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Access to Finance - A Global Agenda

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30/03/11 Presentation at the 2011 'Better Business Kenya' conference in Nairobi

30/03/11 Presentation at the 2011 'Better Business Kenya' conference in Nairobi

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  • This is low even by developing country standards – 3% is the norm. Among developed countries, it is 13%.
  • Kenya has also registered the fastest improvement between the 2009 and 2010 indices
  • Kenya was the first African country to participate in MF Transparency survey
  • The EIU notes that despite the quality of the DTM regulatory framework and the effort of MFIs to attain this status, as of mid – 2010 there were only two DTMs.
  • Transcript

    • 1.  
    • 2. Access to Finance: A global agenda .
    • 3.
      • WHY ACCESS TO FINANCE?
      • Employer and member focus
      • Core values of opportunity, diversity, innovation, integrity, accountability
      • Global agenda for a global organisation
    • 4.
      • SOME EARLY LESSONS
      • Finance is key to growth & innovation
      • Sustainable finance is diverse and widely available; might be less finance
      • Finance needs solid governance, not just better regulation
        • Compliance = zero liability, not risk
    • 5. “ How does finance create value ? ”
    • 6.
      • RAW MATERIALS OF FINANCE
      • Information – costly and noisy
      • Control – costly and unwelcome
      • Collateral – unequally distributed
      • Risk – unwelcome and transferable
    • 7. $ 10tn Of formal loans to SMEs worldwide [5.1% of global GDP] Ardic, Mylenko & Saltane (2011)
    • 8. 0.52 % of this went to Sub-Saharan Africa, [2.6% of regional GDP] Ardic, Mylenko & Saltane (2011)
    • 9.
      • RAW MATERIALS OF MICRO FINANCE
      • Information – costly and noisy
      • Control – costly and unwelcome
      • Collateral – unequally distributed
      • Risk – unwelcome and transferable
    • 10.  
    • 11.
      • THE FINANCIAL CRISIS IN BRIEF
      • Information – costly and noisy
      • Control – costly and unwelcome
      • Collateral – unequally distributed
      • Risk – unwelcome and transferable
      Risk – unwelcome and transferable Risk – unwelcome and transferable
    • 12.  
    • 13.
      • SOAKING UP THE RISK
      • Sacrifice some growth for stability
      • New capital adequacy rules aimed at making sure risk stays with the banks
      • But their IAs completely ignore SMEs!
      • Past experience says short-term financing for SMEs will shrink
    • 14. Result: The number of ‘un-financeable’ businesses will grow .
    • 15. “ Shouldn’t governments do something? ”
    • 16.
      • DESIGNING GOOD POLICIES (I)
      • Demonstrate market failure
      • Set clear, measurable objectives
      • Promote accountability
      • Do not overlook delivery
    • 17.
      • DESIGNING GOOD POLICIES (II)
      • Be humble: macro > micro
      • Remember the four Raw Materials
      • Make sure schemes are sustainable
        • Commercially profitable
        • Self-financing
    • 18.
      • THE G-20 AGENDA
      • 09/09 – Fin. Inclusion Expert Group
      • 06/10 – Principles of Innovative Fin. Inclusion, SME Finance Challenge
      • 09/10 – Flexible Finance Framework
      • 10/10 – IFC report on upscaling
    • 19.
      • THE IFC’S ADVICE TO THE G-20
      • Establish Global SME Finance Forum
      • Set up global funding platform
      • Gather better SME financing data
      • Establish recommendations for developing countries
    • 20.
      • WHAT RECOMMENDATIONS?
      • Diagnostics and strategies
      • Supportive regulatory framework
      • Stronger fin. information infrastructure
      • Effective government support
      • Better SME finance data
      • Build capacity in fin. institutions
    • 21.
      • SAMPLE DIAGNOSTICS
      • The EIU Microscope index
        • Kenya first covered in 2010
      • MFTransparency
        • Kenya the first African participant
    • 22.  
    • 23. “ Kenya has a global reputation for innovation and dynamism in microfinance ” Economist Intelligence Unit, Global Microscope on the Microfinance Business Environment 2010
    • 24.
      • STRENGTHS (I)
      • Capital market development
      • Accounting standards
      • Governance standards
      • MFI transparency
    • 25.
      • STRENGTHS (II)
      • Wide range of MFI services, innovatively delivered
      • ‘ Global leader in mobile banking’
      • Credit bureaux supported by CBoK
      • Regulation of DTMs, NGO-MFIs
    • 26.
      • WEAKNESSES
      • Political stability
      • Judicial system
      • Level of competition
    • 27. What do you think ?
    • 28. CONTACT Please send suggestions for further research to [email_address]
    • 29.