Financial Inclusion in the Middle East and North Africa (MENA)

The MENA region, while showcasing diverse economic landscapes, has struggled with low levels of financial inclusion. Accordingly low level of Financial Inclusion in the Middle East and North Africa poses significant challenges for economic development. According to a FinDev Gateway article about financial inclusion in the MENA region, only 48 percent of adults in the MENA region have a financial account, trailing 23 percentage points below the developing economy average. This raises concerns about the region’s ability to provide access to formal financial services and create financial resilience, particularly for vulnerable populations. The likelihood of having an account decreases further for unemployed adults, with only 39 percent of those not active in the labor force having an account, the lowest percentage globally. Digital payments are not widely adopted in the region, with only 40 percent of adults reporting digital transactions in the past year, compared to the developing economy average of 57 percent.

Financial inclusion in the Middle East and North Africa, Financial inclusion in the MENA region

Despite progress in narrowing the gender gap in account ownership from 17 to 13 percentage points since 2017, significant challenges persist. Only 42 percent of women in developing economies in the MENA region have financial accounts, compared to 54 percent of men, representing the highest gender gap globally. Regarding financial resilience, only 21 percent of adults in MENA can access emergency funding with no difficulty, below the developing economy average of 27 percent. Access to formal financial services, especially formal savings, contributes to financial resilience, but only 35 percent of adults in the region reported saving in the past year. Half of the adults in MENA rely on friends and family for emergency funding, highlighting a dependence on informal financial systems.

As per Bahrain FinTech Bay Financial Inclusion in the MENA region report 2020, the global financial inclusion rate stands at 76%, with 1.7 billion unbanked individuals worldwide. However, financial inclusion in the Middle East and North Africa (MENA) region is considerably lower, recording a regional rate of 20%, emphasizing the need for specific measures to enhance financial inclusion in the area.

Despite the low regional rate, MENA covers only 10% of the top 20 countries with the highest rates of financial exclusion. Men in the region dominate financial inclusion at 19%, compared to only 9% for women in 2016. Additionally, adults in the poorest 40% of households are twice as likely to be without accounts.

Country-wise Financial Inclusion in the Middle East and North Africa

Data from the Bahrain FinTech Bay Financial Inclusion in the MENA Region Report 2020:

CountryAccess to BankingAccess to CreditAccess to SavingsDigital Payments
Saudi Arabia54%11%14%43%

Challenges and Opportunities of Financial Inclusion in the Middle East and North Africa

Financial inclusion in the Middle East and North Africa faces several challenges in achieving widespread results. These include a large unbanked population, limited access to formal financial services, and regulatory barriers. However, amidst these challenges, there are opportunities for progress. Some countries within the region have made significant strides, showcasing the potential for improvement.

Recognizing the importance of financial inclusion, governments in the MENA region have launched initiatives to address these challenges. Efforts are underway to promote digital financial services, expand access to banking in urban and rural areas, and remove regulatory barriers that hinder financial inclusion.

Digital technologies have played a pivotal role in improving financial inclusion in the MENA region. The adoption of mobile banking and digital payment solutions has gained traction, especially in countries with high mobile penetration. This digital transformation is essential for reaching underserved populations and remote areas.

Public-private partnerships and collaborations between financial institutions and technology companies have been instrumental in expanding financial services. These collaborations leverage the strengths of both sectors to create innovative solutions that address the unique challenges of financial inclusion in the region.

Some countries in the MENA region have undertaken regulatory reforms to create a more conducive environment for financial inclusion. These reforms include easing restrictions on mobile banking and non-banking financial institutions and fostering an environment conducive to innovation.

Looking to the future, the MENA region is expected to continue its emphasis on digital solutions to enhance accessibility and affordability and accordingly financial inclusion in the Middle East and North Africa. Anticipated regulatory advancements may encourage innovation and competition in the financial sector, while increased private sector involvement, including fintech companies and mobile network operators, could drive financial inclusion initiatives.

Efforts to address specific challenges, such as financial literacy, will likely gain prominence as part of broader financial inclusion strategies. Governments and organizations are expected to place a greater emphasis on monitoring and evaluating the impact of financial inclusion initiatives, ensuring that they effectively reach and benefit the target populations.

Financial inclusion in MENA region (general trends):

1. United Arab Emirates (UAE):

The UAE boasts a highly developed financial sector with a high level of banking penetration. Efforts have been made to promote digital banking and enhance financial literacy, contributing to improved financial inclusion.

2. Saudi Arabia:

Saudi Arabia has made notable strides in financial inclusion, focusing on promoting electronic payments and digital banking. Increased usage of digital financial services reflects the success of these initiatives.

3. Egypt:

Despite having a large unbanked population, Egypt has undertaken financial inclusion efforts to expand access to banking services. Government-led initiatives promoting digital payments aim to reach underserved populations.

4. Jordan:

Jordan has witnessed progress in financial inclusion, particularly in rural areas. Efforts to increase access to banking services and the popularity of mobile banking contribute to improved financial inclusion.

5. Morocco:

Morocco has implemented initiatives to enhance financial inclusion, including the promotion of financial education and digital payments. These efforts are crucial for reaching diverse populations within the country.

Veengu Software Platform: driving financial inclusion in the MENA region

In the dynamic landscape of financial inclusion in the Middle East and North Africa (MENA), technology plays a pivotal role in bridging gaps and creating pathways for access to formal financial services. Veengu, a software platform, contributes significantly to this mission by supporting the deployment of new fintech services that cater to the unique needs of the region.

Veengu’s Contribution to Financial Inclusion:

Veengu facilitates the quick deployment of various fintech services, including digital wallets, mobile money, and electronic money institutions, as well as money remittance services. These services address critical aspects of financial inclusion, providing solutions that align with the diverse financial needs of individuals and communities in the MENA region.

Key Features of the Veengu Platform:

1. Customer Onboarding:

  • Streamlined processes for efficient onboarding.
  • KYC procedures with options for automated and manual profile approvals.
  • Seamless integration with third-party KYC/OCR services, ensuring a robust and secure onboarding experience.

2. Multi-Currency Account Management:

3. End-User Authentication:

  • Implementing robust authentication processes ensures the highest level of security for users.
  • Balancing user-friendly interfaces with stringent security measures for a seamless yet protected experience.

4. Payment and Transfer Functionalities:

  • ‘Close-loop’ payment and transfer functionalities catering to various transaction needs.
  • Encompassing person-to-person (P2P) transactions and QR-based transactions, providing flexibility and convenience.

5. Transfer Engine:

  • Facilitating incoming and outgoing transfers through seamless integration with banks, service providers, and payment gateways.
  • A reliable and efficient transfer engine enhances the speed and accessibility of financial transactions.

Veengu’s software platform emerges as a crucial player in the MENA region’s journey towards financial inclusion. By empowering fintech services with its comprehensive features, Veengu addresses specific challenges faced by the unbanked population. The platform’s ability to deploy digital wallets, mobile money services, and efficient remittance solutions aligns with the region’s evolving financial landscape.

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