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Credit Access In Samoa

Credit Access In Samoa
In the past few years, Samoa has seen the emergence of a new banking system with a focus on credit access. This comes after years of financial hardship and a shrinking economy. According to a 2016 report, no new loans had been issued in Samoa in roughly five years. Major financial cornerstones like the Bank of Hawaii had backed out of the country.  In desperation, and on the margins of the mainstream economy, Samoa adopted a public banking system.

The Landscape of Samoa’s Credit Sector

The financial services sector in Samoa encompasses a wide range but is mostly limited to urban areas. The industry has four major commercial banks: two foreign banks and two regional banks. However, the domestic credit market is controlled by Public Financial Institutions. Samoa National Provident Fund holds 22.6 percent of the market; another key player, The Development Bank of Samoa, holds a 10.3 percent share. Much of the success of credit access in Samoa can be attributed to the Central Bank of Samoa. It acts as a regulator and has enforced progressive strategies that have expanded financial services and inclusion.

However, 49 percent of Samoans are outside of the formal financial market. Public constraint has often been attributed to a cash-heavy informal economic sector and inadequate access to distribution points throughout Samoa. The World Bank and The International Finance Corporation have identified Samoa as a struggling credit environment, but policy improvements seek to target these issues.

Somoa’s First Credit Bureau

In 2015, Samoa launched its first Credit Bureau financed by The International Finance Corporation. Its intention was to bring efficiency and transparency to the money-lending market. This was a milestone for Samoa’s financial system, which was historically reliant on cash. It helped many different parties by providing confidence to lenders as borrowers built up their credit profiles. The Credit Bureau was fundamental in establishing a credit infrastructure in Samoa. Backed by the Data Bureau and the largest financial firms in Samoa, technological advancements such as cloud storage and information sharing among banks allowed credit footings to grow. The new technologies meant that lenders could deliver financial services at significantly lower costs to expand credit access to broader segments of the economy.

Expanded Credit Access

Domestic credit to businesses has grown by roughly 60 percent since the mid-1980s. The Strategy For The Development of Samoa, intended for the years 2016 to 2019, outlined plans to increase inclusivity to vulnerable groups and help end all poverty in the region.

Supported by the public domestic credit market, economic resilience accompanies private sector investment and development initiatives to expand credit access. Agriculture and fisheries are especially important to Samoa’s rural economic growth and development. The Development Bank of Samoa finances agriculture through the Agricultural Competitiveness Enhancement Program and Agribusiness Development Program. The Agribusiness Programs, Development Bank and Business Enterprise Center provide increased technical and financial support services for small business development.

Positive Results

Samoa has already left the list of the most undeveloped countries and is on its way to sustainable economic growth. With the continued implementation of credit and financial services aimed at the most vulnerable populations, Samoa has seen growth in per capita GDP of roughly $6,000 USD in 2017, up nearly $500 USD since 2015. 

While extreme poverty does not afflict the region, 20 percent of the Somoa’s population lives under the poverty line and struggles to obtain secure employment. The majority of this population lives in rural areas, lacking access to the resources available in urban areas. With the addition of these financial services aimed at reaching underserved communities and the larger rural economy, many industries are growing and the country is opening new doors for its people. As credit access in Samoa continues to spread, the economy and individual prosperity will also blossom.

– Joseph Ventura
Photo: Flickr

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Credit Access in Romania

Credit Access in Romania
Given its turbulent history throughout much of the twentieth century, it is inspiring to see Romania’s economy thrive. Romania experienced economic difficulties as part of the Soviet Union and was especially hard hit by the recent global recession. Despite its recent accomplishments, Romania still has many economic woes including a high poverty rate. With its problems, credit access in Romania is essential if the country wishes to alleviate some of its economic hardships. After its most recent elections, the Social and Liberal Democrat parties formed a coalition government. Many of the coalition’s goals and priorities centered on economic issues, some of which include: the improved absorption of European Union (EU) funds and a focus on securing investments in infrastructure and health care, reforming the pension system, and simplifying tax administration.

Poverty in Romania

Generally speaking, much of Romania’s wealth does not “trickle-down” to all of its citizens, which explains part of the country’s problems with combating poverty. The World Bank cites the following statistics regarding poverty in Romania.

