Publication: Financial Innovation Drives Small Businesses
Loading...
Published
2009-05
ISSN
Date
2012-08-13
Author(s)
Editor(s)
Abstract
International Finance Corporation (IFC) makes selective investments in small businesses that are in frontier countries and have a strong developmental role. Since 2002, the corporation has made 25 or so small direct investments (SDI), most of which turned out to be success stories. Over the years, SDI developed a specific methodology that works well with small companies. But the most successful stories arise from innovative financial solutions tailored to help small businesses as they incubate and eventually graduate into fully bankable companies.
Link to Data Set
Citation
“Spagnoletto, Paolo. 2009. Financial Innovation Drives Small Businesses. IFC Smart Lessons Brief. © World Bank. http://hdl.handle.net/10986/10557 License: CC BY-NC-ND 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication Taking Advantage of a Window of Opportunity(International Finance Corporation, Washington, DC, 2017-02)Rwanda’s government and private sector took a bold step towards achieving a critical reform agenda with the design and implementationof a single window for international trade system. This implementation marked the first successful collaboration among Rwanda’s numerous agencies that over see the country’s cross-border trade. Addressing the demands of a diverse group of stakeholders was certainly daunting, but effective stakeholder engagement and change management efforts have produced results that are exerting a major impact on the efficiency of goods into and transiting Rwanda. Driving the Single Window project was an aspiration for greater collaboration at the level of government-to-government, business-to business and government-to-business. Rwanda’s membership in the East African Community, which is a Single Customs Territory was another critical factor. By addressing national needs and incorporating a regional focus and outreach in the management of cargo, the Rwanda Electronic Single Window has achieved success.Publication Opening Opportunities(International Finance Corporation, Washington, DC, 2017-02)One of the most challenging experiences for businesses involved in cross bordertrade along Kenya’s border points is the clearance of imports and exports. Until 2015, the process of clearing cargo was largely manual. More than 29 different government agencies with different roles in the clearance of international trade goods required businesses to apply for and submit different sets of cargo clearance documents. The World Bank Group’s trade and competitiveness team, through the Kenya investment climate program, has supported the government of Kenya in implementing the Kenya National Electronic Single Window System, also known as the Kenya TradeNet System. This smart lesson describes the system, how it works, its accomplishments, and lessons learned along the way.Publication PortNet in Morocco(International Finance Corporation, Washington, DC, 2017-01)In 2008, Morocco’s National Ports Agency launched a project to create a national single-window platform for Morocco’s foreign tr ade. The process was long and difficult, and its success is owing in large part to the leadership and focus demonstrated by PORTNET S.A., the company created in 2012 to be in charge of the project. This SmartLesson describes the steps PORTNET took to forge a strategic alliance between public and private stakeholders in Morocco to achieve a common, mutually beneficial aim: streamline Morocco’s foreign trade procedures and improve its business climate.Publication Jamaica’s Trade Facilitation Task Force(International Finance Corporation, Washington, DC, 2017-02)Jamaica is taking steps to strengthen its trade environment as a way to improve the ease and ways of doing business and stimulate growth. In February 2015, Jamaica formed its National Committee on Trade Facilitation, known as the Trade Facilitation Task Force (TF2). During its first year, theTask Force had fruitful consultations with its members in the public and private sectors on how to increase trade facilitation in Jamaica. These consultations laid the foundation for the creation of a Trade Facilitation Project Plan, currently in use as a guide for the execution and monitoringof Jamaica’s trade-competitiveness activities. This SmartLesson describes the establishment of the Task Force and the progress of the Project Plan— and shares key lessons learned along the way.Publication Walking the Last Mile(International Finance Corporation, Washington, DC, 2017-02)Albania’s authorized economic operators (AEO) program is not yet operational, even though the country has adopted the necessary European Union (EU) legal and regulatory frameworks. This smart lesson outlines shortcomings in the adoption of AEO provisions under the European community customs code (CCC) as well as the obstacles the national government has faced putting in place the complementary reform measures necessary to ensure practical effectiveness. Lessons learned from the Albanian experience may be instructive for other countries in the central European free trade agreement region as they look to operationalize their AEO programs without diverting from AEO guidelines as set out in the EU acquis.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication How Does Corporate Governance Affect Bank Capitalization Strategies?