Measuring Wealth to Track Sustainability

The new edition of the World Bank's Little Green Data Book, released on World Environment Day 2014, includes a new indicator called change in wealth per capita for more than 200 countries.

The World Bank Group has adopted change in wealth per capita as an indicator for its Results Measurement System, Corporate Scorecard and Systematic Country Diagnostic.

Negative changes in wealth per capita—particularly over several years—imply that a country is becoming poorer by leaving behind fewer resources for future generations.

Consider this: Although most countries are on a sustainable path, nearly 45 percent of the 136 countries analyzed by the World Bank Group in its annual Little Green Data Book are depleting their "wealth" even as they show growth in annual income. As these countries grow, they are not compensating for depletion of natural resources with the risk that in the long term, growth will decline, as the wealth on which it is based erodes.

What do we mean by "wealth"? Broadly defined, a country’s total wealth includes the stocks of produced capital, natural capital, and human and social capital—all of which underpins the generation of national income. Natural capital in analysis presented in the Little Green Data Book includes minerals and energy, agricultural land, forests and protected areas. Our most commonly used indicator of country economic performance, GDP, only measures income, not wealth or how wealth is changing.

To help countries plan for more sustainable growth, a new indicator change in wealth per capita is now available for more than 200 countries in the World Development Indicators and Little Green Data Book. Change in wealth per capita measures whether countries are saving enough to offset depreciation of manufactured capital and depletion of natural capital while sustaining future economic growth for their (growing) populations.

Negative changes in wealth per capita—particularly over several years—imply that a country is becoming poorer by leaving behind fewer resources for future generations.

A new indicator for the World Bank Group

Building on this work, the World Bank Group took a decision to use the concept of Wealth Accounting more widely in its operations. This year, the International Development Association (IDA), the World Bank’s fund for the poorest countries, adopted change in wealth per capita for its Results Measurement System. The Results Measurement System measures progress on more than 20 indicators capturing economic growth as well as the human development priorities of ongoing IDA programs. The World Bank Group’s annual Corporate Scorecard, providing a snapshot of its performance will also include this sustainability indicator. The Systematic Country Diagnostic, a new tool to inform the partnership strategies of World Bank Group client countries, will also build on this wealth accounting framework.

"[Wealth accounting] will allow both the World Bank and policymakers in our client countries to identify some of the threats to the sustainability of economic growth and poverty before it is too late to reverse the trend."

Juergen Voegele
Director, Agriculture and Environmental Services, World Bank

"This measurement will allow both the World Bank and policymakers in our client countries to identify some of the threats to the sustainability of economic growth and poverty before it is too late to reverse the trend," said Juergen Voegele, World Bank Director, Agriculture and Environmental Services.

[caption id="attachment_7476" align="aligncenter" width="520"] © World Bank Group[/caption]

Wealth and World Bank Group’s twin goals

The analyses of 136 countries compiled in the Little Green Data Book found that the share of countries with wealth depletion decreases as income levels increase, indicating that poorer countries face severe sustainability challenges. In Sub-Saharan Africa, 28 countries were found to be depleting their wealth in 2010.

These findings point to the need for including sustainability as part of the equation. The goals of the World Bank Group are to eradicate poverty and promote shared prosperity. In a world of finite planetary boundaries and natural resources it is important that any progress made toward these twin goals can be sustained in the long run and does not come at the cost of natural capital.

To operationalize the twin goals, two indicators—the number of people in extreme poverty and the income growth of the bottom 40 percent—were introduced with their adoption in April 2013. Yet measuring progress toward these goals requires a better understanding of the sustainability dimensions of progress, with measurable indicators.

"The World Bank has been constructing a global database of country-level comprehensive wealth measures since the 1990s.But this is the first systematic attempt at including wealth indicators in World Bank business," said Glenn-Marie Lange, head of the World Bank’s environmental economics and policy team.

Influencing dialogue with countries

In recent years, the demand for analysis using wealth indicators has grown and is helping resource-rich countries such as Ghana, Guinea, Guinea-Bissau, Indonesia, Liberia, Mauritania, Mozambique, Sierra Leone, and Timor L'Este, among others, to manage their natural capital, including minerals, forests, and fisheries. This has helped strengthen the World Bank’s dialogue with countries about linking economic growth and sustainable development strategies.

Increasingly, countries want and need greener and more inclusive growth, as well as better ways to measure it. Several countries are working with Wealth Accounting and Valuation of Ecosystem Services (WAVES), a World Bank-led global partnership, to include the value of natural capital in their national accounts and economic decision making.

The Little Green Data Book has data on other key sectors such as agriculture, forests and biodiversity, energy and emissions, water and sanitation, environment and health and oceans. Since the publication was launched in 2000, it has helped countries get a snapshot of their environmental data to get a more comprehensive picture of their economies.

The new edition of the World Bank's Little Green Data Book, released on World Environment Day 2014, includes a new indicator called change in wealth per capita for more than 200 countries.

The World Bank Group has adopted change in wealth per capita as an indicator for its Results Measurement System, Corporate Scorecard and Systematic Country Diagnostic.

Negative changes in wealth per capita—particularly over several years—imply that a country is becoming poorer by leaving behind fewer resources for future generations.

Consider this: Although most countries are on a sustainable path, nearly 45 percent of the 136 countries analyzed by the World Bank Group in its annual Little Green Data Book are depleting their "wealth" even as they show growth in annual income. As these countries grow, they are not compensating for depletion of natural resources with the risk that in the long term, growth will decline, as the wealth on which it is based erodes.

What do we mean by "wealth"? Broadly defined, a country’s total wealth includes the stocks of produced capital, natural capital, and human and social capital—all of which underpins the generation of national income. Natural capital in analysis presented in the Little Green Data Book includes minerals and energy, agricultural land, forests and protected areas. Our most commonly used indicator of country economic performance, GDP, only measures income, not wealth or how wealth is changing.

To help countries plan for more sustainable growth, a new indicator change in wealth per capita is now available for more than 200 countries in the World Development Indicators and Little Green Data Book. Change in wealth per capita measures whether countries are saving enough to offset depreciation of manufactured capital and depletion of natural capital while sustaining future economic growth for their (growing) populations.

Negative changes in wealth per capita—particularly over several years—imply that a country is becoming poorer by leaving behind fewer resources for future generations.

A new indicator for the World Bank Group

Building on this work, the World Bank Group took a decision to use the concept of Wealth Accounting more widely in its operations. This year, the International Development Association (IDA), the World Bank’s fund for the poorest countries, adopted change in wealth per capita for its Results Measurement System. The Results Measurement System measures progress on more than 20 indicators capturing economic growth as well as the human development priorities of ongoing IDA programs. The World Bank Group’s annual Corporate Scorecard, providing a snapshot of its performance will also include this sustainability indicator. The Systematic Country Diagnostic, a new tool to inform the partnership strategies of World Bank Group client countries, will also build on this wealth accounting framework.

"[Wealth accounting] will allow both the World Bank and policymakers in our client countries to identify some of the threats to the sustainability of economic growth and poverty before it is too late to reverse the trend."

Juergen VoegeleDirector, Agriculture and Environmental Services, World Bank

"This measurement will allow both the World Bank and policymakers in our client countries to identify some of the threats to the sustainability of economic growth and poverty before it is too late to reverse the trend," said Juergen Voegele, World Bank Director, Agriculture and Environmental Services.

[caption id="attachment_7476" align="aligncenter" width="520"] © World Bank Group[/caption]
Wealth and World Bank Group’s twin goals

The analyses of 136 countries compiled in the Little Green Data Book found that the share of countries with wealth depletion decreases as income levels increase, indicating that poorer countries face severe sustainability challenges. In Sub-Saharan Africa, 28 countries were found to be depleting their wealth in 2010.

These findings point to the need for including sustainability as part of the equation. The goals of the World Bank Group are to eradicate poverty and promote shared prosperity. In a world of finite planetary boundaries and natural resources it is important that any progress made toward these twin goals can be sustained in the long run and does not come at the cost of natural capital.

To operationalize the twin goals, two indicators—the number of people in extreme poverty and the income growth of the bottom 40 percent—were introduced with their adoption in April 2013. Yet measuring progress toward these goals requires a better understanding of the sustainability dimensions of progress, with measurable indicators.

"The World Bank has been constructing a global database of country-level comprehensive wealth measures since the 1990s.But this is the first systematic attempt at including wealth indicators in World Bank business," said Glenn-Marie Lange, head of the World Bank’s environmental economics and policy team.

Influencing dialogue with countries

In recent years, the demand for analysis using wealth indicators has grown and is helping resource-rich countries such as Ghana, Guinea, Guinea-Bissau, Indonesia, Liberia, Mauritania, Mozambique, Sierra Leone, and Timor L'Este, among others, to manage their natural capital, including minerals, forests, and fisheries. This has helped strengthen the World Bank’s dialogue with countries about linking economic growth and sustainable development strategies.

Increasingly, countries want and need greener and more inclusive growth, as well as better ways to measure it. Several countries are working with Wealth Accounting and Valuation of Ecosystem Services (WAVES), a World Bank-led global partnership, to include the value of natural capital in their national accounts and economic decision making.

