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Enhancing Access to Finance

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  1. NAWF Women Entrepreneurship Empowerment through Entrepreneurship &Innovation Enhancing Access to Finance Sahar Nasr Program Leader, World Bank February 26, 2015

  2. Challenges and Prospects in the Arab World • The recent economic and political development has brought to the forefront key challenges—the need to create job opportunities, equal access, governance and accountability, and a fair and competitive environment • Growth has accelerated over the past decade in the Arab World, but it has been neither inclusive • High unemployment rates with lowest employment to population and labor force participation rates • Highest female unemployment rate • The region also has some of the world’s highest levels of youth unemployment

  3. SMEs Development is a Root Solution • Formal SME’s (>5 employees) by country (‘000) • Egypt • 200-250 • Morocco • 200-250 • Algeria • 180-200 • Iraq • 150-190 • Sudan • 140-160 • Saudi Arabia • 120-140 • Yemen • 60-70 • UAE • 80-90 • Qatar • 10-12 • Kuwait • 28-35 • Jordan • 16-20

  4. SME Prospects in the Arab WorldInternational Experience—Job Dynamics Median Job Creation Shares of Firms by Size and Age In countries with net job creation (81 countries) Median Job Creation Shares of Firms by Size and Age In countries with net job creation (81 countries) Source:Ayyagari, Demirguc-Kunt, and V. Maksimovic (2011).

  5. Why gender ownership of enterprises matters? Women-owned SMEs are More Inclusive

  6. Male (about For married and unmarried women Female women) 78% 85% Contribute to family spending? Why gender ownership of enterprises matters? High Female contribution to family spending • No divergence in perceptions about the size of female contribution to family spending in married couples • In about a third of households a working wife contributes all her salary

  7. The World Bank Group Interventions Achievıng Universal Financial Access • Financial Services • Enhancing Access to Finance for MSEs Project • Promotıng Innovatıon for Inclusıve Growth • Finance for Rural Egypt Program • Affordable Housıng Fınance DPL • Knowledge and Advisory Services • Financial Inclusion for Economic Growth • FIRST Initiatives—Stress Testing • MSME TA Facility—Joint WB-IFC • Micro Finance Regulations Project--Transition Fund, Deauville Partnership • Convening Services • Islamic finance workshop • Capacity Building of MSMEs Workshops • Innovative Financial Products Conference • Unleashing Universal Access to Promote Inclusive Growth In Egypt

  8. One WBG MSME Program One WBG MSME Program WBG Advisory Services Client Segment WBG Investments Pillar One: Enabling Environment • Support policy and legal reforms • TA to regulatory bodies • Financial infrastructure WB Lines of Credit US$ 870 million Government Pillar Two: Advisory Service to FIs • Extensive TA to MFIs and Banks • Islamic finance • Gender-based products IFC Loan & Equity US$ 693 million Financial Institutions Pillar Three: Support to MSMEs • Business Development Services to MSMEs • Mentoring Entrepreneurs • Business incubator operations MSMEs 8

  9. One WBG MSME Program WBG Achievements under MSME TA Facility WBG Achievements under MSME TA Facility US$ 31 million Mobilized from 7 donors. US$ 2 million Committed by FI to pay for TA 3key laws and regulations approved US$ 1.5 billion Leveraged in IBRD and IFC credit line 119,840 Jobscreated 922,318 loans disbursed to MSMEs as of Dec 2013, 30% for women US$ 1 billion loans disbursed to MSMEs 9

  10. Innovative Forms of Finance for MSME Development • Entrepreneurs and their startups are core driver to sustainable economic growth • Startups can be financed across their different stages through • Incubators • Crowdfunding • Angel Networks • Venture Capital • Commercial Banks • The World Bank is developing a number of Venture Capital programs across MENA to support entrepreneurs and catalyze private investors participation 8

  11. Payment and Innovative Banking Technologies Mobile Banking as a Driver • Mobile money can drive increases in financial access, and can open the way for mobile wallets and links to deposit accounts. • 2/3 of Adults worldwide without an account cite lack of money as the obstacle to use of formal financial services. 1/3 of Adults also blame the cost of opening and maintaining an account or the banks being too far away. • Arab Region has an extremely high mobile penetration rate of over 100%. • Mobile banking has the potential to be transformational • Uses existing mobile communications infrastructure which already reaches unbanked people. • Driven by new players, such as telecommunications companies, with different target markets from traditional banks. • Harness the power of new distribution networks for cash transactions, such as airtime merchants, beyond the conventional merchant POS or ATM networks of banks. • Cheaper than conventional banking, if the offering is competitive.

  12. Payment and Innovative Banking Technologies Mobile Banking as a Driver • Users of Mobile Banking in MENA are currently estimated at 19.8 million. Source: Douglas Pearce, (2011).

  13. Payment and Innovative Banking Technologies • Payment cards are a key subset of transaction accounts – allowing people to make and receive payments digitally • Payment cards have grown at twice the rate of deposit accounts since 2007 in the seven countries representing 55 percent of the world’s unbanked adults (20% vs. 10% on average) • As of 2012, there are twice as many payment cards as deposit accounts in these countries

  14. World Bank Group Engagement- Lines of Credit Enhancing Access to finance for MSEs Project (US$ 300 million). Promoting Innovation for Inclusive Financial Access Project (US$ 300 million) • The Enhancing Access to finance for MSEs Project has strong impact on women’s economic empowerment. • Increase in the number of female-owned MSEs from 4,573 to 24,556 from June 2012 to January 2014 (representing 25 percent of financed projects) compared to 15% in the previous years. • Group lending was capitalized on to expand outreach, especially to women in poor villages. • The project offers special financial products for women that address cultural barriers. • New gender-based products and special windows for women, especially in marginalized Governorates where there are more social and cultural barriers. • Other new products such as Islamic financing also significantly benefit women. 12

  15. World Bank Group Engagement • Joint World Bank IFC • MENA MSME Facility • Provides technical assistance and advisory services under three pillars: • Enabling environment • Advisory services to financial institutions • Support and training to MSMEs • Egyptian Women’s Leadership in MSEs Program • (US$ 300 thousand) • Promoting better understanding of key determinants of successful women-led SMEs. • The work program supports: • Increasing the entry and growth of women-owned and women-managed SMEs in the developing world • Testing the effectiveness of these interventions through rigorous impact evaluations.

  16. Moving Forward, towards promoting women’s access to finance in Arab region . . • Ensuring an enabling environments that facilitated private sector development for both women and men. • Continue the reform and restructuring program of the financial sector. • Developing non-bank financial institutions, and encouraging banks to play their intermediation role. • Ensure women’s equal access to markets, otherwise there will be market distortions. • Capacity building and training bankers, to ensure that credit is extended based on the market without any gender biasness. • Address the culture issue, and society’s perception of women’s role.

  17. Thank You