(World Bank, Washington, DC, 2013-10)This paper examines how corporate governance and executive compensation affected bank capitalization strategies for an international sample of banks in 2003-2011. "Good" corporate governance, which favors shareholder interests, is found to give rise to lower bank capitalization. Boards of intermediate size, separation of the chief executive officer and chairman roles, and an absence of anti-takeover provisions, in particular, lead to low bank capitalization. However, executive options and stock wealth invested in the bank are associated with better capitalization except just before the crisis in 2006. In that year, stock options wealth was associated with lower capitalization, which suggests that potential gains from taking on more bank risk outweighed the prospect of additional loss. Banks' tendencies to continue payouts to shareholders after experiencing negative income shocks are shown to reflect executive risk-taking incentives.Publication Corporate Governance Country Assessment : Kenya(Washington, DC, 2007-12)Good corporate governance ensures that companies use their resources more efficiently, protects minority shareholders, leads to better decision making, and improves relations with workers, creditors, and other stakeholders. It is an important prerequisite for attracting the patient capital needed for sustained long-term economic growth. This report provides an assessment of Kenya s corporate governance policy framework. It highlights recent improvements in corporate governance regulation, makes policy recommendations, and provides investors with a benchmark against which to measure corporate governance in Kenya.Publication Corporate Governance Country Assessment : Slovenia(Washington, DC, 2004-05)This report provides an assessment of the corporate governance policy framework, and enforcement and compliance practices in Slovenia. The country has already upgraded its legislation to meet European Union (EU) Directives, and, its legal and regulatory framework dealing with corporate governance issues is now comparable to that of many EU member states. Strengths and weaknesses are highlighted, and policy recommendations are made where appropriate. The major issues are driven by the continuing transformation of Slovenian companies. Ownership of smaller companies and some blue chips will likely continue to consolidate, as strategic investors, and holding companies acquire control and 100 percent ownership; investor protection in these companies will require the diligent enforcement of takeover rules. For the remaining listed companies and others that will continue to have relatively dispersed ownership, related party transaction protection, and improved periodic disclosure are important. The report recommends that policymakers: 1) require a formal approval and disclosure process for related party transactions; 2) consider methods to increase minority representation on boards; 3) require the disclosure of shareholder agreements; 4) require that the SMA review the content of public company disclosure; 5) require an audit committee of the supervisory board for listed companies; and, 6) continue to support supervisory board training activities. The report also proposes that institutional investors (including State-owned funds) develop public voting, and board representation policies that require board members to act in the best interest of the company (and thus all shareholders and stakeholders).Publication Firms Behaving Nicely : Incentives and Commitment(International Finance Corporation, Washington, DC, 2013-09-26)Ever since the rise of large firms in the 18th century, debate has been raging about how to combine economic efficiency and productivity with socially desirable behavior of firms. This paper reviews the debate starting with the classic corporate governance argument about shareholder rights. It discusses the potential incentives to exploit other stakeholders unduly and examines some mechanisms, beyond contracts and regulation, to cope with this exploitation. In this light it considers reputational mechanisms, using the example of corporate social responsibility, and changes to the constitution of firms, with emphasis on the nonprofit form of enterprise. Based on evidence so far, the for-profit firm with mechanisms assuring sound shareholder rights remains preferable to the alternatives. However, scope for experimentation with mechanisms such as different classes of shareholders with differing voting rights may be socially useful, which suggests that global corporate governance principles thus should not be prescriptive in detail.Publication Republic of Croatia : Financial Sector Assessment Update(Washington, DC, 2008-07)This Financial Sector Assessment (FSA) summarizes the structural and developmental aspects of the 2007 Financial Sector Assessment Program (FSAP) update report for the Republic of Croatia. An in-depth elaboration on the stability and prudential oversight aspects of the FSAP Update, including factual updates of core principles and Report on the Observance of Standards and Codes (ROSCs), are summarized in the Financial System Stability Assessment (FSSA) that was discussed by the International Monetary Fund (IMF) Board as part of the Article IV consultation, in May 2008. This FSA should be read together with the Fund's FSSA in order to obtain a full sense of the findings and recommendations of the 2007 Croatia FSAP Update. The main conclusion of the FSAP update is that, although substantial improvements in regulation, supervision and institutional capacity are observed, challenges remain given the rapidly growing credit and securities market sectors.
Users also downloaded
Showing related downloaded files
Publication Vietnam(World Bank, Hanoi, 2020-05-01)Following from Vietnam’s ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in late 2018 and its effectiveness from January 2019, and the European Parliament’s recent approval of the European Union-Vietnam Free Trade Agreement (EVFTA) and its subsequent planned ratification by the National Assembly in May 2020, Vietnam has further demonstrated its determination to be a modern, competitive, open economy. As the COVID-19 (Coronavirus) crisis has clearly shown, diversified markets and supply chains will be key in the future global context to managing the risk of disruptions in trade and in supply chains due to changing trade relationships, climate change, natural disasters, and disease outbreaks. In those regards, Vietnam is in a stronger position than most countries in the region. The benefits of globalization are increasingly being debated and questioned. However, in the case of Vietnam, the benefits have been clear in terms of high and consistent economic growth and a large reduction in poverty levels. As Vietnam moves to ratify and implement a new generation of free trade agreements (FTAs), such as the CPTPP and EVFTA, it is important to clearly demonstrate, in a transparent manner, the economic gains and distributional impacts (such as sectoral and poverty) from joining these FTAs. In the meantime, it is crucial to highlight the legal gaps that must be addressed to ensure that national laws and regulations are in compliance with Vietnam’s obligations under these FTAs. Readiness to implement this new generation of FTAs at both the national and subnational level is important to ensure that the country maximizes the full economic benefits in terms of trade and investment. This report explores the issues of globalization and the integration of Vietnam into the global economy, particularly through implementation of the EVFTA.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Beyond Unicorns(Washington, DC: World Bank, 2021-07-28)Similar to many other countries around the world, the COVID-19 (coronavirus) pandemic has hit Indonesia hard. Latest estimates suggest that about 5.1 million people—equivalent to 2.4 percent of the working-age population—have lost their jobs, while an additional 24 million have had to work reduced hours due to the pandemic. As many as 50 percent of workers have experienced a reduction in earnings. The impact on living standards has been devastating, with more than 2.2 million Indonesians estimated to have been pushed into COVID-19-induced poverty in 2020. One unexpected silver lining from the crisis, however, has been the turbo-charged adoption of digital technologies. Businesses, both large and small, have flocked to digital technologies to try to ensure the continuity of their operations. School closures have forced students and teachers to adapt and explore digitally enabled remote learning options, including the adoption of a variety of EdTech solutions. HealthTech apps enabling remote consultations and the delivery of medicine have seen unprecedented growth in adoption rates. Confined at home due to mobility restrictions, Indonesians have switched to the internet for their entertainment and social needs, driving sharp growth in the usage of digital media (music and video streaming) and communications applications. With this pandemic-induced flight to digital expected to be permanent to a large extent, there is excitement about an even greater acceleration in what was already the fastest growing digital economy in Southeast Asia. But at the same time questions have also emerged about the possibility of the differential access to and adoption of digital technologies compounding existing inequalities. For a country that considers achieving balanced development one of its key priorities, this is an important new challenge.Publication World Development Report 2024(Washington, DC: World Bank, 2024-08-01)Middle-income countries are in a race against time. Many of them have done well since the 1990s to escape low-income levels and eradicate extreme poverty, leading to the perception that the last three decades have been great for development. But the ambition of the more than 100 economies with incomes per capita between US$1,100 and US$14,000 is to reach high-income status within the next generation. When assessed against this goal, their record is discouraging. Since the 1970s, income per capita in the median middle-income country has stagnated at less than a tenth of the US level. With aging populations, growing protectionism, and escalating pressures to speed up the energy transition, today’s middle-income economies face ever more daunting odds. To become advanced economies despite the growing headwinds, they will have to make miracles. Drawing on the development experience and advances in economic analysis since the 1950s, World Development Report 2024 identifies pathways for developing economies to avoid the “middle-income trap.” It points to the need for not one but two transitions for those at the middle-income level: the first from investment to infusion and the second from infusion to innovation. Governments in lower-middle-income countries must drop the habit of repeating the same investment-driven strategies and work instead to infuse modern technologies and successful business processes from around the world into their economies. This requires reshaping large swaths of those economies into globally competitive suppliers of goods and services. Upper-middle-income countries that have mastered infusion can accelerate the shift to innovation—not just borrowing ideas from the global frontiers of technology but also beginning to push the frontiers outward. This requires restructuring enterprise, work, and energy use once again, with an even greater emphasis on economic freedom, social mobility, and political contestability. Neither transition is automatic. The handful of economies that made speedy transitions from middle- to high-income status have encouraged enterprise by disciplining powerful incumbents, developed talent by rewarding merit, and capitalized on crises to alter policies and institutions that no longer suit the purposes they were once designed to serve. Today’s middle-income countries will have to do the same.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.