The Little Green Data Book has data on other key sectors such as agriculture, forests and biodiversity, energy and emissions, water and sanitation, environment and health and oceans. Since the publication was launched in 2000, it has helped countries get a snapshot of their environmental data to get a more comprehensive picture of their economies.


India in a Strong Position to Tap Global Growth

[caption id="attachment_7483" align="alignright" width="259"] Akshardham[/caption]

Unlike most developing countries, India’s recent growth has been well below potential, which provides space for economic activity to accelerate without building inflationary pressures.

Global Economic Prospects 2014, presented in New Delhi today, says growth in India is projected at 5.5% in FY2014-15, accelerating to 6.3% in 2015-16 and 6.6% in 2016-17. This comes at a time when the outlook for most other developing countries is largely flat as they have by now recovered from the crisis and are growing close to potential, says the report.

Overall, the global economy is expected to pick up speed as the year progresses and is projected to expand by 2.8% this year, strengthening to 3.4 and 3.5% in 2015 and 2016. High-income economies will contribute to about half of global growth in 2015 and 2016, compared with less than 40% in 2013.

Developed economies are projected to inject an additional $6.3 trillion to global demand over the next three years, which is significantly more than the $3.9 trillion increase they contributed during the past three years, and more than the expected contribution from developing countries. The momentum will be led largely by continued recovery in the United States and the Euro zone that, as India’s main trading partners, will provide a growing market for the country’s exports.

"Overall, the global economy is expected to pick up speed as the year progresses and is projected to expand by 2.8% this year, strengthening to 3.4 and 3.5% in 2015 and 2016."

“With a rising global demand, we expect that a rebound in domestic investments and a pick-up in manufacturing activity will help India move from two years of sub-5% growth to over 6% in the next year,” said Onno Ruhl, World Bank Country Director, India. “Removing bottlenecks in energy supply, improving the business climate, and unlocking stalled PPP contracts are some of the key areas that could be addressed in the short term to bring India back to a high growth trajectory.”

Speaking at the launch, Ruhl suggested short- and medium-term priorities that could help India regain its growth momentum and improve progress in poverty reduction.

Removal of immediate bottlenecks to growth will be crucial. Improving the business environment by reducing the regulatory and compliance costs for firms could help remove some of these hurdles. Revitalizing the power sector, by improving the performance of distribution utilities, and ensuring that players in the sector are subjected to financial discipline is another step. Further investments in infrastructure, including re-pricing stranded PPP contracts and developing an integrated logistics strategy could address missing links in the transport system.

The GEP 2014 report also points out the need for continued progress on fiscal consolidation to ensure fiscal sustainability and to create space for pro-poor expenditure. India’s general government deficit, despite falling, is still more than 2 percentage points of GDP higher than in 2007, indicating that depleted fiscal buffers have yet to be fully restored.

“In addition to making more effective use of resources spent on subsidies for fuel, food and fertilizer, India needs to boost revenue generation,” said Ruhl. Implementing the GST, targeting subsidies better and broadening the tax base will help create the fiscal space for supporting accelerated growth and poverty reduction.

“Continued fiscal consolidation will help create additional space for private investment. Efficiency in expenditure is one potential avenue for generating the money to raise the quality of public investments in human capital and physical infrastructure,” said Andrew Burns, lead author of the report.

Ruhl emphasized the importance of supporting deeper drivers of growth such as urban infrastructure development and empowering of urban local bodies and boosting agricultural productivity by reducing food distribution inefficiencies, simplifying agricultural trade and marketing, and helping farmers insure against crop risks. Improving the quality of education and further investments in skills and workforce training will be critical in positioning India to take full advantage of global opportunities.

A key risk to the near-term outlook is weak seasonal monsoon rains, perhaps triggered by El Nino weather conditions. Weaker than average monsoons can reduce GDP growth in South Asia by half a percentage point or more, while stronger El Nino conditions that result in deficient rainfalls or drought can have more significant impacts, the report cautions.

Stressed bank loans (including restructured loans), which now exceed 10% of loans in India, represent another source of vulnerability. If left unaddressed, it could result in insufficient financing for resumption of the investment cycle in India, the report warns.

For more information on GEP 2014, visit www.worldbank.org/globaloutlook to download the report.


Building a Better Data Revolution

New technologies like mobile phones and tablets are helping revolutionize data collection, but ensuring data quality remains critical.

Survey Solutions—a suite of survey management tools—is helping developing countries take advantage of new technologies and deliver high-quality data.

A four-day Survey Solutions Workshop provided hands-on training to participants from nearly twenty national statistical agencies.

Last month the World Bank hosted the Survey Solutions Workshop, a four-day event to provide development practitioners with the tools and techniques to design and implement world-class household surveys. At the opening session, Marcelo Giugale, the World Bank's Director of Economic Policy and Poverty Reduction Programs for Africa, laid out the need for the workshop: “We must learn about the lives of the poor, and that cannot be done without timely, relevant, high-quality household survey data.” New technologies such as mobile phones and tablets are helping deliver on this agenda by providing more timely updates on the progress towards ending extreme poverty and boosting shared prosperity. But data quality remains elusive.

"If no emphasis is put on survey management, potential gains in quality stemming from the use of mobile technologies for data collection could be illusory," argued Talip Kilic, a research economist at the World Bank and part of the Living Standards Measurement Study (LSMS) team. "The data collected with tablets or smartphones may seem 'cleaner', but its accuracy could be questionable unless there is a system in place to hold all survey staff accountable, whether managers at the headquarters or staff in the field."

Ensuring accountability was one of the reasons for the creation of Survey Solutions, a unique suite of tools for data collection and household survey management. Survey Solutions was developed through a collaboration of the LSMS and Computational Tools teams within the World Bank’s research department. Although the market offers a range of software options to conduct surveys on tablets, none have sufficiently addressed the management aspects of fieldwork. Edwin St Catherine, director of statistics at St Lucia's Central Statistical Office, confirmed this point: "The possibility of managing enumerators and supervisors...is critical for us, critical to data quality, and it is not available in any of the other software."

Three years ago the World Bank came to the same conclusion. The LSMS group commissioned an independent review of available computer-assisted personal interviewing (CAPI) software. The conclusion? An all-inclusive CAPI solution that supported the survey management process was needed to enhance effectiveness in serving the World Bank’s clients—primarily statistical agencies in developing countries—in conducting high-quality household surveys.

"We must learn about the lives of the poor, and that cannot be done without timely, relevant, high-quality household survey data."

Marcelo Giugale, Director of Economic Policy and Poverty Reduction Programs for Africa, World Bank

Three years later Survey Solutions is now offering a one-stop shop for data collection: a suite of software tools for questionnaire design, survey management, and data collection, coupled with publications, training materials, and technical assistance delivered by LSMS survey specialists. "Starting the Survey Solutions project was, for us, a logical step. For more than thirty years we have accumulated extensive expertise in household surveys which we apply to promote best practices in data collection around the world, including through technological innovations and tools like Survey Solutions," explained Gero Carletto, manager of LSMS.

Over the course of the four-day workshop, representatives of nearly twenty national statistical offices and development agencies learned how to make the best use of the system's capabilities. The workshop offered a step-by-step walk-through of the system: creating user accounts for each field team member, assigning different roles to different team members, and allocating sampled households to team members to then conduct interviews. In mock exercises, questionnaires were administered to respondents on a tablet, and participants monitored field work and generated real-time reports highlighting team performance—exactly as it should happen in the field.

Workshop participants appreciated the practical approach of the workshop. Luqmaan Omar, executive manager of data processing at Statistics South Africa, summed it up: "18 hours in the plane wasn't easy, but it was definitely worth it. We have all the tools available and we are ready to kick off with planning.” More than 97% of the participants would like to attend such an event again; as many would recommend the sessions to a colleague.

While some of the attending experts were in the midst of running their own surveys with the management system—Survey Solutions has so far been implemented in 23 surveys in 11 countries—others were busy planning. Speaking on behalf of the World Bank’s Africa and South Asia Regions, which supported the workshop, John Newman, a lead statistician in the World Bank, provided participants with guidance on ways in which the World Bank, as well as the African Development Bank, United Nations Economic Commission for Africa, and the PARIS21 consortium can support implementation of a modern survey management system. At the same time, Michael Lokshin, manager of the Computational Tools team, discussed forthcoming features of the system that can further improve the statistical offices' workflows and lead to greater accountability for the data produced.

Most of the participants have requested similar training events be held in their countries and regions. This is particularly important for people like M. Emdadul Haque, director of the Bangladesh Poverty Database, whose team is going to use Survey Solutions to manage the creation of a 36 million-large household database. "We have greatly benefitted from the workshop," he said, but he pointed out that more training will be required to successfully bring such a project to the field. "Our technical staff would immensely benefit from a follow-up event," agreed Goodson Sinyenga, deputy director of Zambia's statistical agency. As a result, the Computational Tools team is busy planning further trainings in the regions.


Bangladesh Receives $600 Million to Improve Rural Electricity Supply

[caption id="attachment_7505" align="alignright" width="166"] Dhaka[/caption]

The Government of Bangladesh today signed a $600 million credit to improve the quality of electricity supply for 25 million people in the rural areas of the eastern part of Bangladesh.

The credit for the Rural Electricity Transmission and Distribution Project (T&D) is from the International Development Association (IDA), the World Bank Group’s soft loan arm. The project will support construction of new lines and new substations, while upgrading existing lines in the rural areas of Dhaka, Chittagong and Sylhet divisions, to reduce system losses and enhance the capacity of the rural electricity network in Bangladesh.

“Only 42% of the rural population currently has access to electricity in Bangladesh, leaving about 13 million rural households without electricity,” said Christine E. Kimes, Acting Head, World Bank Bangladesh. “Access to energy promotes economic growth and prosperity and has a positive impact on income, expenditure and education. By improving efficiency of the system so that more electricity can reach rural areas, the project will contribute towards increasing economic activity and reducing poverty in the rural areas of Bangladesh.”

The project will reduce technical losses in the rural grid electricity system and will make available more energy to consumers, thus improving the quality of supply for 25 million people in rural Bangladesh. It will contribute to increasing the capacity of the transmission and rural distribution system to supply and distribute additional power to rural consumers as additional generation becomes available.

“Only 42% of the rural population currently has access to electricity in Bangladesh, leaving about 13 million rural households without electricity.”

- Christine E. Kimes, Acting Head, World Bank Bangladesh

“The Government of Bangladesh has a vision of providing universal access to electricity and we welcome this project that will strengthen the rural network and improve the efficiency of the power system,” said Mohammad Mejbahuddin, Secretary, Economic Relations Division, Government of Bangladesh. “By helping more rural people access electricity, the project will contribute to increased income and growth opportunities for millions in the rural areas yet to get access to electricity.”

The rural electrification program of Bangladesh is recognized globally as one of the most successful programs in the world.  However, over the years the transmission and distribution network has become overstretched.  This project will provide support for upgrading the network as well as strengthening the institutional capacity of the rural electricity service delivery. The project will be implemented by the Bangladesh Rural Electrification Board (BREB) and the Power Grid Company of Bangladesh (PGCB).

Mejbahuddin and Kimes signed on behalf of the Government of Bangladesh and the World Bank respectively at the Economic Relations Division premises.

The IDA credit has 40 years to maturity, including a 10-year grace period; and carries a service charge of 0.75 percent.


UN Reports FDI Hit $1.4 Trillion in 2013, Upward Trend to Continue

Global foreign direct investment is up and expected to rise over the next three years, driven mainly by stronger economies in developed countries, according to a new United Nations report which highlights the key role that transnational corporations and foreign investment could play in accelerating progress on sustainable development.

According to the ‘World Investment Report 2014,’ produced by the Geneva-based UN Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) rose 9 per cent in 2013 to $1.45 trillion.

“UNCTAD projects that FDI flows could rise to $1.6 trillion in 2014, $1.7 trillion in 2015 and $1.8 trillion in 2016,” the UN agency reported.

The predicted rise in FDI would be mainly driven by investments in developed economies as their economic recovery strengthens, but fragility in some emerging markets and risks related to policy uncertainty and regional conflict could derail the gains, said UNCTAD.

In addition, direct investment to developing economies is expected to remain high. Developing countries and transition economies constitute half of the top 20 economies ranked by FDI inflows, which includes China, Chile, Colombia and India.

“UNCTAD projects that FDI flows could rise to $1.6 trillion in 2014, $1.7 trillion in 2015 and $1.8 trillion in 2016.”

Of the total FDI, about 39 per cent was to developed countries, while a new high of $778 billion – or 54 per cent – was reported to developing economies. The top destination remains China and the Asian region, which attracted more than $420 billion in foreign investment last year.

This overall growth demonstrates the “great potential of international investment, along with other financial resources, to help reach the goals of a post-2015 agenda,” Secretary-General Ban Ki-moon said in the preface of the report, referring to the development targets that will follow after 2015, the deadline to reach the anti-poverty targets known as the Millennium Development Goals (MDGs).

Highlighting the importance of transnational corporations, Mr. Ban added that this year’s report offers an action plan for galvanizing the role of businesses in achieving the future sustainable development goals, as well as enhancing the private sector’s positive economic, social and environmental impacts.

These aims will have significant resource implications. Global investment needs are around $5 trillion to $7 trillion per year, according to UNCTAD, the majority of which is in developing countries and includes mainly basic infrastructure, such as roads, water and sanitation, as well as agriculture and rural development, climate change mitigation and adaptation, health and education.


Tanzania Could Create Many New Jobs by Harnessing its Rapid Urban Expansion

[caption id="attachment_7516" align="alignright" width="202"] Dar es Salaam[/caption]

Tanzania could create large numbers of new, productive jobs for its people, especially young men and women, if policy makers fostered industrial and business policies that catered to the country’s booming cities and their urban populations, according to the World Bank’s latest Tanzania Economic Update which was launched today in the country’s capital. Recent projections show that by 2030 more Tanzanians will live in cities than in the surrounding countryside, while Dar es Salaam could become a megacity with a population exceeding 10 million.

The biannual report, entitled ‘Who Wants A Job – The Magnetic Power of Cities,’ argues for policies and actions to help the country’s growing number of businesses create over one million jobs needed to complement the youth labor force that continues to expand each year.

“There is no doubt the Tanzanian economy has been doing well over the past decade,” says Philippe Dongier, the World Bank Country Director for Tanzania, Burundi and Uganda. “But it is also true that the economy has failed to create enough productive jobs for a rapidly growing labor force. Today, there are approximately 23 million Tanzanians in the job market, and is expected to reach 45 million people by 2030 who have high hopes of a decent job and a good life.”

“There is no doubt the Tanzanian economy has been doing well over the past decade.”

- Philippe Dongier, the World Bank Country Director for Tanzania, Burundi and Uganda

Improving agricultural productivity is essential, but even if that succeeds beyond expectations, it will not be sufficient to accommodate the rapidly growing labor force. The report explains that urbanization, if well managed, offers an opportunity to create new kinds of jobs in areas such as manufacturing and services in Tanzania. This economic transformation, already experienced elsewhere, is under way in Tanzania. Agriculture contribution to GDP declined from approximately 45 percent to 28 percent between 1990 and 2012, and most new businesses are now being created in urban centers. However, the majority of these small businesses remain fragile, informal, unspecialized, and are often run by entrepreneurs who typically are unable to expand and become competitive.

“There is an urgent need to address the challenges faced by small business entrepreneurs in Tanzanian cities,” says Jacques Morisset, the main author of the report and Lead Economist for Tanzania, Burundi, and Uganda. “Success for the country will lie in her ability to boost the expansion of small businesses and create linkages with large conglomerates.”

The economic update suggests measures to remove the restrictions that hinder small business growth in Tanzania’s city centers. These include alternative methods of building skills for business owners; improving infrastructure investments in roads for better connectivity; reducing administrative costs and securing property rights; and increasing access to finance.

Tanzania’s economy is expected to continue its steady growth path of approximately seven percent per year, according to the report. It also flags the deterioration of the fiscal deficit from 3.7 percent of GDP in 2011/12 to 6.8 percent in 2012/13, which was accompanied by an unprecedented increase in the level of arrears accumulated by the government with suppliers and pension funds. This calls for close monitoring, as the government will need to find the right balance between its ambitious public investment program and preserving the country’s debt and fiscal sustainability over time.


Achieving Green Growth in FYR Macedonia

World Bank presents its FYR Macedonia Green Growth Country Assessment

[caption id="attachment_7522" align="alignright" width="195"] Skopje, Macedonia[/caption]

The World Bank today presented its FYR Macedonia Green Growth Country Assessment, a report that aims to define the outlines of a green growth path and the initial steps for the country along that path.

According to the World Bank’s recent Inclusive Green Growth: The Pathway to Sustainable Development flagship report, green growth is ‘growth that is efficient in its use of natural resources, clean in that it minimizes pollution and environmental impacts, and resilient in that it accounts for natural hazards and the role of environmental management and natural capital in preventing physical disasters.’

According to the Green Growth Country Assessment presented today, while most countries might agree that such growth is a worthy goal, determining what a green growth path might mean for a particular country is a significant challenge.  Green growth can be defined more precisely, as economic growth with more sustainable use of natural resources (minerals, water and clean air, and biodiversity), with proper consideration of mitigation of greenhouse gas emissions; with attention to adaptation to a changing climate; and with more focus on innovation and green jobs to enhance benefits flowing from the technological innovation and new industries spurred by a shift to green growth.

“In Macedonia, the World Bank is doing something special.”

This report takes a practical approach to identifying specific challenges and opportunities FYR Macedonia faces in building its green growth future and presents them in a form useful for decision makers. The report addresses mitigation, adaptation, and the most immediately challenging resource sustainability issue – clean air.

“In Macedonia, the World Bank is doing something special,” says Erika Jorgensen, Task Team Leader of the Program and co-author of the Report.  “We are approaching Green Growth in a rather comprehensive way, and developing methodology to understand not what is there today, but thinking what is going to happen in 40 years in the country.”

The Macedonian economy continues to evolve, with ongoing programs of structural reforms to improve growth and competitiveness, and with growing alignment with Europe. The country’s momentum towards Europe is already requiring it to focus more on environmental issues.

This Green Growth Country Assessment for FYR Macedonia defines a green growth path to 2050, focusing on climate action.  “For this program with Macedonia, as for most countries, the centerpiece of green growth is climate action,” says the World Bank’s Country Director for Southeast Europe, Ellen Goldstein. “The World Bank firmly believes that climate change is a fundamental threat to development and the fight against poverty.”

According to the report, while addressing today's economic challenges, policymakers need to keep the long-term in mind, both the likely impact of a changing climate on water, agriculture, and infrastructure, and growing obligations to mitigate greenhouse gas emissions, especially from energy and transport. These considerations are particularly important for decisions on long-lived infrastructure such as power supply, irrigation, or urban streets, water distribution, and sewers.  Innovative modeling of water, as a constraint on growth as the climate becomes warmer and drier, quantified the tough tradeoffs that will be needed to balance competing demands from agriculture, the power sector, and municipalities and industry. A greener energy sector demands aggressive energy efficiency measures while bolstering supply security and reducing greenhouse gas emissions.


Boosting Trade Competitiveness Key for Sustained Growth in Malaysia

[caption id="attachment_7528" align="alignright" width="153"] Kuala Lumpur[/caption]

Malaysia's economy is expected to grow by 5.4% in 2014 and 4.6% in 2015, according to a new World Bank report. Exports rose in the previous two quarters and lifted Malaysia’s economic growth. The Malaysia Economic Monitor, launched today, notes that trade is critical to Malaysia’s transformation into a high income economy.

“Trade can improve the living standards for Malaysians and their families by generating jobs and providing them with a wider, more affordable range of goods and services,” saysFrederico Gil Sander, World Bank Senior Economist for Malaysia, “More than half of goods and services produced in Malaysia are ultimately consumed abroad, highlighting the benefits of boosting trade competitiveness.”

Malaysia needs to attract and create more firms that make and export knowledge-based products (such as medical software and health services). To achieve this, it can bridge the mismatch between the skills of Malaysian graduates and the skills that the global market needs. Universities and Malaysian firms can drive innovation and growth by working together to improve student skills in communication, problem-solving, and information technologies.

“More than half of goods and services produced in Malaysia are ultimately consumed abroad, highlighting the benefits of boosting trade competitiveness."

“As chair of the ASEAN in 2015, Malaysia can encourage member countries to adopt trade policies that will benefit entrepreneurs, workers, and consumers,” says Ulrich Zachau, World Bank Country Director for Malaysia, “ For example, Malaysia can take the lead and seek commitments from ASEAN countries to make regulations more trade friendly and transparent, and to open up the professions--so that qualified lawyers and engineers can work freely across the entire ASEAN region,"

The Malaysia Economic Monitor series provides an analytical perspective on the policy challenges facing Malaysia as it grows into a high-income economy. The series also represents an effort to reach out to a broad audience, including policymakers, private sector leaders, market participants, civil society, and academia.


World Bank Group President Brings Hopeful Message to Middle East

Jim Yong Kim brings a message of optimism to Saudi Arabia, Lebanon, and Jordan in his first visit to those countries as World Bank Group president.

The World Bank Group is helping Jordan and Lebanon cope with the impact of millions of refugees escaping ongoing conflict in Syria, but the international community needs to provide more help to the countries.

The World Bank Group also is committed to scaling up support for countries undergoing political transition in the region.

[caption id="attachment_7533" align="alignright" width="144"] Jim Yong Kim[/caption]

World Bank Group President Jim Yong Kim has a message for the Middle East and North Africa:  Despite the enormity of the challenges, the region can find a way out of its crises.

Kim is visiting Saudi Arabia, Lebanon, and Jordan for four days, during which his main messages will be about the importance of partnerships, good governance, transparency, and jobs for women and youth.

Four years after the Arab Spring, the region is at a crossroads. Conflict is ongoing in Syria. Millions of people have fled into neighboring Jordan and Lebanon, and now those countries struggle to fund their public services. Several other countries in the region are in political transition or recovering from conflict, and most need to improve education, adapt to climate change, improve governance, tackle inequality, and reduce unemployment.

But there are nascent signs of hope. Tunisia, where the Arab Spring began, bitter political rivals put aside their differences earlier this year and ratified a new constitution that adopted the principles of pluralism. In Yemen, the National Dialogue brought together the full range of political parties, civil society, women and young people. The gathering for the first time had a significant representation of women – 30 percent of the group.

“I visit the Middle East at a moment of tremendous challenges,” said Kim. “I am optimistic, however, that a brighter future for the next generation is within reach.”

He said the World Bank Group is working with development partners to “provide all the necessary support at this critical juncture.”

"Four years after the Arab Spring, the region is at a crossroads. Conflict is ongoing in Syria."

That includes financial commitments, which have been steadily growing in recent years and now stand at $16 billion in the region. New commitments in fiscal year 2014 (July 1, 2013 to July 1, 2014) are close to $5 billion. The Bank has also been sharing the lessons learned from its work around the world on how to turn a vibrant private sector into an engine of inclusive growth, and the role good governance and transparency play in creating effective and accountable institutions.

And the World Bank Group wants to strengthen partnerships with Saudi Arabia and Arab development funds to improve trade and transport within and between countries, and to scale up support for countries undergoing political transitions, among other initiatives.

Saudi Arabia contributed $3.25 billion to support Yemen’s transition process, and also co-hosted (along with the United Kingdom) the “Friends of Yemen” – a  group of countries and intergovernmental organizations that came together to assist Yemen during the transition process.

Another focus of Kim’s visit is to affirm the World Bank Group’s support for Jordan and Lebanon, which have taken in close to 2 million Syrian refugees.

In Lebanon, roughly one quarter of the population is now Syrian. A World Bank assessment of the impact estimated that GDP dropped 2.9% a year between 2012 and 2014. In addition, over that time, 170,000 Lebanese fell into poverty, the unemployment rate doubled to above 20%, and total economic losses in both public and private sectors were estimated at $7.5 billion.

In both Lebanon and Jordan, the refugees are putting an extra strain on services such as water and electricity, waste disposal, primary education, and health, as well as bringing increased competition for scarce jobs.

To help Lebanon, the Bank created a Multi-Donor Trust Fund for grants from donors and partners.  Norway has already contributed, and France and Finland recently made pledges, with other donors expressing interest. The Bank has contributed $10 million from the State and Peace Building Fund.

For Jordan, the Bank provided rapid financial assistance of $150 million in July 2013 to help the country cope with the influx of refugees. An additional $60 million grant was made in October 2013 by the Bank and a number of development partners including the United Kingdom, Canada, Switzerland, and the Arab Fund.  An additional $250 million was approved on March 13, 2014.

The UN made its largest-ever humanitarian appeal for $6.5 billion for 2014 to support aid organizations’ response to the massive humanitarian needs in Syria and neighboring countries. Some $2.3 billion was raised at the January 2014 Kuwait Donor Conference.

“The international community needs to step up its support to the Jordanian and Lebanese hosting communities,” said Kim. “The people of these countries have demonstrated unprecedented generosity. They should not be left to shoulder this crisis alone.”


Bracing for Climate Change: Managing the Unavoidable and Avoiding the Unmanageable

Climate change is already happening: 900 extreme events were registered across the world last year and in Bulgaria, the frequency of natural disasters has increased significantly in the new millennium - with 10 major natural occurrences recorded between 2004 and 2006 alone.

A new World Bank report for Bulgaria looks at financial disaster risk management and insurance options for climate adaptation in the country, highlighting vulnerability and suggesting policy options.

With 52 disasters across 23 countries in the European Union (EU) over the last 12 years, the European Commission has proposed that at least 20% of the EU budget for 2014-2020 be allocated for climate-related expenditures.

In June 19, 2014 thirteen people were killed by flooding and landslides as a result of heavy rains and floods in Northeastern and North Central Bulgaria. The national meteorological service estimated that the amount of rain that fell in eastern Bulgaria over a 24 hour period was equal one month of precipitation. As a result, a state of emergency was declared in the Black Sea town of Varna and the low-lying district of Asparuhovo, where many houses were flooded and dozens of cars floated away and now lie on top of each other. Town of Dorbich was also flooded, as was Veliko Turnovo.

In the lead up to this tragic event, several unusual natural events rocked Bulgaria over five weeks in the spring. Heavy rains and floods swept through parts of the country. Earthquakes rattled towns. Tornado-force winds swept the roofs off of several houses in a village near the capital, Sofia.

"These events only seem to reaffirm what many experts around the country – and around the world – have been saying for some time: climate change is not only real, it is already happening."

These events only seem to reaffirm what many experts around the country – and around the world – have been saying for some time: climate change is not only real, it is already happening. Statistics emerging from the scientific community are staggering: 900 extreme events were registered across the world last year. In Bulgaria, in particular, the frequency of natural disasters has increased significantly in the new millennium, with 10 major natural events recorded between 2004 and 2006 alone.

How does one cope with this new reality?

For policy makers across the world, the overarching guiding principle remains to “manage the unavoidable and avoid the unmanageable.” A new World Bank report for Bulgaria, Insurance Against Climate Change, spells this principle out while highlighting the usefulness of combining insurance measures, early warning systems, information campaigns, and strict regulation to help reduce the possible negative impacts of climate change.

