83950 FIRST Initiative • Monthly Update Strengthening Financial Sectors JULY 2013 As every summer, July tends to be a slow month in terms of approvals and activities. At FIRST, we witnessed a smaller number of approvals, however substantial activity can be seen in the submissions made to the Governing Council (GC), wherein five new projects, adding to $3.3 million were submitted for GC approval. The submissions also included a Rwanda program, the first in our programmatic window and is budgeted for $2 million. In terms of the project pipeline, the inquiry and proposal numbers have been stable for the last three months. We also provide a snapshot of FIRST’s active portfolio, along with disbursements till end of July. PAKISTAN: MICROINSURANCE REGULATION AND SUPERVISION FIRST assisted the Securities and Exchange Commission of Pakistan (SECP) in developing a comprehensive legal and regulatory framework to create an enabling environment for microinsurance. As a part of the TA, FIRST supported the SECP in drafting the microinsurance regulatory framework, developing microinsurance regulatory accounting systems and in stakeholder consultations during the process of drafting regulatory framework. FIRST also assisted SECP to conduct a diagnostic study to assess supply-demand for micro-insurance in Pakistan. The results were published in October 2012. The project paved the ground for creating an enabling environment for microinsurance industry in Pakistan through its deliverables. In addition, the interactions with SECP, the insurance providers, and microfinance institutions (MFIs) in Pakistan have helped create awareness about the importance of this market and its importance to enhancing access to insurance, and hence finance. As a result of this project, SECP issued the draft of the Securities and Exchange Commission (Micro- insurance) Rules of 2013, and also issued a 'Code of Consumer Protection' in June 2013, applicable on all insurers in the business of micro-insurance. In Pakistan, where insurance penetration is just 0.8 per cent of GDP, it is anticipated that this initiative will help in creating a transparent and enabling environment thereby increasing the insurance density and affordable outreach to low- income people. FIRST Initiative has recently approved a follow on project to assist SECP to harmonize the overall insurance legal and regulatory framework and to incorporate risk-based supervision, which is based on the diagnostic assessment undertaken as part of the micro-insurance project. PROJECT APPROVALS In July project approvals added to $0.6 million, with additional $3.3 million prepared and submitted to the Governing Council. Projects approved in July US$ 631,500 Morocco, Strengthening Assisting the Insurance Commissions of selected 407,793 Tunisia, Libya Insurance countries (Morocco, Tunisia, Libya and Palestine) in 1 and Palestine Supervision in the conducting self-assessments of their supervisory A007 MENA Region systems against new global IAIS standards in order to identify gaps in insurance sector regulation and supervisory practices; and in developing effective and time-bound country Action Plans to address key issues identified for each jurisdiction. Jordan A020 Payment Systems Assisting Central Bank of Jordan in (i) improving 223,707 Reforms systemically important payment systems, (ii) strengthening legal and regulatory framework for the Jordan National Payments System (iii) improving payments systems oversight, and (iv) creation of an enabling environment for development of innovative payment mechanisms and rapid expansion in usage of electronic payment mechanisms. Projects submitted to GC in July US$3,380,666 Philippines Crisis Preparedness Assisting in enhancing the ability of the Financial 280,027 A019 Framework II Stability Coordination Council (FSCC) to manage a possible financial crisis through the development of a Crisis Preparedness Framework that provides for working arrangements both before and during a crisis. Pakistan Strengthening Supporting the Securities and Exchange 332,078 A021 Insurance Regulatory Commission of Pakistan (SECP) to reform and and Supervision upgrade the insurance legal, regulatory and Framework supervisory framework to increase stability in the insurance sector and contributing to insurance sector growth. Rwanda P1 Strengthening Assisting National Bank of Rwanda (BNR) to 2,053,569 Financial Stability strengthen the legal and regulatory framework of Rwanda’s financial sector and to contribute to financial stability. Seychelles Secured Lending and Assisting Central Bank of the Seychelles to increase 336,484 A026 Collateral Registry access to credit to the private sector by introducing a secured lending legal framework and collateral registry, thus strengthening lenders' rights in movable assets. Seychelles Financial Sector Assisting Central Bank of the Seychelles in 378,508 A027 Development facilitating financial sector reforms by helping Implementation Plan national authorities adopt a coherent vision and strategy for financial sector development in Seychelles including a well-sequenced, time-bound and prioritized roadmap for implementing reforms. 2 MONTHLY DATA • As can be seen in the graph below, the number of projects in preparation has been stable for the last three months. • As of July 31, project pipeline was concentrated in Africa region (50%), followed by the strong demand from Middle East and North Africa region (20%). Number of projects in the portfolio, by project status: Pipeline distribution ($ amounts), by region: 120 100 6% 20% ECA 80 AFR 60 In Preparation EAP 40 Active 12% SAR 20 50% LCR 0 7% MNA May June July 5% Operational figures ($ million) Project approvals (during the month) 0.6 Total Phase III approvals (as on July 31) 1.9 Project disbursements (during the month) 0.2 Total Phase III approvals(number of projects 7 Project disbursements - LIC (during the month) 0.1 Current pipeline (number of projects) 25 Project disbursements - MIC (during the month) 0.1 New inquiries received (during the month) 10 Active Portfolio Snapshot (as of July) # of Projects Committed ($ million) Disbursed ($ million) LIC 65 17.6 9.5 MIC 39 9.2 4.5 Total 104 26.8 14.0 3