Building inclusive financial systems in the Middle East and Africa

Financial inclusion is one of the key development priorities in the Middle East and Africa. Over the past decade, we have witnessed significant progress in this space, including the introduction of mobile trading platforms, educational campaigns and leveraging technological developments to address the needs of underserved segments.

Digitalization is at the forefront of these efforts. According to a report issued by the Official Monetary and Financial Institutions Forum (OMFIF) in partnership with Mastercard Policy Center for the Digital Economy, 89% of the respondents saw ‘digitally led’ as the principle most aligned with their financial inclusion strategies. The study surveyed representatives of international organizations, public sector institutions and summarizes the discussions held at two events hosted by OMFIF and Mastercard. The first was a virtual roundtable, ‘Fostering financial inclusion through payments in the Middle East and Africa’. The second was a seminar held in Marrakech at the sidelines of the International Monetary Fund and World Bank annual meetings on ‘Payment innovation and secure digital infrastructure in the Middle East and Africa’.

Effective regulation, chosen by 78% of participants, stands as the second most aligned principle with ongoing financial inclusion initiatives in the region. Regulations play a key role in combatting cybersecurity threats and enhancing consumer protection. However, to create an ecosystem that is enabling as well as secure, policy-makers must strike a balance between mitigating risks and promoting innovation. To ensure the economic sustainability of the payments system, 89% of the respondents currently undertake initiatives to encourage competition for market entry, technological advancements and innovative business models to reduce the cost of financial services.

The report has identified stakeholder collaboration as the final most important building block of successful financial inclusion initiatives. An interoperable financial system is critical in this context. While new technologies can provide enhanced access and security, it is crucial to facilitate their seamless integration into existing financial systems through collaborative partnerships between the public and private sector.

The study also highlights the gaps and challenges that remain in the path to a more inclusive financial system, such as low levels of financial and digital literacy as well as lack of trust. Less than 50% of the participants said they were satisfied with the levels of financial inclusion in their jurisdiction. To change the status quo, there should be an emphasis on the benefits and convenience of moving away from cash-based transactions, including the integration of savings products and the disbursement of pension and other social security payments through digital payments infrastructure.

The ultimate goal is to make financial services accessible to all while ensuring stability, trust and sustainability in these rapidly evolving ecosystems.  

Click here to view the full report.