Jordan launches NFIS, first in the Arab Region

“AFI members are of the conviction that financial inclusion drives inclusive economic growth and sustainable development. It plays a necessary role in integrating the unbanked and financially underserved into the formal economy,” said AFI Executive Director, Dr. Alfred Hannig in his keynote address at the financial inclusion policy forum, The Launch of the Financial Inclusion Strategy for Jordan: Moving Forward Towards Inclusive Growth.

The Forum is held under the Royal Patronage of His Majesty King Abdullah II ibn Al Hussein from 4-5 December 2017 and organized together by the ADF, the GIZ and AFI.

Central Bank of Jordan (CBJ) developed the NFIS as part of an inclusive and collaborative effort made together with the government, private sector, civil society, and other key stakeholders in the Kingdom — towards achieving inclusive economic growth and sustainable development, in alignment with the United Nations Sustainable Development Goals (SDGs).

Welcoming remarks at the Forum were made by H.E. Ziad Fari, Governor of the Central Bank of Jordan, H.E. Dr. Abdulrahman A. Al Hamidy, Chairman of the Board of the Arab Monetary Fund, Mr. Andrea Matteo Fontana, European Union Ambassador to Jordan and Mr. Ralf Schröer German Embassy Chargé d´Affaires.

H.E. Dr. Maher Sheikh Hasan, CBJ Deputy Governor and Mrs. Maha Bahou, CBJ Executive Manager, presented the NFIS, sharing the CBJ vision for making better finance available for youth, women, forcibly displaced persons (FDPs), low income segments of the population through microfinance, fintech and digital financial services (DFS.  Following the Strategy presentation, the AMF and GIZ followed the signed the Memorandum of Understanding.

Only 33 percent of adults in Jordan, 27 percent of which are women, have an account with a financial institution according to a recent 2017 CBJ-GIZ study. Overall, access to finance has improved in recent years, but disparities remain for the majority of the population and vulnerable groups continue to be disadvantaged.

Key thematic areas of focus in Jordan’s National Financial Inclusion Strategy

1. FinTech for Financial Inclusion  

FinTech is advancing the financial inclusion of people living in remote areas, women, MSMEs, the youth, and more recently, forcibly displaced persons. 

“FinTech for Financial Inclusion helps us to find solutions to issues on derisking, climate change, refugees and enables regulators to drill down and find solutions, potential for financial inclusion,” Dr Alfred Hannig said.

2. Women’s Financial Inclusion 

Gender gap in Financial Inclusion persists  at an average 9 percent at a global level. Out of the 2 billion globally unbanked, 58 percent are women or 1.2 billion. Financial inclusion of women is intrinsically desirable but will also drive the uptake of digital financial services.

“Digital services have also demonstrated potential to close the financial inclusion gender gap. For example, digitizing G2P payments has provided women with more access to finance, and increased their financial agency. In countries like Mexico and Brazil — this has halved the gender gap in financial inclusion,” said Dr. Hannig as he addressed the Forum.  

3. Financial Inclusion of Forcibly Displaced Persons

Jordan hosts 685,597 total refugees registered with UNHCR as of end-2016, representing 20 percent of total refugees hosted in the region. Meanwhile, the Middle East and North Africa region hosts 26 percent of total refugees, mostly by neighboring countries.

National strategies that consider the plight of the FDPs, not only contribute to inclusive economic growth and the preservation of human dignity, but also guard financial stability and integrity by mitigating the risks associated with an otherwise invisible economy. 

The CBJ leverages on mobile financial services to financially include and economically empower FDPs. Jordan Mobile Payments (JoMoPay) is the national centralized payment switch that connects end users through a mobile device to a payment ecosystem that comprises of financial and payment intermediaries such as telcos, banks and transfer companies. JoMoPay offers benefits to refugees as its KYC requirements are uniquely designed for refugees to use their UNHCR ID number to register, providing them with access to a mobile wallet. 

The World Food Programme (WFP) in partnership with the United Nations High Commissioner for Refugees (UNHCR) has been using an innovative iris scan payment system in Jordan’s refugee camps, allowing tens of thousands of Syrian refugees to purchase food from camp supermarkets using a scan of their eye instead of cash, vouchers or e-cards. WFP’s system relies on UNHCR biometric registration data of refugees. The system is powered by IrisGuard, the company that developed the iris scan platform, Jordan Ahli Bank and its counterpart Middle East Payment Services.  

The role of NFIS in achieving Sustainable Development Goals (SDGs)

With financial inclusion as one of the key enablers for achieving the SDGs, national strategies have an important role to play in ensuring a country’s financial inclusion policy will contribute to the achievement of the global goals.

“AFI’s analysis has highlighted that progress towards achieving up to 16 out of the 17 SDGs can be accelerated by increased financial inclusion,” Dr. Hannig said while giving an example of the linkage between financial inclusion and climate change — recognized by AFI members in their adoption of the Sharm El Sheikh Accord this September at the 2017 AFI GPF.

For more on financial inclusion of FDPs and progressive approaches by the AFI members, take a look at the AFI Special Report on the Financial Inclusion of FDPs, prepared by AFI under the auspices of the German G20 Presidency.