The challenges of financial inclusion in MENA region

Many people living in the Middle East and North Africa (MENA) have still no access to financial services.

Indeed, only 18% of adults have an account in a traditional bank , which is one of the lowest rate of financial inclusion in the world.
Women and young people are most affected by this financial exclusion : 13% of women have a traditional bank account, and only 2% of young adults had a savings account in 2011.

Despite this, several countries in this region have strong and developed banking systems that are capable of supporting significant economic or financial shocks unlike some European countries.

What are the characteristics of the microfinance sector in this region

Microfinance is a recent sector in this region where Microfinance Institutions (MFIs) are mostly NGOs, limiting their growth, their ability to act as their private investment.

Currently microcredit represents only 0.2% of GDP (Gross Domestic Product) in the region and the sector of ​​microfinance meets only 10-15% of the demand.
Compared to other regions such as Southeast Asia or South America, the loans granted by MFIs involve two times less people (only 1.8% of adults).

Despite a low and evolutive sector, the microfinance is one of the most effective tools to ensure the economic empowerment for women, innovation and the entrepreneurship spirit of young people who suffer from a very high unemployment rate (about 25%) in the region.

In addition, following the social and political events in this region, people's expectations are high towards microfinance to fight against some of their evils: social exclusion , the difficult access of the poorest people in funding and the unemployment .

What are the main challenges of financial inclusion in the region?

  • Reduce the gap between the financial exclusion and the development of the financial sector
  • Develop an environment that facilitates access to credit through funding: grants to MFIs, support policymakers and central banks as EIB* (European Investment Bank) ...
  • *The EIB works for the implementation of policies of the European Union. It plays an active role in meeting the current financial challenges by promoting the access to finance for SMEs and participating in initiatives to support youth and employment on one hand, and the share of other investment sustainable projects on the other hand.

  • modernize and develop the market for regional economies and the private sector
  • Support youth and access to employment while putting in place measures to boost competitiveness and growth in the region
  • Strengthen regulation and supervision of MFIs which need to diversify their range of financial products such as savings .

Sources : Sanabel Network, Mondial Bank MENA blog

Tags : financial inclusion, microcredit, microfinance, MicroWorld, Pi Slice, financial products, EIB, savings, MENA