The study argues that inaction in tackling climate-change related risks will only raise the potential risk of ongoing climate change. According to the report, if one waits too long to take action, a much costlier intervention may ultimately be necessary or the opportunity to effectively deal with the impacts of climate change impacts may even be lost altogether. Therefore, adaptation must not exclusively be focused on controlling the negative impacts climate change impacts, but rather focus equally on taking advantage of existing opportunities and incentives as well.

With 52 climate-related disasters in 23 countries in the European Union (EU) over the last 12 years, climate change has been a hot topic all over Europe – not just Bulgaria. In response, the EU has set forth a series of ambitious targets, known as the 20-20-20 mitigation targets – committing countries to cut greenhouse gas emissions by 20%, reduce energy consumption by 20% through improved energy efficiency, and meet 20% of energy needs through renewable sources. Lending support this plan, the European Commission has also proposed that at least 20% of the EU budget for 2014-2020 be allocated for climate-related expenditures. Furthermore, the European Parliament recently called for even more ambitious targets for 2030: a 40% cut in greenhouse gases (compared to 1990 levels); at least 30% of energy coming from renewable sources; and a 40% improvement in energy efficiency. All these developments present a unique opportunity for Bulgaria to further advance policies in the sphere of climate adaptation.

As a member of the EU, Bulgaria may draw upon existing EU policies and instruments to respond to the impacts of climate change and enhance the country’s preparedness and capacity in the face of a changing climate. Many of these policies are based on the 2013 climate change adaptation strategy – a key document that aims to make Europe more climate-resilient.

Bulgaria’s vulnerability to climate change is further accelerated by a relatively high degree of poverty in areas where such events typically happen. A review of the existing financial disaster risk management in Bulgaria reveals that existing mechanisms are inadequate to manage the potentially enormous economic and fiscal losses posed by natural disasters.

It is estimated that only 8% of the 3.6 million homes in Bulgaria are insured against natural disasters, such as earthquakes and floods. Such a low insurance rate could result in huge, unexpected public expenditures for the country, should a natural disaster hit. The new report contains several proposals to help policymakers in the country address this particular challenge - including the promotion of risk prevention through incentives and discounts for insuring buildings. Other recommendations include improving forest, agriculture and wetland management, promoting technology innovation, and strengthening the cooperation between the insurance sector and the government. Collectively, these measures can help prepare the country for an impending disaster – helping both mitigate risks and reduce any eventual impacts.


The World Bank Called for Tighter Economic Policies to Restore Economic Stability

[caption id="attachment_7549" align="alignright" width="201"] Ulan Bator, Mongolia[/caption]

In its newly released Mongolia Economic Update, the World Bank said that the Mongolian economy is facing challenges from the large balance of payments pressure and high inflation. The World Bank underscored that the economic vulnerability will likely continue under the current growth-oriented policies and urged that monetary and fiscal policies be tightened in order to restore economic stability and maintain financial soundness.

Three years of growth-oriented economic policies have successfully supported double-digit economic growth but also led to large economic imbalances. The Government and monetary authorities implemented strong economic stimulus measures in 2013 as the country gradually was losing growth momentum amidst falling foreign investment and the weakening global minerals market. Expansionary policies relying on quantitative easing and external debt-financing contributed to the country maintaining double-digit economic growth last year despite the weakening external environment. The policy-induced high growth, however, also came with significant balance of payments pressure and high inflation. The current account deficit remained close to 30 percent of GDP in 2013 for the third consecutive year, while the foreign direct investment (FDI) in 2013 dropped to half of its level from the year before. Double-digit inflation continued since mid-2013 and picked up to 13.7 percent in May.

“In 2014, the economy is undergoing an adjustment in response to the large external and internal imbalances. Domestic demand is now under growing pressure from high inflation and continued currency depreciation. Inflation rate exceeded nominal household income growth in the first quarter according to the World Bank’s estimation. Annual economic growth is expected to soften to 9.5 percent in 2014 reflecting waning domestic demand. Considering the still high domestic credit growth and currency depreciation, inflation will likely remain at a double-digit level for the remainder of the year.”

- Taehyun Lee, World Bank Senior Economist

Large balance of payments pressure will likely persist in 2014. The current account deficit will likely narrow in 2014 due to weak imports and stronger copper exports. However, surplus of capital and financial account is also dropping amidst further dampening of the FDI. The overall external financing gap of the balance of payments is easing this year compared with the year before but the financing gap of the first five months still remained high, reaching over five percent of expected annual GDP of 2014. The international reserve level in May declined to US$1.6 billion, down by 61 percent from its peak at the end of 2012. The reserve level is still enough to cover around three months of imports and the bilateral currency swap line with neighboring China will be able to provide a significant buffer. However, economic policies need to focus on addressing the large external imbalance to ensure stable and sustainable economic growth.

The World Bank also underscored the importance of close monitoring on deteriorating asset quality of banking sector. As domestic credit increased by over 50 percent over the last twelve months, the size of non-performing loans and past-due loans more than doubled to MNT 1 trillion in May, up from MNT 464 billion in the same month the year before. The NPL ratio remains relatively moderate but the ratio has been also growing in recent months. Close attention is also needed to signs of overheating of the housing market and the rising household debt, added the World Bank’s economic report.

The World Bank called for tighter monetary and fiscal policies and strengthened supervision on the banking system. “The recent signs of weakening aggregate demand reflect inevitable adjustment of the economy to restore domestic and external economic balances. Further economic stimulus relying on quantitative easing and large off-budget spending may not be much effective and will likely add to pressures on inflation and currency value. It would also likely accelerate depletion of international reserves through a slower adjustment of the balance of payments imbalance. Key task for economic policies now is to safeguard the economy from reaching more vulnerable situation. During the adjustment process, economic growth may become slower than previous years but will still remain higher than many other developing countries.” said Taehyun Lee, the World Bank Senior Economist and Acting Country Manager.

Monetary policy needs to be tightened to address high inflation. Recent indicators show signs of a gradual tightening of the expanded balance sheet of the central bank. Continued tapering of quantitative easing would help ease inflationary pressure over time. Financial sector policy should focus on ensuring financial stability and enforce proper prudential regulations to banking operations including policy lending programs. Fiscal policy should adhere to the fiscal discipline of the Fiscal Stability Law. Legal institution for fiscal discipline is already in place, but implementation still remains questionable. Under the current trend, overall fiscal deficit will reach 10 percent of GDP due to continuous off-budget spending after 10.9 percent of GDP last year. Off-budget spending needs to be consolidated into the budget and the fiscal deficit needs to be kept within the target of the Fiscal Stability Law.

“No one can deny the great potential that Mongolia has. The country has proven it over the last three years with amazing growth and reduced poverty rate. Yet, the road to the future prosperity is a long-term process and the economy is facing short-term challenges in the middle of the road that need to be overcome by tighter and stability-oriented economic policies.” concluded Chorching Goh, the World Bank Lead Economist for China, Mongolia and Korea.


Urban Energy Efficiency Key to Mexico’s Ambitious Goals for Energy and Low Carbon Growth

Mexico sees urban energy efficiency as critical for sustainable growth, livable cities and competitiveness

Ministry of Energy rolls out national municipal urban energy efficiency program with World Bank support

National program to include diagnostics of energy use in 30 cities across the country, including Guadalajara and Monterrey

Mexico’s urbanization is gaining steam.  By 2027, city dwellers are projected to make up 88 percent of the population.  At the same time, Mexico faces the possibility of becoming a net importer of energy by 2020; this would be a shift for a country whose energy sector has traditionally driven growth and competitiveness.  To grow sustainably while meeting the needs of these expanding urban populations, Mexico needs to de-couple energy consumption from economic growth.

In short, Mexico’s cities will have to become much more energy efficient.

Governments at the federal, state and city levels are paying increased attention to this issue, but action to improve the efficiency of city systems and services is often still hampered by institutional barriers and a lack of awareness among local officials.

To address this, SENER, Mexico’s Ministry of Energy, is rolling out a national municipal energy efficiency program with the help of the World Bank. The program will work with city institutions to systematically integrate energy efficiency into policymaking, investment decisions, and procurement at the local level.

"The urban energy diagnostic will allow us to assess for the first time at a national level how energy is used in Mexican cities. The objective is to work with municipalities to design appropriate investments targeted at sectors with the greatest potential for improved energy efficiency."

- Leonardo Beltran, Deputy Secretary for Energy Planning at SENER

As a first step, SENER is launching diagnostics of energy use in 30 Mexican cities, including the state capitals Guadalajara, Monterrey and Oaxaca. The diagnostics will lay the groundwork for energy efficiency investments in public lighting, municipal buildings, and water and wastewater pumping, among others.

The Mexican government’s increased commitment in this area was on display at a conference on “Energy Efficiency in Cities,” held in Mexico City on June 17-18, where the national municipal energy efficiency program was highlighted to over 200 participants from a dozen countries. The conference was supported in part by the World Bank’s Energy Sector Management Assistance Program (ESMAP), along with other agencies.

“The urban energy diagnostic will allow us to assess for the first time at a national level how energy is used in Mexican cities,” said Leonardo Beltran, Deputy Secretary for Energy Planning at SENER. “The objective is to work with municipalities to design appropriate investments targeted at sectors with the greatest potential for improved energy efficiency.”

The diagnostic studies will also increase the capacity of city officials to conduct energy efficiency assessments, and raise awareness about the substantial gains – in terms of budget savings, improved services with social benefits, and lower carbon emissions – that can result from lower energy expenditures.

The diagnostics will build on the assessments in the cities of León and Puebla using the Tool for Rapid Assessment of City Energy (TRACE). Developed by ESMAP, TRACE is a decision-support system designed to help cities quickly identify and prioritize energy efficiency opportunities.

“We of course knew energy was a major expense for our city, but going through the diagnostic exercise helped us see how important it was to take energy considerations into account as we make investment decisions,” said Fidel García, Director General of Sustainable Development for the Municipality of León. “The TRACE tool identified street lighting, municipal buildings and solid waste as priority areas to address first. In addition, the process helped identify the local institutions that have the capacity to develop a strategic approach for the targeted sectors.”

The potential savings of energy efficiency efforts in urban sectors can be substantial.

For example, in Rio de Janeiro, the World Bank’s assessment showed that a $190 million investment in switching public lighting over to LEDs would not only save the city $380 million in operating costs, it could also reduce energy consumption in the sector by 57 percent. In Mexico, the rapid assessments conducted with TRACE indicated potential energy savings in public lighting of $2.3 million in León and $3.2 million in Puebla.

A recent ESMAP report showed that just a few simple efficiency measures by water and wastewater utilities in developing countries could substantially reduce costs and water losses, realize energy savings of up to 30 percent, and increase access to water for poor communities.

“Energy efficiency can offer practical solutions for budget‐constrained cities to expand and improve their services, boost their competitiveness, reduce their emissions and move to a low carbon development path,” said Malcolm Cosgrove-Davies, Energy Sector Manager for the World Bank’s Latin America and Caribbean Region.


From Germany to South Africa – The Oppenheimers: Diamonds Are Not Forever

“I’m a philistine.” Nicholas F Oppenheimer, worth some $6.5bn, is not likely to be spotted at a theatre or opera house anytime soon. The vast library of rare antique tomes his grandfather Ernest (1880-1957) lovingly accumulated over a lifetime remains but the tangible expression of an odd hobby. The grandson is down-to-earth, discrete, focused, and – according to some – at times as ruthless a businessman as his father Harry was.

At the close of 2011, “Nicky” Oppenheimer (69) made the momentous decision to sell his 40% stake in De Beer’s, a cartel of companies that dominates the diamond industry and, indeed, sets its course. Founded by famed British mining magnate and empire-builder Cecil Rhodes in 1888, De Beer’s has been in the Oppenheimer family since 1927 when German-born Ernest took over the company. Earlier, Ernest Oppenheimer and American financier JP Morgan had set up the AngloAmerican mining company in Johannesburg, South Africa. It was precisely to this company that Nicky Oppenheimer sold his shares in De Beer’s – closing, as it were, the circle.

"Nicky Oppenheimer is no stranger to controversy either."

The $5.1bn sale was a unanimous family decision bringing the Oppenheimers hundred plus year-long involvement with the diamond industry to a close. It also showcased, briefly, the philosophy that built the family fortune: In business there is no place for emotion. In the 1940s, Ernest Oppenheimer famously refused to supply the allied forces with industrial diamonds at reduced prices for the war effort.

Nicky Oppenheimer is no stranger to controversy either. He caused uproar in 2005 with the statement that Africa was suffering from “donation fatigue.” Mr Oppenheimer went on to explain that the continent would be much better served with investors putting their money into income-generating projects. In fact, Mr Oppenheimer’s comment was both timely and spot-on. The current economic boom lifting an increasing number of countries out of dire poverty is fuelled by private investment rather than aid money.

The Oppenheimer family is now in the process of allocating the capital raised by the sale of De Beer’s among a number of ventures in Africa. “We will be looking for opportunities and we are very Africa-orientated and we are going to be looking, obviously, around the world, but there will be a very clear African bias to what we hope to do in the future.”

The Oppenheimer family, originally from Leipzig in Germany, is today thoroughly South African. Nicholas Oppenheimer’s father Harry (1908-2000) – at the time one of the richest men on earth – was actively engaged in anti-apartheid politics and financed the Progressive Federal Party. He also served a term a member of parliament for Kimberley, eventually becoming the opposition’s spokesperson on economics, finance and constitutional affairs.


CFI.co Meets the Vice President of Global Trust: Andreas Thanos

At a time when Greece was descending into the depths of a financial crisis without equal in the country’s history, one firm was doing just fine, abiding by a simple, yet highly effective, corporate philosophy that puts clients’ interest ahead of other considerations.

“Since the trouble in Greece started some six years ago, we have tripled our staff level and saw a six-fold increase in the volume of assets we manage.” Andreas Thanos, vice-president of Global Trust Independent Financial Advisors explains that while banks were tumbling and people feared losing their money, his firm managed to stay one step ahead of the unfolding crisis and managed to fully protect its clients’ capital through diversification of various financial institutions and through different type of financial products.

“As fear mounted that Greece would revert back to the drachma, we began receiving a surprising number of new clients who entrusted their savings to Global Trust. I’m happy to report that none lost any of their money. Throughout the crisis we actually succeeded in obtaining good returns for our customers via corporate bonds, foreign equities and bond funds.”

Mr Thanos, a certified portfolio manager, since 2001 can look back on a long career that introduced him to nearly all facets of the financial sector. He has been monitoring international financial markets since his student days in London back in 1986. Mr Thanos worked in both Greece and the UK as a financial analyst, consultant and broker, for a number of financial management firms of renown. He has managed Greek, European, US and BRIC equity portfolios, Euro and US dollar bond portfolios, for HNWI (high net worth individuals) and institutional investors. He has also served as head of asset management of both advisory and discretionary services.

Mr Thanos has further honed his skills and is now considered an expert in the management of capital in turbulent times.

“Even though the environment has been very challenging over the past six years, it has not been entirely without opportunity. At Global Trust we aim to blaze new trails and pioneer effective solutions to any unexpected circumstance. Success comes through good judgement, hard work, expertise, being one step ahead of what is coming; and above all providing an extraordinary service to our clients”.

Though Global Trust prospered during the lean years past, the firm also has to battle the numerous misconceptions that persist regarding Greece and its business culture. “In some corners of Europe, the Greeks are deemed quite lazy, while in reality some people in the private sector, who during this crisis were shouldered the shortages made, have been working 50 hours a week, or more, for the past two to three years, in order to compensate for others being laid off, or retired. Some of them are getting less money today than before or as much as they were getting ten years ago”.

Mr Thanos readily admits that change was needed and is now indeed taking place. “The problem with that is that change was imposed in rather haphazard way with foreign stakeholders such as the troika (ed. the triumvirate composed of the European Commission, the European Central Bank, and the International Monetary Fund) emitting diametrically opposed instructions that often made no sense at all. They were micro-managing a crisis that stood in need of a solid macro policy. Moreover, it was expected that Greece carry out these instructions immediately. This caused havoc not just in the wider society but also in the way it is being run with those doing the running not quite knowing how they were supposed to be doing their job. Radical change imposed from one day to the next without any preparation or forethought whatsoever proved a recipe for disaster.”

However, things did turn around. “With a 26% decline in its GDP and a turning of a primary deficit of more than 13% into a surplus, over the last 6 years, Greece has started gaining respect in the eyes of the international financial community. Previously any trader holding any type of Greek asset ran the risk of being summarily fired if found out. Today that trader is buying Greek assets with great appetite and is likely to be in line for a promotion, or a bonus. After hedge funds moved in and made untold hundreads of millions in the process, investors reawakened to the possibilities and opportunities available in Greece.”

Mr Thanos enjoys long distance running. “I enjoy long distance running as I help manage Global Trust and the capital entrusted to us. Investments are not unlike long distance running in as much as they require stamina and perseverance. Investing is a marathon and decidedly not a sprint”.

All staff members at Global Trust charged, or involved with managing funds, are certified financial advisors. The firm boasts over a century and a half of accumulated professional investment experience. In its current form, Global Trust has been in business since 1998. However, the firm traces its roots back to 1990 when it started as a financial consultancy company. Global Trust is currently expanding its offices in Athens.


CFI.co Meets the CEO of SSF: Sam Shawki Fawaz

Mr Sam Shawki Fawaz, managing director and CEO of SSF Entrepreneur, has accumulated over forty years of experience in Liberia’s business world. His career has crisscrossed the economy from forestry to construction and road building. Though born in Lebanon, Mr Fawaz has spent his entire adult life working and living in Liberia. He arrived in the country in the 1960s as a teenager. He is married to a Liberian lady.

Mr Fawaz graduated in business management and started his career in 1974 at the United Logging Company where he first rose to the position of operations manager before becoming the company’s managing director. He also provided management support to subsidiary companies in other parts of Liberia.

These positions afforded him the opportunity to bear direct responsibility for the construction and maintenance of the feeder road network within the logging concession areas and for other major roads required for the unimpeded transportation of round log cargoes from the forests to the ports for overseas shipment. The construction and maintenance of this road network was critical to the operations of logging companies, ensuring that the cargoes of logs were readily available at various point of discharge for export.