  • Romania has one of the highest poverty rates in the EU.
  • The share of citizens at risk of poverty after social transfers increased from 21.6 percent in 2010 to 25.3 percent in 2016.
  • There was a decrease in the share of the at-risk population in Romania: from 41.5 percent in 2010 to 38.8 percent in 2016.

Economic Reform

Much of Romania’s financial system needed reform before its acceptance into the European Union in 2007. Romania’s financial systems were in ruin after the collapse of the Soviet Union in 1989 so the European Union urged the Romanian government to reshape its financial sector in order to better adjust to the new, open-market economy of the EU. Because of its reshaping and restructuring, the Romanian economy was the second fast-growing in Europe in 2017. The World Bank predicts that the Romanian economy will continue to grow.

New legislation regarding access to credit was passed in Romania in 2016. Elena Iacob, an attorney who has analyzed the legislation, concluded: “It remains to be seen whether the various measures enacted by recent legislation will actually help the consumers to have access to more fair terms and affordable credit to satisfy their needs, or, on the contrary, will ‘help’ to the raise of the cost of the credit and to the demise of the market for residential real estate development, already weakened by the economic and financial crisis.”

Benefits of Credit Access

Credit access in Romania would potentially give Romanians more purchasing power. Romanians could spend their money on things they have always wanted, or they could save that money for the future, in preparation for healthcare expense or for a relative’s education. With more disposable income, Romanians could funnel more money into their economies, strengthening their own local and national economies as well as that of the EU.

Iacob’s analysis is cautiously optimistic about Romania’s economic future. While unsure of the effects of the new legislation, Iacob argues that the legislation does favor the consumer. Hopefully, with greater credit access in Romania, many will be able to better themselves financially, all in an effort to lessen the country’s poverty rates. Given its recent economic advances, credit access in Romania could allow the nation to increase its standing and influence in the EU while becoming a shining example of the successes in the war on extreme poverty.

– Raymond Terry
Photo: Flickr

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Economic Growth Increases Credit Access In Uzbekistan

credit access in Uzbekistan
Uzbekistan is setting strong economic precedents for the European and Central Asian region. New supportive legislative policies have increased government spending on education and training programs. Global economists argue this is one of the main reasons Uzbekistan’s GDP has increased by more than eight percent the past three years.

Recent economic success is also attributed to growing economic freedom allowed by a currently changing Soviet-style economy. Uzbekistan has the most diversified economy in Central Asia. This provides an increase in GDP per capita, which has been increasing steadily over the past three years as well. Improvements in GDP per capita are strong indicators of improvement in personal living standards.

At present, the service sector accounts for about 45 percent of GDP. Examples of common Uzbekistan services include car repairs, the medical industry, teaching and the food industry. Not far behind services lies industry and agriculture. Uzbekistan is the world’s fifth-leading cotton exporter and seventh-leading producer.

Economic projections for the private sector show a steady increase over the next few years. Fiscal space in the government budget allows the economy to increase stimulus without increasing public debt. This leaves the public to continue growing in wealth while working simultaneously to steadily boost GDP.

The Banking System

Credit access in Uzbekistan is likely to increase due to recent banking growth. More money circulating through the Uzbekistan economy raises banking lending power. In the past, Uzbekistan banking systems limited access to foreign investments due to governmental regulations. Almost all money contributed had come from the domestic system.

Exclusive banking provided benefits such as domestic accountability. An increase in Uzbekistan credit access relied on loans by the population. Other past pros to this system included resilience to global financial crises. Banks proved most effective in 2014 when domestic capital injections provided immunity from failing global counterparts.

This, however, has changed in 2018. Total banking capital increased 26 percent in 2014, and this year banking directors met to discuss boosting central bank interdependence with foreign allies to target foreseen inflation rates.

Banking directors continue to emphasize the importance of regulation to create and maintain a newly inclusive baking system. The new system would include an interactive global policy regarding foreign loans and cooperation.

Personal Credit Access in Uzbekistan

Smaller banking also influences credit access in Uzbekistan. A closer look reveals smaller economic changes, some of which include assistance from the International Finance Corporation (IFC). The IFC is a member of the World Bank and works to improve business in the private sectors of developing countries.

Private sector investments from the IFC have improved credit access in Uzbekistan in several ways. For example, the financial Markets Infrastructure Program (2009 to present) aims to create and improve credit information sharing. Members of the public can now receive an accurate prediction of loan repayment possibilities.

The current program also educates possible loan participants on formal risk factors associated with taking a loan. The certification for financial institution employees is the most prevalent in this project, as it allows job creation while creating a more knowledgeable private sector.

The Mortgage Market Development Project also instituted public credit access in Uzbekistan by improving mortgage lending procedures in local banks, made possible through set lending practices. Both programs continue today, allowing the general public higher access to jobs, loans and savings options.

Strong Projections

Expansion into the global economic sphere is a huge step for Uzbekistan, as previous years of Soviet-style economics would not have allowed this type of growth. Compared to its European-Asian counterparts, the Uzbekistan economy is at the forefront of balance and diversity.

The shift from exclusive banking to possibly inclusive is a prime example of the forward economic thinking propelling the country forward. Further improvements to liberalize the Uzbekistan economy, establish rule of law, social safety, constructive foreign policy and personal banking are also paving the way for success in the coming years.

– Logan Moore
Photo: Flickr

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Five Important Ongoing Development Projects in Moldova

development projects in moldovaOnce considered one of the richest states in the former Soviet Union, Moldova is currently one of the poorest countries in Europe. The Moldovan economy heavily relies on agriculture. Development projects in Moldova mostly focus on fostering democratic governance and economic growth in the country, and poverty reduction is a primary goal for these projects.

Here are five ongoing development projects in Moldova.

  1. Moldova Competitiveness Project (MCP)
    Implemented by Chemonics International, Inc., MCP (2015-2020) aims to improve efficiency and competitiveness in Moldovan industries in order to support Moldova’s efforts to foster a strong, export-oriented economy. Some of the project’s goals include improving the quality of Moldovan products and services, increasing productivity and technical skills in the labor force and expanding market linkages. These goals are expected to increase incomes, reduce poverty and emigration and enable Moldova to compete within the E.U. and other high-value markets.
  2. Development Credit Authority (DCA)
    DCA (2011-2028) helps, “Moldovan financial institutions to increase financing for local small and medium-size enterprises (SMEs) through a loan guarantee mechanism.” The main goal is to increase economic opportunities and improve the Moldovan private sector’s competitiveness. Additionally, it aims to improve Moldovan energy efficiency.
    Current DCA programs in the country include two guarantee facilities. One of them supports the Moldovan Information Technology (IT) sector in order to increase loans to IT firms for capital and long-term investments and support loans to IT professionals for mortgages, thereby improving quality of life and providing continued support to investments in the country.
    USAID Moldova and Swedish International Development Cooperation Agency (SIDA) launched the second guarantee in 2014 to “support lending to the energy sector,” in order to improve Moldovan SMEs’ efficiency, thereby strengthening their “commercial viability and growth in an environmentally sustainable manner.”
  3. Moldova Sustainable Green Cities
    With a budget of $2.7 million, this project is set to run from 2017 to 2022 and catalyze investments in low carbon green urban development with an integrated urban planning approach. The project seeks to achieve its goal by encouraging innovation and participatory planning and partnerships with various public and private sector entities. The goal is to improve the quality of life and advance opportunities for sustainable economic growth in Moldova. Primarily, the project aims to establish a sustainable Green City Lab that would continue to operate after its closure.
  4. ICT Excellence Center (ICTEC) Project
    Under this 36-month project, USAID will launch and develop an ICT Excellence Center in Moldova in collaboration with the government and the private sector. Through this development project in Moldova, USAID aims to bring “significant new resources, ideas, software, technologies and development activities, such as training, practical assignments and mentoring programs” to the country. The project will support the setup and equipment needs, the creation of a relevant business plan, training of qualified staff and the expansion of educational and entrepreneurial development activities.
  5. Export-led Development of Organic Agriculture in Moldova
    Implemented by People in Need, this project builds on previous support for organic agriculture in Moldova. It specifically focuses on developing the local organic market and sustainable extension services, preparing Moldovan farmers to export products for the sustainable “advancement of the entire sector.”

Most of these development projects in Moldova aim to improve its presence within the E.U. and other competitive markets in order to enable the people of this nation to lift themselves to a higher quality of life. With similar continued investment in the Moldovan community, industry and infrastructure, there is hope that Moldova will be able to reach this goal.

– Mehruba Chowdhury

Photo: Flickr