to improved governance, service delivery, and economic growth. The study will inform a reform and capacity strengthening action plan with the Government as well as subsequent Bank's proposed technical assistance program to strengthen the PIM.

Over the past five years, the microcredit sector has experienced unprecedented growth. The number of borrowers served by microfinance institutions (MFIs) has increased threefold to reach 120 million clients, according to MIX estimates as of December 2009 and by other estimates the number may be as high 190 million (Microcredit Summit Campaign 2011). In large markets, such as Mexico and South Africa, commercial banks and consumer lending companies have expanded their activities to include microfinance for low-income households. Unfortunately, the growth of microcredit is not always sustainable. Some iconic markets, such as India and Bosnia Herzegovina, are experiencing large-scale credit crises, and they are not alone. The deterioration in the quality of MFI loan portfolios can be attributed to several factors. Some fast growing MFIs have outgrown their risk management systems and controls. These weaknesses have often been exacerbated by high staff turnover, leading to a further erosion of credit discipline. Rapid growth has also been focused in narrow geographies, which in turn affected borrower repayment incentives and behaviors. This report takes a fresh look at the state of credit reporting at the base of the pyramid. The data and analysis for this paper are drawn from International Finance Corporation (IFC) and Consultative Group to Assist the Poorest (CGAP) market intelligence on credit reporting systems. the lessons learned for effective credit reporting at the base of the pyramid and identifies key success factors as well as common challenges.

The sales of goods and services are exposed to a significant number of risks, many of which are not within the control of the supplier. The highest of these risks and one that can have a catastrophic impact on the viability of a supplier, is the failure of a buyer to pay for the goods or services it has purchased. In today's challenged domestic and global economic climate, recognizing and managing future risks has become a priority for businesses. Losses attributed to non-payment of a trade debt or bankruptcy can and do occur regularly. Default rates vary by industry and country from year-to-year, and no industry or company is immune from trade credit risk. The essential value of trade credit insurance is that it provides not only peace of mind to the supplier, who can be assured that their trade is protected, but also valuable market intelligence on the financial viability of the supplier's customers, and, in the case of buyers in foreign countries, on any trading risks peculiar to those countries. As well as providing an insurance policy that matches the client's patterns of business, trade credit insurers will establish the level of cover that can reasonably be provided to the supplier for trade with each individual buyer, by analyzing the buyer's financial status, profitability, liquidity, size, sector, payment behavior and location.