Description:
The paper provides an assessment of the
state of financial inclusion in the MENA region, and
identifies constraints, opportunities, and priorities for
significantly improving access to finance. Practical
recommendations for improving financial inclusion are
outlined. Firstly, governments could agree a Financial
Inclusion Strategy that is underpinned by improved data,
that has both public and private sector commitment, and that
scales up financial access on a large scale, principally
through bank accounts. Secondly, the regulators should
provide a legal and supervisory framework that enables
access to finance to be expanded primarily through banks,
but with regulatory space for the use of agents, mobile
phone technology, and for a finance company model for
microcredit and leasing. Interest rate caps on microloans
should be removed, and instead consumer protection and
supervisory capacity for microfinance should be
strengthened, while prudent competition between financial
service providers should be promoted. Thirdly, financial
infrastructure needs to continue to be a focus area, and in
particular credit information and secured transactions.
Finally, barriers to the growth of Islamic financial
services should be removed so that they can better meet
market demand.