The Path to Financial Inclusion in the MENA Region: Insights from Mohamed Abdel Razek
In an exclusive op-ed, Mohamed Abdel Razek, Group Head of Technology, Transformation & Information at Mashreq, sheds light on the pressing issue of financial inclusion in the Middle East and North Africa (MENA) region. With the lowest proportion of financial account ownership globally, the MENA region faces significant challenges that require immediate attention and innovative solutions.
The Financial Inclusion Gap
According to the World Bank’s Global Findex Database, only 48 percent of adults in the MENA region, excluding high-income economies, possess a financial account. This figure is a staggering 23% lower than the global average for developing economies. The implications of this gap are profound, as financial inclusion is not merely a matter of convenience; it is a crucial driver of sustainable development. By empowering individuals and businesses to engage with the formal economy, financial inclusion can significantly reduce inequalities and foster economic growth.
Recognizing the urgency of this issue, governments across the MENA region are collaborating with key players in the financial ecosystem, including banks, non-banking financial institutions, and payment service providers (PSPs), to transform the landscape of financial services. Central to these efforts is the rise of financial technology (fintech), which is emerging as a vital enabler of financial inclusion.
Serving the Underserved
A significant portion of the population remains excluded from the formal financial system, including rural communities, smallholder farmers, informal workers, small and medium-sized enterprises (SMEs), women, youth, the elderly, and people with disabilities. The barriers to financial inclusion are multifaceted, often rooted in issues of remoteness, time, and cost associated with traditional financial services.
In contrast, digital financial services offer a solution that is not only cost-effective but also accessible in real-time and at the tap of a button. Fintech is revolutionizing banking experiences by providing simple, streamlined, and customer-centric solutions that reduce reliance on cash and enhance financial well-being. By addressing the unique needs of underserved populations, fintech is creating tailored solutions that resonate with local realities.
The Role of Innovative Technologies
Innovative technologies form the backbone of mobile banking applications, which are instrumental in helping unbanked and underbanked individuals overcome the challenges posed by traditional banking systems. These applications mitigate obstacles related to the remoteness of bank branches, high costs of financial services, and a general lack of trust in conventional financial institutions.
For instance, the e& Neo platform, launched in partnership between Mashreq and e& in Egypt, exemplifies how fintech can drive financial inclusion. This market-first solution allows customers to access a variety of banking services directly from their mobile phones, aligning with Egypt’s Financial Inclusion Strategy (2022-2025). By combining Mashreq’s technological expertise with e&’s extensive reach, the platform aims to meet the financial needs of Egypt’s large population effectively.
With mobile internet penetration in the MENA region currently at 51% and steadily increasing, there is a significant opportunity to leverage advanced fintech solutions to drive financial inclusion further.
Building Strong Foundations
To harness the full potential of fintech and accelerate its growth, it is essential to establish a robust and secure digital infrastructure that is interoperable across the region. Expanding access to information and communication technology (ICT) for underserved segments is equally critical. Additionally, creating strong regulatory frameworks that balance oversight with an enabling environment for innovation is imperative for fostering a thriving fintech ecosystem.
Financial education also plays a crucial role in overcoming barriers to adoption. Building financial literacy and raising awareness about the benefits of fintech can help demystify these technologies for the older, less tech-savvy segments of society. Addressing concerns related to security, privacy, and data protection is vital to ensuring that all demographics can confidently engage with fintech solutions.
A Collective Effort for True Inclusion
Achieving true financial inclusion in the MENA region requires a collective effort from all stakeholders within the ecosystem. By working together, governments, financial institutions, fintech companies, and civil society can create an inclusive financial landscape that leaves no one behind.
As Mohamed Abdel Razek emphasizes, harnessing the power of fintech to extend the benefits of the digital economy to all is not just a goal; it is a necessity for sustainable development in the region. By prioritizing financial inclusion, we can empower individuals, stimulate economic growth, and pave the way for a more equitable future.
In conclusion, the journey toward financial inclusion in the MENA region is fraught with challenges, but with innovative solutions and collaborative efforts, it is a journey that can lead to transformative change. The time to act is now, and the potential rewards are immense.