Any business pursuit requires two critical inputs: finance and entrepreneurial skills. Business initiatives are limited by the fact that investment needs to happen first for revenues and profits to follow. This makes the financing more vital to a business in all stages, from inception to initiation to expansion. Addressing the financing constraint through policy and market paves the way for business to flourish.
Peaceful countries have effective financial markets that can better serve the needs of business. The term “finance gap” defines the unmet credit need of businesses in a country. For less peaceful countries, this gap is estimated at US$1.7 trillion.
This chart from the Business & Peace report shows the financial gap for business by levels of peace. A peaceful setting reduces the gap between a business’s need for finances and its availability by supporting functioning capital markets, including stock exchanges and commodity markets. Effective financial infrastructure supports the development of financial markets in low-peace, developing countries. A prudent financial system stands on a highly standardised accounting and auditing structure, sound credit reporting, collateral and insolvency regimes, and well-functioning payment and settlement mechanisms.