Political Economy of International Climate Finance: Navigating Decisions in PPCR and SREP

This working paper explores how countries can build their own 'climate finance readiness' by understanding their internal political economy and use that understanding to steer consensus-based decisions on climate finance investments. For climate finance to be effective, national leaders must build shared commitments. This involves considering the arguments, incentives and power dynamics at play to ensure priorities are more equitable and representative of a broader group of stakeholders. Doing so will also help to reduce the risk of implementation delays. This paper uses case studies from Bangladesh, Ethiopia and Nepal to explore how narratives and incentives within the political economy drive climate investment outcomes under the Pilot Programme for Climate Resilience (PPCR) and the Scaling up Renewable Energy Programme (SREP). It draws from broader analysis of the discourses around these investments, including 80 interviews with government; multilateral development banks (MDBs) and other stakeholders

Regulatory Challenges Strategically Enhance Banking Efficiency and stability: The study of East African countries

The purpose of this paper is to assess and promote safe and sound banking systems, including the policy, legal and regulatory framework which affects developing countries’ banking systems, especially in terms of the range of institutions and products available, their financial performance and their outreach, particularly to the rural and lower- income population. This review of the experience is intended to help guide other countries that are in the process of adopting legislation and regulations. The study also examines how the operation of banking systems and their clients may be affected by the impact of business and commercial laws and institutions, such as the impact on contract enforcement and the operation of banking systems.Sub-Saharan Africa, Banking Reform, Market for Credit

The Digitalisation of African Agriculture Report 2018-2019

An inclusive, digitally-enabled agricultural transformation could help achieve meaningful livelihood improvements for Africa’s smallholder farmers and pastoralists. It could drive greater engagement in agriculture from women and youth and create employment opportunities along the value chain. At CTA we staked a claim on this power of digitalisation to more systematically transform agriculture early on. Digitalisation, focusing on not individual ICTs but the application of these technologies to entire value chains, is a theme that cuts across all of our work. In youth entrepreneurship, we are fostering a new breed of young ICT ‘agripreneurs’. In climate-smart agriculture multiple projects provide information that can help towards building resilience for smallholder farmers. And in women empowerment we are supporting digital platforms to drive greater inclusion for women entrepreneurs in agricultural value chains

Privatization in Sub-Saharan Africa: Some Lessons from Experiences to Date

Privatization became a central element of economic reforms in most countries in Sub-Saharan Africa during the 1990s. Yet, empirical evidence regarding the impact of privatization remains scarce. Since the seminal work of CAMPBELL-WHITE & BHATIA [1998], covering transactions on the African continent until 1996, no comprehensive assessment has been conducted. At a time when public opposition to further privatization is growing, this paper aims at giving a broad overview of the impact of privatization in Sub-Saharan Africa from 1991 to 2002 in the light of recent developments, and to derive some general trends and conclusions from the body of empirical evidence available to date. During this period, about 2300 privatization transactions have taken place, generating a total sales value estimated at US$ 9 billion. The main findings on the impact of privatization are as follows: first, privatization has had a minimal one-off impact on the budget; second, firm turnover and profitability have generally increased immediately following privatization but the evidence is mixed regarding the sustainability of the initial post-privatization upswing; third, employment has been adversely affected by privatization, although the latter has not resulted in massive layoffs in absolute terms; fourth, FDI and stock markets have played a limited role in privatization transactions despite some showcase transactions; fifth, regulation and competition have often been overlooked in the privatization process, and even where they have been dealt with, enforcement problems have greatly limited their effectiveness; sixth, privatization has created new political patronage opportunities, leading to numerous corruption scandals which have damaged the credibility of the privatization process; finally, social aspects of privatizations have generally been overlooked, reflecting the tendency to focus on privatization transactions, rather than on sector reorganization at large including wider social objectives.Africa, competition, governance, privatization, regulation

Determinants of the Profitability of Private Commercial Banks in Ethiopia

The aim of this study is to examine factors that determine profitability of private commercial banks in Ethiopia. Because the factors that determine bank profitability are broad, the nine variables that were identified from the literature and considered to have an impact on profitability are categorized into three major environmental aspects: macroeconomic variables, industry-specific variables, and bank-specific variables. To verify the independent variables that behave differently with risk adjusted return, risk neutral and risk adjusted performance metrics were also used. In terms of sample, the study looked at balanced panel data of 16 commercial banks from 2014 to 2019. In order to analyze the data, both descriptive and inferential statistics were used. From the total nine independent variables, two of them namely, the bank capital strength and managerial efficiency simultaneously determine banks' profitability measured both in Return on Assets (ROA) and Return on Risk Weighted Assets (RORWA). Whereas, three variables, namely, income diversification, banking industry development and inflation rate had significantly determined banks' profitability measured in ROA. While credit risk had significantly determined banks' profitability measured in RORWA. The remaining three variables, namely: bank size, bank growth and gross domestic product of country do not significantly determine banks profitability measured either on ROA or RORWA. The study suggests commercial banks to enhance capacity to control their operating costs and interest margin, diversify their sources of income, and strict follow-up on their capital adequacy positions. Keywords: Commercial Banks, Profitability DOI: 10.7176/RJFA/14-7-03 Publication date: April 30th 2023