The closure of logging operations in 1989 – a direct result of the outbreak of the civil war that was to rage on for 14 years – did not diminish Mr Fawaz’ desire to remain engaged with the country. The end of the conflict awarded Mr Fawaz the opportunity to start a road construction business. He thus realised a lifelong-desire to run his own company.

During the war years, Liberia’s road network was largely destroyed through neglect. As such, it could not support the plans of international organizations like the United Nations High Commission for Refugees (UNHCR) for the return and reintegration of thousands of Liberian refugees from neighbouring countries.

This situation provided an opportunity to Mr Fawaz who promptly provided consultancy services to the UNCHR. He later managed to fully engage in the road rehabilitation sector. The partnership with UNHCR resulted in the first major intervention by SSF in 2004. This work contributed significantly to the ultimate success of the UNHCR-sponsored return and reintegration programmes for Liberian refugees from Guinea, Ivory Coast and Sierra Leone to the Lofa and Nimba Counties in Liberia.

The experience emphasised the importance of good all-weather roads, not just to the livelihood of the displaced people, but to the economic recovery of the country as well. This led to the incorporation of SSF Entrepreneur. In 2005, Mr Fawaz entered a joint ownership of SSF Entrepreneur with Mr Anwar Ezedine.

Over the years, Mr Fawaz has succeeded in establishing SSF Entrepreneur as a formidable partner to the Government of Liberia in the road construction sector. He has amply demonstrated to possess the required capacity to take on even the most challenging contracts awarded by the Ministry of Public Works – the entity charged with statutory oversight responsibilities for road construction across Liberia.

Although Mr Fawaz has no formal training as an engineer, he has accumulated vast knowledge of road infrastructure and building techniques, as well as an enviable stock of managerial competences. This valuable experience is largely responsible for the level of success SSF Entrepreneur has achieved today. Mr Fawaz believes the success of his company may be ascribed to his foresight in exploiting niches in Liberia’s road infrastructure sector.

The managerial and entrepreneurial skills of Mr Fawaz – coupled to his close relationships with workers, chiefs, elders, community leaders and other stakeholders – have not only catapulted SSF Entrepreneur to the top spot in the road building sector, but have endeared him to the people of Liberia as well.

This should come as no surprise given his numerous social contributions –including scholarships, donations of medicine to clinics, and the provision of food stuffs to communities in which the company operates. This comes in addition to the long-standing company policy of only hiring local labour.

Even so, this husband and father of six does not rest on his many laurels. Instead, Mr Fawaz now aims to transform SSF Entrepreneur into a regional powerhouse in the construction sector across West Africa.


CFI.co Meets the CEO of Fortress Investments: Hamed Mokhtar

Hamed Mokhtar is the managing director of Fortress Investments of 2011. Born and educated in the United States, Mr Mokhtar brings a wealth of experience and creativity to both the company and the markets it operates in.

His key industry of interest is the educational sector, primarily those of Dubai and Abu Dhabi. Fortress has channelled investments worth many millions into this field. Confident about the continued influx of foreign nationals to the region, Mr Mokhtar describes the UAE as “the intelligent man’s land of opportunity.”

Mr Mokhtar’s greatest mission to date has been to help source foreign investments into Dubai. By so doing, he has been successful in developing relationships and partnerships with the royal families of Dubai, Abu Dhabi and other Emirates, further adding to the support and growth of Fortress Investments.

The instability of surrounding Arab countries, coupled to the UAE’s privileged economic position, allow Mr Mokhtar to anticipate even more substantial future inflows of expats to the region. His positive economic outlook for the GCC states has also inspired him to encourage family, friends, and colleagues to relocate to the UAE.

Mr Mokhtar is also chairman of the Fortress Investment Committee. In this capacity he has established a strong track record by consistently generating solid returns for his clients’ investments. “Our philosophy is to invest in global securities that are undervalued due to a combination of negative market factors – whether they are environmental, political, or sector specific,” explains the Fortress CEO.

While most of his peers sought safe harbours in government and corporate bonds and index funds to withstand the recent economic headwinds, Mr Mokhtar and his company chose a different asset preservation model allowing for higher-than-average returns. This was achieved by identifying and securing margins of safety within the global equities and precious metals markets.

“Gold has gone up by some 600% over the last decade while silver has gone up even more. Opportunities still exist to capitalize on further gains,” says Mr Mokhtar pointing to the recent six-month high gold prices reached as a result of safe-haven buying.

A specialist in US equities, Mr Mokhtar has consistently outperformed the market and capitalized on unique asset allocation strategies focused on value investing. Fortress has achieved this by maintaining capital provision ratios of 1:1, as well as a maximum investor rate of return of 8.75%. “We continue to deliver above benchmark yields for our clients and hope to continue to do so well into the future,” concludes Mr Mokhtar.


CFI.co Meets the CEO of INVESTBANK: Muntaser Dawwas

As Chief Executive Officer of INVESTBANK, Muntaser Dawwas joined the bank three years ago in full force, with a proven track record and boasting an impressive level of experience in banking gathered at major financial institutions in both the Far East and the Middle East regions.

Upon accepting his new position at INVESTBANK in 2011, Mr Dawwas expressed a great deal of enthusiasm and indicated that his role as CEO will allow him an opportunity to take a number of initiatives aimed at reinforcing the bank’s leading position in serving corporate and affluent clients alike while adding new services through the bank’s subsidiaries.

Mr Bisher Jardaneh, Chairman of the Board, at the time welcomed Mr Dawwas, saying: “Mr Dawwas is without doubt a great asset to INVESTBANK, with his expertise and knowledge of the financial and banking sector.”

Prior to assuming his current post, Mr Dawwas was Global Head of Consumer Banking at the Arab Bank where he managed a network of well over 400 distribution branches. Previous to this, Mr Dawwas was based in Singapore as Group Chief Marketing Officer for Standard Chartered Bank (SCB) overlooking the bank’s position in no less than 59 countries.

Earlier at SCB, Mr Dawwas was based in Bahrain as Regional Head of Consumer Banking (Northern Gulf & Levant) where his geographic responsibilities included Bahrain, Qatar, Jordan and Lebanon. He was also based in Jordan with SCB as head of consumer banking.

Mr Dawwas’ career started at Citibank in Amman, Jordan as Financial Controller for the bank’s operations in Jordan, Palestine, East Jerusalem, Iraq and Syria.

Mr Dawwas is married and has three children. He received his Bachelor of Science in Accounting and Financial Management at the University of Buckingham in the United Kingdom. He obtained his degree as a certified public accountant (CPA) in the United States.

Through its continuous efforts to consistently adhere to the highest standards of banking services, INVESTBANK’s organizational structure and its experienced professionals will take the bank’s vision and turn it into reality with Mr Dawwas at the helm.


CFI.co Meets the CEO of Qatar International Islamic Bank: Abdulbasit Al-Shaibei

Qatar International Islamic Bank (QIIB) CEO Abdulbasit Al-Shaibei is perhaps at heart a central banker. He plays by the rules, is exceptionally mindful of community needs, and came to QIIB via the Qatar Central Bank and a number of premier commercial banks. At the Qatar Central Bank, Mr Al-Shaibei was head of the Investment, Trading and Foreign Exchange Division between 1990 and 1994. Previous to that, he gained experience at the Banking Control Department carrying out periodic inspections at both Qatari and foreign-owned banks operating in the country.

Under Mr Al-Shaibei’s expert guidance, QIIB has managed to become widely known for offering comprehensive financial solutions that are fully compliant with Islamic Law. With his vast experience in the banking industry as both a regulator and a senior manager of a leading Islamic bank in Qatar, Mr Al-Shaibei is well poised to reap the benefits of the recent upsurge in interest in Shariah-compliant banking and financial services. Mr Al-Shaibei said that the bank is continuously marching towards further progress and development by rendering excellent services without compromising on quality and Shariah compliance.

Mr Al-Shaibei has a Bachelor’s Degree of Science in Business Administration and Economics from Fayetteville University, North Carolina, USA. He also obtained a degree in executive management from the prestigious Wharton School of Business at the University of Pennsylvania.

His considerable leadership abilities and proven business management skills in achieving sound results and realizing maximum potential in a competitive business environment, have managed to propel QIIB to considerable heights. The bank currently boasts QR 34.4bn in assets with an equity of QR 5.3bn. Part of this success is owed to Mr Al-Shaibei’s ability to skilfully motivate and invigorate people‘s talents and desire to excel and consistently triumph over significant challenges.

He has repeatedly praised his staff for raising the performance bar and helping QIIB successfully tackle the effects of the global economic meltdown of 2008. Throughout the challenging years that followed, QIIB kept its focus on risk management.

Outlining the measures taken by QIIB to improve the skills of its workforce, Mr Al-Shaibei said numerous training programmes are regularly held, both within and outside Qatar, in association with premier institutions in the field. The focus on developing Qatari talent has also achieved the desired results with many Qataris joining the bank at various levels.

Mr Al-Shaibei further said QIIB remained committed to supporting community and nation building activities in sports, religious, charitable, educational and other fields.


CFI.co Meets the CEO of Banco del País: María del Rosario Selman-Housein

For the past six years, María del Rosario Selam-Housein has stood at the helm of the Banco del País, expertly leading the bank to its prominent present position in Honduras. However, Mrs Selman-Housein has not just engineered the bank’s remarkable growth since 2008; she has also made Banco del País into a fixture of Honduran society through a pro-active approach to corporate social responsibility policies. Banco del País underwrites a growing number of community initiatives that aim to support education and healthcare programmes.

Married and a mother to three kids, María del Rosario Selman-Housein was born in San Pedro Sula, the business hub in the western part of Honduras where she attended Sampedrana International School all the way through high school. Academically gifted, Mrs Selman-Housein proceeded to the National Autonomous University of Honduras in Tegucigalpa where she read social and judicial sciences with an emphasis on mercantile law.

After obtaining her bachelor’s degree with honours, Mrs Selman-Housein switched to the Universidad Tecnológica Centroamericana where she took a master’s degree in marketing and international business. She also enrolled in a number of graduate courses outside the country. At the Monterrey Institute of Technology and Higher Education in Mexico, Mrs Selman-Housein obtained a degree in financial and banking administration.

Starting her career in an administrative position at the Banco Cuscatlan of El Salvador, Mrs Selman-Housein soon moved to jobs at Aval Card SA and the Cuscatlan bank and insurance company in her native Honduras.

In her early years as a law professional, Mrs Selman-Housein worked at the law offices of Batres y Asociados and later at Matamoros, Batson y Asociados. She went on to become the regional manager of the Honduran-American Chamber of Commerce (HAMCHAM) and barely a year later saw herself installed as the general manager of Asesores Administrativos.

Since 2008, Mrs Selman-Housein is the CEO of Grupo Financiero del País. As such she directs not just the Banco del País but also the Seguros del País insurance company.


CFI.co Meets the CEO of Makhtag: Muhammad Halim Fidai

Former governor Muhammad Halim Fidai of the Wardak Province in Afghanistan is not impressed with the way his country is usually portrayed by the international media. In fact, Mr Fidai finds it incomprehensible that the media consistently downplays the significant progress made since the ousting of the Taliban regime in November of 2001.

Six years ago, Mr Fidai, then 38, became the youngest governor of one of the country’s 34 provinces. Mr Fidai governed Wardak province, gateway to the capital city Kabul, successfully for five years. As an independent politician not affiliated to any party, Mr Fidai has made it a point of honour to dedicate his efforts in the public sphere to the betterment of his country. As such, he is a man of ideas rather than of raw power as it befits a journalist, editor and writer of no less than seventeen books.

Mr Fidai’s most recently published work – The Roots of Leadership and Democracy in Afghanistan – deals with the country’s valiant attempts to find a sustainable way of introducing a stable and representative form of government that includes all sectors of Afghan society – even the ones now engaged in armed struggle.

The questions addressed in the book are of singular importance. With the impending withdrawal of foreign troops from the country, Afghanistan stands in urgent need of a home-grown solution to its governance issue. Mr Fidai argues, quite convincingly, that only an all-inclusive government headed by a non-partisan president has any chance of bringing the lasting peace that is required in order for Afghanistan to prosper and overcome strife.

Mr Fidai has long been involved with international aid organisations and is considered an expert on the delivery and execution of projects. For the past fourteen years Mr Fidai has assisted mostly American non-governmental organisations (NGOs) with the implementation of education, human rights, public-administration and women empowerment projects throughout the country.

Currently, Mr Fidai is an active member of the Fikr & Amal Jirga (Thought & Action Assembly) – an Afghan think tank. He is also the founder and CEO of Makhtag (Progress) Consultancy – a firm providing services in governance, research, public diplomacy, and leadership.

Mr Fidai is a founding member of the Afghan chapter of the South Asian Free Media Association. He is also a member of the Central Eurasia Leadership Academy. Mr Fidai holds an MBA from a university in India with a specialization in leadership and change management. He is widely travelled both inside Afghanistan and outside the country, attending seminars and other events in South East and Central Asia, Europe and the Middle East.


CFI.co Meets the CEO of XacBank: Bat-Ochir Dugersuren

Mongolia’s economy has been undergoing changes in recent years, and one of the challenges for its domestic banks is keeping up with the pace of growth. In line with this trend, XacBank has modified its strategy to adjust to the changes in the domestic market and has been working on improving its service as well as enhancing its electronic channels.

XacBank had additional challenges in the context of the slowdown in the global economy and weak investor confidence.

However, the bank was able to maintain its market share in challenging conditions and maintain a higher growth in its retail deposits when compared to the rest of the market in Mongolia, says Mr Bat-Ochir.

He says of XacBank’s plans for the coming year: “The bank wants to build scalable and efficient institutional capacity to expand both in the small and medium enterprise [SME] and corporate and retail segments:’ He foresees that there will be high growth potential in the SME and corporate segment once a stable investment environment in Mongolia has been established and confidence has returned to the market. The SME sector is expected to expand alongside Mongolia’s mining boom, as it is hoped that smaller companies will benefit in the supply chain of the mining industry. In recent months, XacBank has increased its SME loan book as well as its foreign exchange trading volume.

The bank is also notable for its emphasis on corporate governance and has a three pronged philosophy of ‘planet, people and profit’ as well as a focus on financial inclusion.

Mr.Bat-Ochir Dugersuren has been CEO of XacBank since January, 2011. He started his career as financial officer for the MicroStart project in 1998, the project which later became the foundation of the current XacBank. He obtained degree of Master of Business Administration from International Business School, Brandeis University, Boston in 2008. Since then he held numerous top executive positions such as Chief Investment Officer at TenGer Financial Group and First Deputy CEO of XacBank. He contributed to the development of the bank and growing with it to become a capable and talented leader.


CFI.co Meets the CEO of Green Delta Securities: Wafi S M Khan

Stock brokerage in Bangladesh is not the most obvious of career choices ambitious students mull in Bangladesh. The few people who have been successful in portraying the brokerage industry as a glamorous one are definitely key players in the market. The CEO of Green Delta Securities Limited, Wafi S M Khan, is one of them. Mr Khan has been running his organization successful, displaying unique leadership skills centered on a customer centric approach and keen risk management abilities. Mr Khan has not just led his business to greater heights; he has also contributed significantly towards the strengthening of the sector’s overall appeal.

Green Delta Securities is one of the best known brokerage houses in Bangladesh and is a direct subsidiary of the Green Delta Insurance Company. Mr Khan took over as CEO in 2011 and promptly unleashed his pioneering attitude toward business generation and other core activities. Prior to joining Green Delta Securities, Mr Khan worked at The City Bank as vice-president and head of non-funded business. Here, he gathered extensive experience in the banking industry and set benchmarks for others to attain.

Mr Khan started his remarkable career at ANZ Grindlays Bank and proceeded to positions at BRAC Bank, and American Express Bank before arriving at The City Bank. His skills and innovative approach were greatly influenced by his work in retail banking. Mr Khan was directly involved with the launch of numerous retail, card and loan products.

For Green Delta Securities Mr Khan envisions a future as Bangladesh’ preferred brokerage house for both individual and institutional clients. He initiated programmes aimed at making sure that clients get access to the highest level of service with exceptional compliance levels. Green Delta Securities is now able to consistently offer top-quality services at competitive prices for all the capital market needs. Moreover, the range of products offered is comprehensive and includes brokerage, CDBL (Central Depository Bangladesh Limited), telephone-trading and custodian services.

However, the Bangladesh brokerage industry has a long way to go to change its overall perception. Mr Khan has taken a number of initiatives with a view to changing the rather negative aura that surrounds the sector in the eyes of many in the country.

“Being a stockbroker can lead to a career full of growth and potential. For a stockbroker every day brings a new challenge. He is offered a rare inside view of the capital and share markets. Sadly, the overall capital market is something most people of our country don’t care much about. We see people of modest financial means invest recklessly in the capital market with the proceeds of land sales or other one-off sources of income. When faced with tremendous loss, these people will often blame the system or the government. They fail to realise the nature of the markets.”

“Capital markets are for the people who have idle money to spend. If you lack the required ‘capital’, stocks and other risk-bearing investment products are not for you. The lack of knowledge about capital markets is the prime reason why this industry has a less than stellar reputation. This in turn discourages fresh university graduates from joining brokerage houses.”

Mr Khan has formed his team at Green Delta Securities with a mix of young talent and more experienced professionals. His visionary approach is gradually helping to change the mind-set of local investors and the general public. He is organising workshops and training seminars on a regular basis for the people who need it the most. Mr Khan can be regularly seen on business talk shows explaining the dynamics of the brokerage industry to audiences.

Throughout his career, Mr Khan has made a name as a result-oriented team player, innovator and initiator. He has taken up several successful training and workshops, both locally and globally, on career management and leadership. He has also attended various international conferences which took him to Dubai, Singapore, Thailand, UK and China.

Mr Khan’s achievements, dedication, skills, and his strong commitment to the brokerage industry have been recognized through awards and other honours by a number of trade organisations and associations.

Mr Khan is the former President of the Dhaka North Junior Chamber International (JCI). He was the secretary of Rotary Club of Metropolitan Dhaka. He is currently a member of Metropolitan Chamber of Commerce and Industry (MCCI) and Bangladesh Malaysia Chamber of Commerce and Industry. He is also a member of many prestigious local and international social clubs and board member of non-profit business organizations.