By Helen Moser
The assumption of many Microfinance Institutions (MFIs) is that providing microfinance to women is not only a social imperative – it is also one that may yield higher returns to capital, as women are typically more credit-constrained than men due to their limited access to formal financial services. Women in developing countries are 20 percent less likely than men to have access to formal credit. Additionally, women tend to be poorer than men on average and have less collateral to offer.
MFIs rose in popularity in the late 1990s and early 2000s, and many MFIs like the Grameen Bank began strategies of lending primarily to women that continue today. Over 80 percent of the poorest MFI clients worldwide (those who live on less than $1.25/day) are women. MFIs and their supporters often claim women make better use of loaned or granted funds than men do. But in actuality, microfinance may not be an effective solution to raise women’s business profits from microenterprise, nor their incomes. Continue reading
By Motoki Aoki
Long the pariah in Sub Saharan Africa’s economic integration, Zimbabwe has recently made an effort to re-engage with the global community. In February 2015, the EU lifted its 12-year sanction and resumed aid to Zimbabwe. In June, after a decade-long freeze, an IFC delegation visited Harare to seek ways to reinvigorate Zimbabwe’s private sector and help the country’s economy continue trending upwards after it shrank by nearly 40 percent from 2000 to 2008. After what was essentially a lost decade, leaders in Zimbabwe are now seeking long-term, inexpensive funding for the country’s economy and undercapitalized firms. They have found willing partners in multilateral institutions.
The Political Landscape: The Root of Economic Underperformance
Zimbabwe has rich human capital, characterized by a high adult literacy rate of 86.5 percent. It is the political landscape, however, that Zimbabwean chief financial officers specify is the largest risk to business performance. Recognized as the world’s oldest leader, President Robert Mugabe will run for another term in 2018, when he will be 94 years old. Mugabe’s economic policies have been notoriously inconsistent and unfriendly to FDI. Continue reading
By Miguel E. Eusse Bencardino
Water scarcity in the Middle East has long been an issue due to the area’s desert climate and lack of freshwater resources. While water access is a humanitarian issue, in this region it also carries enormous political importance. Despite efforts in previous peace negotiations to bring water security, more technical, institutional and political cooperation is needed. A new World Bank initiative aims to help spur this type of cooperation, with Israel at the helm.
Israel is internationally recognized for its ability to manage and deliver scarce water resources. Israel has built four desalination plants since 2005, and five more are expected to begin operations soon. Additionally, cooperation agreements with Jordan have improved the region’s water distribution infrastructure. Through desalinization of Mediterranean and Red Sea water (which accounts for 80% of Israel’s total water today), Israel has reached water stability.
Nitzana Desalinization Plant in Israel courtesy of Wikimedia Commons.
On June 17 Israel’s Ministry of Economy signed a $500,000 agreement with the World Bank to promote knowledge sharing on water issues through technical assistance, capacity building, and knowledge dissemination. Every World Bank Group member country aiming to improve its water resilience is eligible to participate; countries facing water stress are highly encouraged to take part.
By Ariel Gandolfo
Earlier this month, CNBC reported that Google is in negotiations to invest in Africa’s largest wind power project, which is set to break ground this Thursday. Located in Kenya, the $700 million Lake Turkana wind farm represents the largest single private investment in Kenya’s history. The expected 310 megawatt output could increase national energy capacity by 20 percent, filling a crucial gap in a country where more than 75 percent of the population lacks electricity, even after the government spends over one hundred million dollars per year on fuel imports.
The investment clearly makes sense for the forward-thinking tech giant, because more Kenyans with electricity means more people able to use Google products; the company’s strategy dovetails philanthropy with its core business interests by enlarging its long-term customer base. While Google has concentrated its renewable energy technology investments in California and the American Southwest, it also invested $12 million in the solar Jasper Power Project in South Africa in 2013, and the Turkana wind farm could be its second large-scale investment in African energy infrastructure.
The wind array will be constructed on the eastern shore of Lake Turkana, pictured here.
Clean energy investments are a cornerstone of American foreign policy on the African continent, and the Obama administration has leveraged billions of dollars from the private sector and philanthropic foundations to scale up investments in clean energy innovation. President Obama’s flagship Power Africa initiative, housed in USAID, is the most notable for international development. By collaborating with African governments and private companies, Power Africa aims to add 30,000 megawatts of clean electricity generation and provide electricity to 60 million new homes and businesses. Continue reading
By Julia Marvin
In late 2013, President Xi Jinping announced his interest in founding the Asian Infrastructure Investment Bank (AIIB), a Chinese-led development bank that would address the large financing gap resulting from regional infrastructure demands. The Asian Development Bank (ADB) can only produce about $13 billion annually in new loans – just a fraction of the projected $8 trillion needed over the next decade in order to sustain growth. The AIIB, with its $50 billion initial capital endowment, intends to step in and help fill the gap.
World Bank Group President Jim Yong Kim meeting with Chinese President Xi Jinping
Chinese Finance Minister Lou Jiwei touted the advantages of a Chinese-led investment bank, saying “Asia is in direct need of investment, especially in infrastructure, but ADB’s current capacity is really insufficient… By comparison, the China Development Bank has been doing commercial infrastructure loans and its business size is far bigger than the ADB and World Bank combined – and that happened in less than 20 years.” The AIIB would initially focus on re-vitalizing the Silk Road as well as general infrastructure needs in the region.
The AIIB is a manifestation of China’s desire to change the status quo of international lending. There is a stark political impetus for this move, especially given the context of the recent BRICS bank announcement. The ADB and the World Bank are seen as OECD dominated institutions, and China has been one of the leaders in attempting to construct an alternative set of international structures. China and other Middle Income Countries are eager to pursue the institutional bells and whistles of the developed world, but the type of lending and leadership these institutions will offer remains unclear.