Financial Inclusion & Employment in the Arab Region Conference 2015
November 7, 2019
Would you lend money to these people?
Who would? You would?
That’s Bill Gates?! In the Arab world, only a limited number of
people use basic financial services
to improve their social and economic well-being. Arab policy makers and financial experts
therefore met in Jordan this year. This is, how they learned from global experience
to promote better, affordable financial services for
people and firms. We need to increase the number of people Who are dealing with banks much bigger than what we have. Only 25% of the population are dealing with banks. So, we have a big job ahead. Financial inclusion is a good instrument:
Making Finance available for everybody, Making life more affordable for the poor,
and Enable them to participate more in the decision
making process. So, it is part of the social, economic, and
political process of the country. One of the biggest challenges is the unemployment. We have in our region the highest unemployment rate. As you know, we have the youngest among other regions. A good number of those young are entering the job market every year.
Therefore, we need to create jobs. In order to create jobs we need financial
inclusion, We need an accessibility to finance,
And we need a complete strategy. We need the regulators, We need the whole financial market, we need the private sector with us. And, hopefully, by working together we will address that challenge. There is a shift from microfinance to financial inclusion. In the past, we talked about microcredit,
microsavings, Provided by microfinance institutions.
Now, we see other kinds of financial services. We talk about payments, we talk about insurance,
We talk about pension. And, these services are provided by
a broad range of different financial institutions. We talk about financial inclusion, including SMEs, but also households in the financial sector. What it finally leads to, and we really have evidence now for that, It leads to higher economic growth. With higher economic growth, everybody benefits
from it. It leads to higher income, more employment,
but not only that. Financial inclusion also has an impact on
financial sector stability. We learned at the conference today that there are more than 50 countries that have developed
Financial inclusion strategies. We have also seen that those countries that
have developed A financial inclusion strategy have achieved
better outcomes In terms of bringing people into the formal
financial sector. In the region, Jordan and Palestine are in
the forefront now. They are the first countries in the Arab World,
That have developed financial inclusion strategies. We as GIZ are very happy to support this development. When you, for example, look at a person who
lives in a capitol, And he or she would like to make even a small
transfer To the grandmother, who is sitting in a village
up country: Without a payments facility you would have
to climb on a bus Or you would have to travel for 5 hours.
So, there is a huge security issue and Carrying the cash on a bus to the village
is very costly. But if you have a mobile phone, like this
one, You can make this transfer through the mobile
phone Onto the mobile phone of your grandmother
in the village. She can go to the agent and cash out the money. But, the regulator want to regulate that and to supervise that. So, smart policies mean: Make that happen. That this can happen in a safe and sound way,
and This makes a huge difference in a poor person’s
life. Digital financial services are a brilliant
way Of bringing people into the financial system. They can start with a payment account. Transferring money from one place to another
is often A gateway service for people to join the financial
system. Then you can take up things like bill pay,
international remittances. People can store value on their phones or
on a card. They can then built up a record through the data that is generated by those behaviors to get credit, insurance and so on. Digital allows people to reach the poor
much more affordably than they could before.