Determinants of the Profitability of Private Commercial Banks in Ethiopia

The aim of this study is to examine factors that determine profitability of private commercial banks in Ethiopia. Because the factors that determine bank profitability are broad, the nine variables that were identified from the literature and considered to have an impact on profitability are categorized into three major environmental aspects: macroeconomic variables, industry-specific variables, and bank-specific variables. To verify the independent variables that behave differently with risk adjusted return, risk neutral and risk adjusted performance metrics were also used. In terms of sample, the study looked at balanced panel data of 16 commercial banks from 2014 to 2019. In order to analyze the data, both descriptive and inferential statistics were used. From the total nine independent variables, two of them namely, the bank capital strength and managerial efficiency simultaneously determine banks' profitability measured both in Return on Assets (ROA) and Return on Risk Weighted Assets (RORWA). Whereas, three variables, namely, income diversification, banking industry development and inflation rate had significantly determined banks' profitability measured in ROA. While credit risk had significantly determined banks' profitability measured in RORWA. The remaining three variables, namely: bank size, bank growth and gross domestic product of country do not significantly determine banks profitability measured either on ROA or RORWA. The study suggests commercial banks to enhance capacity to control their operating costs and interest margin, diversify their sources of income, and strict follow-up on their capital adequacy positions. Keywords: Commercial Banks, Profitability DOI: 10.7176/RJFA/14-15-01 Publication date:August 31st 2023

Opportunities for private sector participation in agricultural water development and management

Irrigation management / Private sector / Public sector / Public policy / Private investment / Participatory management / Privatization / Financing / Farmers / Households / Water harvesting / Africa South of Sahara

The impact of Company-specific and Macro-economic factors on Company Performance: Evidence from Insurance Sector in Sri Lanka

This study examines the impact of company-specific and macro-economic factors on insurance companies' financial and market performance in Sri Lanka. The analysis was conducted using a panel regression. The sample consisted of nine listed insurance companies from 2010 to 2019, inclusive of both years. Capital structure, capital adequacy, liquidity position, and company size were considered as company-specific factors, whereas inflation and GDP growth were considered as market-specific factors. Net profit margin, return on assets, return on equity, and earnings per share were considered to measure the financial performance. In contrast, market value-added (MVA) was used to measure the market performance. Capital adequacy and capital structure have a significant negative association with financial performance, whereas the size is positively related to financial and market performance. The GDP growth rate is negatively associated with financial performance. Moreover, the liquidity position of the company is positively related to the MVA. The study provides evidence that the capital structure, capital adequacy, GDP growth rate, size of the company and liquidity position are essential factors that affect the insurance sector's financial and market  performance in Sri Lanka. The study recommends that Sri Lankan insurance companies pay due attention to these factors to address financial and market performance matters. There is a dearth of studies in Sri Lanka on this phenomenon. We contribute as the direct study that analyzes the financial and market performance of the insurance sector in Sri Lanka in a single study. Keywords: Company-specific factors, Financial performance, Market performance, Insurance sector, Macroeconomic factors, Sri Lanka

Banking Sector Reform in Ethiopia

The fragile and inefficient state-dominated banking sector that existed in Ethiopia during the military government (1974-1991) was a major hindrance to economic growth. Since it took power in 1991, the current government has implemented a number of reforms. For instance, in 1994, the government legalized domestic private investment in the banking industry. In addition, it restructured the two development banks as commercial banks, and introduced a new Banking and Monetary Proclamation that gave more autonomy and further clarified the National Bank of Ethiopia’s activities as the regulator and supervisor of the banking sector. Although these measures have led to marginal improvements in efficiency and competition, there is a great need for additional market oriented reforms to further enhance the sector’s role in mobilizing savings and allocating funds to their optimum usage. The purpose of this paper was to analyze additional market-based policy initiatives undertaken by the government to determine if they would further enhance the efficiency of the banking sector in Ethiopia. Based on the results of the data analysis it may be concluded that the Ethiopian government needs to further strategize and take the following steps: a) reverse the decision prohibiting foreign banks from investing in the country, b) fully privatize the state-owned commercial banks, c) allow market forces to determine interest rates and the exchange rate of the Ethiopian currency, Birr (ETB), and d) upgrade the regulatory and supervisory capacity of the National Bank of Ethiopia to facilitate efficiency in the banking market

Using agriculture for development: Supply- and demand-side approaches

For most poor countries of today, using agriculture for development is widely recognized as a promising strategy. Yet, in these countries, investment in agriculture has mostly been lagging relative to international norms and recommendations. Current wisdom on how to use agriculture for development is that it requires asset building for smallholder farmers, productivity growth in staple foods, an agricultural transformation (diversification of farming systems toward high value crops), and a rural transformation (value addition through rural non-farm activities linked to agriculture). This sequence has too often been hampered by extensive market and government failures. We outline a theory of change where the removal of market and government failures to use this Agriculture for Development strategy can be addressed through two contrasted and complementary approaches. One is from the “supply-side” where public and social agents (governments, international and bilateral development agencies, NGOs, donors) intervene to help farmers overcome the major constraints to adoption: liquidity, risk, information, and access to markets. The other is from the “demand-side” where private agents (entrepreneurs, producer organizations) create incentives for smallholder farmers to modernize through contracting and vertical coordination in value chains. We review the extensive literature that has explored ways of using Agriculture for Development through these two approaches. We conclude by noting that the supply-side approach has benefited from extensive research but met with limited success. The demand-side approach has promise, but received insufficient attention and is in need of additional rigorous research which we outline