Propelling financial inclusion in the Arab Region

Today we celebrate the Arab Day of Financial Inclusion!

Adopted by Arab Monetary Fund (AMF) and the Council of Arab Central Banks on 27 April 2016, the overall purpose of Arab Day of Financial Inclusion Day to advocate financial inclusion, and its role in driving the development of policies, strategies and programs to promote access to financial services, and improve financial inclusion in the region.

The Arab world has witnessed an increased momentum in policy dialogue and national initiatives to address financial inclusion challenges. Arab countries have recognized financial inclusion as a key policy objective that stimulates growth and employment, reduces poverty, promotes social well-being, and contributes to financial stability. Greater access to and use of formal financial services would empower almost 71 percent of adults (78 percent of women) and 4 out of 5 businesses in the Arab world, helping to bring them into the formal economy, and boost sustainable development.

As we highlight this day, take a moment to learn how AFI is propelling financial inclusion efforts in Arab Region and as part of the Financial Inclusion for the Arab Region Initiative (FIARI).

9th Global Policy Forum

AFI’s annual flagship event, the 9th Global Policy Forum (GPF) was held in Sharm El Sheikh, Egypt from 13-15 September, co-hosted by Central Bank of Egypt (CBE). This was the first time AFI’s flagship event was hosted in the Arab Region, gathering over 800 participants. The Forum highlighted innovative financial inclusion policies and activities taking place around the world.

The Forum saw the launch of FIARI, endorsement of the Sharm El Sheikh Accord, and AFI members made significant step in bridging the gender gap within the network, with 27 AFI member countries making at least one target focused on gender and women’s financial inclusion under Maya Declaration Commitments.

Launch of the Financial Inclusion for the Arab Region Initiative (FIARI) 

FIARI was launched by AMF, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, and AFI, during the 9th AFI Global Policy Forum held in Sharm El Sheikh, Egypt on 14 September 2017.

“The Arab Region welcomes AFI and AFI welcomes the Arab Region into the Network. FIARI will enable us to engage in the region, to learn from each other on important issues such as financial inclusion for forcibly displaced persons, women’s financial inclusion but also SME finance. These are important issues and regulators can make a difference,” emphasized Dr. Alfred Hannig, Executive Director, AFI.

The aim of FIARI is to help accelerate conducive policies and actions for enhancing Arab societies’ access to financial services through an effective coordination mechanism, by supporting the implementation of national financial inclusion policies, in alignment with United Nations Sustainable Development Goals (SDGs).

Six AFI members from the Arab Region are currently part of FIARI with more expected to join during its implementation. Besides Central Bank of Jordan, these members include Central Bank of Egypt, Central Bank of Mauritania, Banque Al-Maghrib, Palestine Monetary Authority, Central Bank of Sudan, Central Bank of Syria, Ministère des Finances de la République de Tunisie and Central Bank of Yemen.

Sharm El Sheikh Accord

A significant outcome of the 9th GPF was the Sharm El Sheikh Accord on Financial Inclusion, Climate Change and Green Finance, endorsed by an overwhelming 94 percent of the AFI membership including the Arab Region.

The Accord commits AFI members to work together and with partners to identify, understand and implement financial inclusion policy solutions that have positive outcomes for the environment, focusing on communities that are most vulnerable to climate change.

Through the Accord, the pledge by AFI members will not only contribute to climate change adaptation and mitigation in their own jurisdictions and regions, but also to the attainment of Sustainable Development Goal 13 (take urgent action to combat climate change and its impacts) at the global level.

FinTech Policy Forum in Amman, Jordan

Together with CBJ, AFI organized the FinTech Policy Forum on 2 April 2018 in Amman, Jordan — held as part of FIARI. FinTech innovations can complement financial inclusion by broadening financial access “at scale” and improving the quality of financial services through “efficiency”, concluded 130 policymakers and regulators from 50 countries and over 45 institutions who are attending the FinTech Policy Forum.

“Technology advancements are redefining finance and the financial landscape. We are only beginning to understand how technology can transfer the payments platform,” said HE Governor Dr. Ziad Fariz, CBJ.

Dr. Ziad Fariz launched Jordan’s regulatory sandbox framework — pivotal in the Arab Region — for public consultations at the FinTech Policy Forum, “as regulators, our principle responsibility is that supervised institutions are operating safely and soundly with applicable laws especially in treating consumers fairly.” 

Jordan launches NFIS, first in the Arab Region

The first in the Arab Region, CBJ developed the National Financial Inclusion Strategy (NFIS) as part of an inclusive and collaborative effort made together with the government, private sector, civil society and other key stakeholders. Key thematic areas of focus in Jordan’s NFIS include FinTech, women’s financial inclusion, Forcibly Displaced Persons (FDPs), and SME financing.

The NFIS was launched at the Financial Inclusion Forum 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, as part of activities under FIARI,

Recognizing financial inclusion as a key contributor to economic development, employment generation, and reduced socio-economic inequalities, aligned with the range of the United Nations’ Sustainable Development Goals, Jordan formed a Financial Inclusion Steering Committee led by the CBJ in 2015. The Bank embarked on a national policy process for enhancing the formal financial inclusion of all, with special focus on youth, women, refugees, and the low-income population. In 2016, the CBJ committed under the Maya Declaration to the national goals of expanding access to finance for the adult population, while reducing the gender gap.

NFIS capacity building program for 16 countries

Leveraging on AFI’s unique peer learning model, 43 participants and 20 financial institutions, from 16 countries, were able to learn from the expertise of AFI member institutions from beyond the Arab region such as Sub-Saharan Africa and Asia — specifically Bank of Uganda (who recently launched its NFIS) and Bangko Sentral ng Pilipinas, who both shared their country experiences in implementing their respective National Financial Inclusion Strategies (NFIS). The capacity building program was organized as part of FIARI activities.

Participants include technical level staff from AFI/AMF member institutions and GIZ partner institutions (central banks and ministries of finance) in the Arab Region who are closely involved in the NFIS development and implementation, attended Capacity Building Program “Preparing for Financial Inclusion Strategy Implementation” in December 2017, following the launch of Jordan’s NFIS.

Other technical Initiatives

AFI stakeholders’ engagement in the Arab Region include collaboration with AMF in the Financial Inclusion Task Force (FITF), serving as a technical member for drafting a Technical Note on Financial Inclusion and Islamic Finance, together with Islamic Financial Services Board (IFSB) and Organization of Islamic Cooperation (OIC).