Financial sector development - Sida

More documents

Recommendations

Info

1. BACKGROUND 1.1 Mandate and terms of reference As a follow up to the merger in 1995 of five Swedish development cooperation agencies, Sida was mandated by the Swedish government to review its policy in relation to the mobilisation of financial resources in developing countries. The Review would include recommendations regarding the promotion of domestic resource mobilisation as well as foreign private capital flows. The Sida Management Committee agreed, at a meeting on 17 September 1996, on the following terms of reference for the Review: a) The Review should focus on the development of countries in Eastern and Southern Africa. b) The Review should take into consideration the findings and recommendations of two previous studies on related issues; Sida’s aid reviews with regard to Concessionary Credits (”Kreditutredningen”) and Private Sector Development (”Näringslivsöversynen”). c) The Review should describe and analyse the financial sector assistance which has been provided by SIDA BITS, SAREC and SwedeCorp prior to mid-1995 and by ”new Sida” thereafter. c) The Review should analyse the mobilisation of financial resources in a few countries in Sub-Saharan Africa. d) The Review should discuss the factors that are impeding an increased mobilisation of financial resources (domestic resources and foreign private flows) and analyse which kind of technical assistance projects may be used to overcome these obstacles. e) The Review should discuss the role of financial assistance (loans, guarantees and provision of equity capital) in the promotion of efficient and sustainable financial institutions in developing countries. f) The Review should discuss the role of Swedish institutions in financial sector development. g) The Review should discuss the possibility to achieve synergy effects in Sida’s financial sector development projects through: 1) enhanced cooperation with foreign development cooperation partners; and 2) improved coordination within Sida. h) The Review should present a policy for financial sector development. It should also elaborate on organisational aspects and the staffing required for implementing the policy. 10
1.2 Implementation of the Review The Review was conducted by the Sida Department for Infrastructure and Economic Cooperation (INEC), headed by Lars Ekengren, Deputy Director General of Sida. In the beginning of October 1996, a working group was formed, consisting of Lars Ekengren, Mikael Söderbäck, Jan Grafström, Jan Engström (secretary) - all from Sida INEC - and Lars Johansson of Sida Department for Policy and Legal Services. In addition, a reference group was formed consisting of Claes Norgren (Swedish Finance Supervisory Authority), Leif Vindevåg (Stockholm Stock Exchange), Enrique Rodriguez (SWEDBANK), Irja Hedin (Föreningsbanken), Prudence Woodford-Berger (Stockholm University), Olle Arefalk (Swedfund International AB), Lars Kalderén (consultant), Rune Barnéus (consultant), Jan Bjerninger (Ministry of Foreign Affairs), Gösta Edgren (Sida Department for Policy and Legal Services), Peeter Horm (Sida Department for Central and Eastern Europe), Mario Zejan (Sida Department for Research Cooperation), Per Lundell (Sida Department for Democracy and Social Development) and Lars Liljeson (Sida INEC). The reference group provided valuable support and advice to the working group. The reference group convened on four occasions between 8 October 1996 and 25 March 1997. At the meeting on 28 November 1996, Mr Noritaka Akamatsu of the Financial Sector Development Department of the World Bank was invited to present his views on securities market development in developing countries. In the course of the review, INEC commissioned a number of special studies which are form appendices to this report. 1.3 Disposition of the report The report is structured as follows: Chapter 2 deals with assistance for financial sector development against the background of the Swedish development objectives. Chapters 3 and 4 of the report deal with general aspects of savings, investment, growth and the role of the financial system in the development process. The analysis contained in these chapters are based on studies presented by Lisa Román and Bo Karlström. Chapter 5 deals with the experience of Swedish aid in the financial sector and is based on a study by Karlis Goppers. Chapter 6 on regional and global trends is based on a study prepared by Jan Engström when working as a national expert for the European Commission. Chapter 7 focuses on the development of the financial sector in Eastern and Southern Africa. The chapter is mainly based on four diagnostic financial sector studies carried out by Lisa Román, Bo Karlström, Lars-Erik Birgegård and Gunnar Fors. Chapter 8 deals with the feasibility of using Swedish technical resources for development assistance work. Chapter 9, based on a study by Björn Mothander, elaborates on Sida’s involvement in the provision of capital resources to financial institutions. Finally, Chapter 10 presents a proposal for a Sida policy in this field. 2. FINANCIAL SECTOR DEVELOPMENT IN THE LIGHT OF THE SWEDISH DEVELOPMENT OBJECTIVES The overall objective of Swedish development assistance is to improve the livelihoods of the poor. In the Government's 1995 instruction to Sida, the overall objective of poverty reduction was further underlined and Sida was mandated to focus on long run poverty 11
Page 1: *MRERGMEP7IGXSV(IZIPSTQIRX %VITSVXF
Page 4 and 5: TABLE OF CONTENTS EXECUTIVE SUMMARY
Page 6 and 7: 10.4 Goals and points of departure
Page 8 and 9: EXECUTIVE SUMMARY Evidence from the
Page 10 and 11: The proposed Sida policy on Financi
Page 14 and 15: eduction. To this end, Sida has dev
Page 16 and 17: along with growth. This approach hi
Page 18 and 19: thus encouraging savings. On the ot
Page 20 and 21: Informal financial systems are comm
Page 22 and 23: I General projects and sector progr
Page 24 and 25: SIDA gave a total of MSEK 250 over
Page 26 and 27: Box 2. Restructuring of a state-own
Page 28 and 29: Box 4. Reform of legal framework fo
Page 30 and 31: 6.2 Increased demand for capital fr
Page 32 and 33: In the 1970s and 1980s a substantia
Page 34 and 35: A first lesson is that subsidies, e
Page 36 and 37: Governments have used the banking s
Page 38 and 39: Several investment funds focusing o
Page 40 and 41: countries in Sub-Saharan Africa. Th
Page 42 and 43: Table 4. Financial depth (Broad mon
Page 44 and 45: formal and informal markets is not
Page 46 and 47: competitors in the microfinance sec
Page 48 and 49: A survey report (Appendix 5) analys
Page 50: (and other program countries) are v
Page 53 and 54: Commercial Law in Gothenburg, the S
Page 55 and 56: Box 8. Advanced training in capital
Page 57 and 58: • the poor state of the financial
Page 59 and 60: poor, micro-enterprises and others
Page 61 and 62: • Equity investments involve a su
Page 63 and 64:
• If the purpose of the contribut
Page 65 and 66:
• to make risky investments pract
Page 67 and 68:
10.5 The comparative advantages of
Page 69 and 70:
work to prepare financial sector st
Page 71 and 72:
a substantial part of Sida’s pove
Page 73 and 74:
GLOSSARY OF FINANCIAL TERMS Below a
Page 75 and 76:
Indirect instruments: In connection
Page 78:
7;)(-7, -28)62%8-32%0 ():)0341)28 '
show all

Financial sector development - Sida

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?