Impact Stories

SEYCHELLES: Strengthening Secured Lending and Collateral Registry

CHALLENGE The entrepreneurial environment in Seychelles is challenging: it is characterized by an inefficient regulatory framework and poor access to finance. Although the banking sector is well capitalized and enjoys high levels of profitability, which is mostly attributed to non-interest income earned on loans and advances and to investment in government securities, banks in Seychelles do not adequately engage in lending, especially to SMEs. This is partly explained by the lack of acceptable collateral. Banks accept only immovable property as guarantees on loans, thus effectively preventing...

Seychelles

Financial and Information Infrastructures

COLOMBIA: Improving Access to Housing Finance for Low-income and Informally Employed Segments

CHALLENGE The housing finance market in Colombia remains underdeveloped; the situation is especially acute for low-income salaried households and those employed in the informal sector. In 2013, the market depth was 4.5 percent of GDP (Col$28.6 trillion, or US$15 billion), noticeably lower than in Chile (20 percent) and in Mexico (11 percent), for comparison. Housing finance represented about 10 percent of banks’ credit portfolios. With rapid population growth and urbanization exacerbating the housing shortage, an estimated 35–40 percent* of the population is in need of affordable housing. The...

Colombia

Housing Finance

RWANDA: Savings Co-ops help Rwanda reach Financial Inclusion targets early

A recently published FinScope survey reveals that Rwanda has reached 89% financial inclusion, narrowly closing in on the 90% target set by its Vision 2020 plan. Since 2008 , the percent of adults formally included in the financial sector has more than tripled from 21% to 68%. Rwanda’s dramatic rise in access to financial services has largely been delivered through the formal, non-bank sector, which includes mobile money, Saving and Credit Cooperatives (SACCOs), and insurance. Their formalization and rapid expansion is an example of how the financial system in Rwanda has become stronger, more...

Rwanda

Banking

COSTA RICA: Strengthening Systemic Risk Monitoring

When is a bank too big to fail? How can financial sector policymakers anticipate cascading domino effects, and how can they tame the innate boom bust tendencies in the financial sector? The global financial crisis highlighted the urgency to add a macro overlay to existing approaches to financial sector regulation and supervision, aimed at ensuring the safety and soundness of individual financial institutions. Macroprudential supervision is meant to fill the gap. It adopts a broader perspective on the financial system, including the linkages that support its functioning, and focuses on...

Costa Rica

Macroprudential, Financial Safety Net & Crisis Preparedness

DJIBOUTI: Innovative MSME Finance Shows Promise

Only 5% of formal businesses in Djibouti receive bank financing, according to estimates . Banks in Djibouti are fairly liquid, but they are often unwilling to lend to micro, small and medium size enterprises (MSMEs) because of low appetite for risk and insufficient collateral. However, MSMEs are important for job creation and economic growth. To improve their access to finance, Djibouti’s Central Bank and the Ministry of Economy and Finance reached out to the World Bank and FIRST Initiative for technical assistance to design a Partial Credit Guarantee Fund (PCG Fund) as part of a broader...

Djibouti

Banking

NICARAGUA: Strengthening the Microfinance Sector

CHALLENGE The explosive growth in Nicaragua’s microfinance lending activities in the overall credit boom during 2006–2008 led to widespread over-indebtedness, which led to the “No-Payment Movement” (Movimiento No Pago) in 2009–2010. As a consequence, 19 microfinance institutions lost over $60 million in foreign financing and their credit portfolio in arrears skyrocketed to 17 percent from 3 percent before the crisis. Several microlenders went out of business or had to be heavily recapitalized. As the “No Pago” movement had brought abusive practices to light, the Nicaraguan authorities...

Nicaragua

Microfinance

INDONESIA: Enhancing Payment Systems’ Interoperability and Removing Legal and Regulatory Restrictions to Accelerate Financial Access

CHALLENGE The rapid growth of retail payment transactions and large remittance inflows into Indonesia created challenges for the country’s payment systems. In addition, institutional changes made with the establishment of the Indonesia Financial Services Authority, which has taken over the responsibility of regulating and supervising banks, put a clear mandate and authority for Bank Indonesia as the overseer of the payment systems, including nonbank remittance service providers. The lack of system interoperability and a conducive legal and regulatory framework constrained the introduction and...

Indonesia

Financial and Information Infrastructures

Rural family in their field harvesting crop. India. Photo: © John Isaac / World Bank

INDIA: Making Financial Products Work for Farmers and Poor Households

CHALLENGE Improving livelihoods for the poor was a big challenge for the government of India during 2004–2009, when the poverty ratio was between 30 and 40 percent. With two-thirds of the population dependent on agriculture for a livelihood, crop insurance is an important element of agricultural risk management. The government has historically focused on crop insurance to mitigate the natural risks of farming. In 1999, the government established the National Agricultural Insurance Scheme (NAIS) to reduce farmers’ vulnerability to natural disasters. After four years of operations, the NAIS...

India

Insurance

PAKISTAN: Enabling Microinsurance Sector to Take Off

CHALLENGE During the 2003–2007 period, Pakistan’s GDP was growing at 6 percent annually on average*, but it deteriorated as a result of the global financial crisis, political turmoil, and the devastating floods in 2010 and 2011. In 2010, 20 percent of the population lived below the poverty line; the agriculture sector employed 44 percent of the work force and contributed 21 percent of GDP. The monsoonal rains, resulting in floods, have created havoc and had a dramatic impact on millions of lives. In 2012, the damage to agricultural land and infrastructure due to floods was estimated at Rs 250...

Pakistan

Insurance

WEST BANK AND GAZA: Remarkable Progress in the National Payment System Reform

CHALLENGES Payment and settlement systems are a core component of the financial system underpinning its functioning. They allow financial markets to function smoothly and individuals, firms, and the government to receive payments and to pay for goods and services. Disruptions in these systems may cause disruptions in the financial markets, introduce inefficiencies all through the economy, impact the safety and soundness of the financial system; and affect public confidence in money. Inefficiencies in the national payments system (NPS) could increase costs for users and raise barriers to...

West Bank and Gaza

Financial and Information Infrastructures