Financial Inclusion in Middle East and North Africa: Challenges and Opportunities

Despite a steady increase in their outreach over the past decade, the countries of the Mediterranean basin continue to lag behind their neighbors in terms of breadth, scale, and diversity of their financial sectors. Across the whole region, a huge gap remains between the demand and provision of financial services: almost 100 million adults are still outside the formal financial system, and those segments of the population that are excluded from financial markets are also the most economically vulnerable. The political context (major political upheavals in 2011), the mistrust of financial actors towards the "bottom of the pyramid", the restrictive regulations surrounding microfinance and the lack of awareness of the financial offer by potential beneficiaries explain this limited financial inclusion. Nevertheless, in the wake of the Arab Spring, many governments have become aware of the importance of improving access to financial services, and are updating their regulatory frameworks. The arrival of new actors (mobile operators, agent networks, payment institutions) also promotes financial progress and innovation in the basin, and may soon allow Mediterranean countries to include their still excluded populations in the formal financial system