The Arab Spring as an opportunity for financial inclusion

In 2011, a wave of revolutions in Arab countries announced an era of renewal, and a shift towards democracy. 2012 marked the kickoff of the political and administrative changes through the establishment of national legal frameworks.

Consequently, the Arab Monetary Fund (AMF), in partnership with CGAP (Consultative Group to Assist the Poor), has made financial inclusion the main objective of its new mandate, and seven new members (Egypt, Jordan, Morocco, Palestine, Yemen, Sudan and Syria) have joined the Alliance for Financial Inclusion (AFI).

At a national level, Tunisia has created the first microfinance supervisory body in the region. Morocco has published a new microfinance tool to help develop the sector, and has passed a law allowing private companies to provide financial services, a first step towards enabling NGOs to become profit-making entities.

The region has seen further progress in this area:
- Growth of Responsible Finance: The Central Bank of Jordan issued its consumer protection directives that cover a wide range of topics such as transparency, equal treatment and the fight against over-indebtedness.
- The growth of Al Barid Bank (Moroccan Post) - proving the power of postal networks - to reach 5 million active customers through a network of 1,800 branches.
- A wave of innovation from the provision of health micro-insurance in Jordan and experimentation with various forms of Shariah-compliant finance.

But some concerns remain: the first signs of multiple loans appear in some markets (Lebanon, Jordan) and reforms stagnate in some countries such as Egypt.
Thus, expectations are high for 2013. There is a real potential through mobile banking, especially in countries where banking penetration is particularly low, such as in Yemen and Sudan. We can also expect to learn from ongoing innovations and a deepening of regulations.

Source : CGAP

This article is part of the special report: