Transcript Per Capita GDP growth rates

Making Finance Work for Africa
March 5, 2007
Nairobi, Kenya
Asia and Africa
Per Capita GDP growth rates (in percent)
3.54
2.92
2.07
1.02
-0.02
1913-1950
0.01
1950-1973
Asia (excluding Japan)
1973-1998
Africa
Source: Angus Maddison. 2001. The World Economy: A Millenial Perspective.
2
Sub-Saharan Africa: Macroeconomic
Indicators
Real Per Capita GDP Grow th
Consum er Prices
70
3
2
60
1
50
0
40
-1
S ub- S a ha ra n
A f ric a
A dv a nc e d
E c o no m ie s
30
D e v e lo ping
C o unt rie s
-2
20
-3
10
-4
0
-5
1980
1985
1990
1995
2000
2005
1980
1985
Trade Volum e (goods and services)
1990
1995
2000
2005
External Debt
15
350
300
10
250
200
5
150
0
100
50
-5
3
0
1980
-10
1980
1985
1990
1995
2000
2005
1985
1990
1995
2000
2005
E xt e rna l de bt ( in % o f G D P )
E xt e rna l de bt ( in % o f e xpo rt s o f go o ds a nd s e rv ic e s )
Source: IMF, April 2004, World Economic Outlook.
Net Interest Margins in Africa higher than for banks
in the rest of the Word
Higher margins driven by:
900
800 bps
Other
Smaller bank size
Inflation
Lack of property right protection
20 bps
70 bps
100 bps
130 bps
600
480 bps
300
0
Africa
Rest of the World
4
Market-friendly growth –
The hope for poverty reduction
— Catch-up is possible —
Time to double income:
Pre-industrial:
Britain (1780-1830)
Britain in 19th century
Fast growers since WWII
350 years
175 years
65 years
10 years
Botswana, Ireland, Chile….) or less
(Japan, China, Thailand,
POSSIBLE
“CATCH-UP”
5
The Ngorongoro Crater
6
cellphone
7
Vast Coverage
8
Source: GSM Association
Fastest-growing markets
World, Growth Rate, Connections, Q2 2006 (%)
Country
Guinea
Value
56.43 %
2
Turkmenistan
34.09 %
3
Bangladesh
31.47 %
4
Guinea-Bissau
29.29 %
5
Liberia
23.73 %
6
Nigeria
23.61 %
7
Pakistan
21.53 %
8
Mali
21.48 %
9
Sudan
21.34 %
10
Algeria
18.76 %
11
Chad
18.47 %
12
India
17.86 %
13
Zambia
17.02 %
14
Nepal
16.57 %
15
Malawi
16.50 %
16
Haiti
15.92 %
17
Iraq
15.89 %
18
Venezuela
15.62 %
19
Uzbekistan
15.51 %
20
Armenia
15.35 %
Rank
1
Source: Wireless Intelligence
9
How to reach the unbanked?
• No Bank Branches/ATMs
• No MFIs
Autazes - AM
140km & 14 hours by boat to branch
Santa Rosa do Purus - AC
10
500km to branch by boat or plane
Branchless Banking
11
Lessons from Brazil



Agents are used widely
 90% of sample (especially in urban areas)
 61% of users, use lottery houses
 50% of users have used primarily branches before
 Illiterates show same profile as literates
Usage primarily for bill payments (95% of transactions)
Bank accounts opened to only receive benefits, salary,
etc.
 51% have a bank account (of which 50% simplified
account)
Banking agents reach new customer segments (C, D, and E);
however, many of these clients do not see the value of financial
services.
12
Two cases:
SMART Money
(2000 )
GLOBE G-Cash
(2004 )
13
What are the regulatory issues?
Is her PIN valid as signature?
Will a leading mobile co become a monopoly?
Should her telco be allowed to take deposits?
What can she do if de-frauded?
Should the telecoms regulator care?
Can this agent safely handle cash for a bank?
Are agents liable for meeting AML/CFT?
Can others use her credit history to assess risk?
How easy for a startup to offer anywhere transfers?
14
Are there FX constraints on transfers?
15
 “Little else is requisite to carry a
state to the highest degree of
opulence from the lowest barbarism
but peace, easy taxes, and a
tolerable administration of justice:
all the rest being brought about by
the natural course of things”
16
 Adam Smith, 1755