Dear regulators and participants in the Financial Inclusion in the Arab Region Initiative, FIARI

It is with great pleasure that AFI can take this opportunity to support the first FIARI workshop on National Financial Inclusion Strategies held and championed by our three partners Arab Monetary Fund, GIZ, and World Bank. I am therefore pleased to open this workshop.

The AFI network is a member-owned and member driven organisation of central banks and financial regulators from 89 developing and emerging economies countries. Supporting the Arab region in meeting the targets set out by the Sustainable Development Goals (SDGs) is one of the key priorities for the Alliance for Financial Inclusion and the partners in FIARI.

This is a challenging year for all of us. Recent evidence suggests that the health crisis, translated in many placesinto an economic crisis, will lead to a widening of existing inequalities between geographies, genders, ethnicities and generations. Social distancing is a limited option for the poor whose jobs often depend on face-to-face interactions. As a result, the poor in developing and emerging economies, who unlike populations in the developed world have no or only rudimentary safety nets, will be disproportionately hit by the crisis. Women and less-skilled workers will be most likely the most affected.

According to the IMF, the number of extremely poor people in 2020 will significantly increase for the first time in 20 years, while income inequalities will fall back to the levels of 2008 which implies that the emerging world’s economic advances can easily be eaten up by this crisis. The potential social and economic impact of the crisis can be equally huge for the Arab Region. For example, a recent study released by AMF shows five percent increase of unemployment in 2020, along with the loss of 6 to 7 million jobs. The 2021 growth forecast of 3.5 percent might not be enough for the Arab Region to recover job losses.

Young people aged 10 to 24 years account for nearly half of the total population in the Arab countries, according to 2019 UNICEF report. According to the World Bank, in 2019, the youth unemployment stand at the highest rate in the world with 27,5 percent in the Middle-East and North Africa, excluding high income countries, and youth financial inclusion is the lowest rate in the world.

Financial inclusion gender gap in the Arab region, remains high at 22 percent despite progress made in women financial inclusion, from 14 percent in 2011 to 26 percent in 2017, according to the 2017 Global Findex. Middle East and North Africa region has the second highest global gender gap of 40% in the world, right after Sub-Saharan Africa, according to the 2018 World Economic Forum Global Gender Gap Report.

These figures, which reflect just two main development issues in the region, have further increased with the pandemic.

However, as we have learned from previous crises such as the 2008 Financial Crisis, that there is an opportunity in every crisis. While the COVID-19 repercussions threaten to dismantle many recent development milestones, financial inclusion is one of the few solutions available to immediately address the issues facing hard-hit economies across the AFI network. We believe that without the strides AFI members made over the past decade in advancing financial inclusion, combined with their proactive policy response to the crisis of the previous months, the situation could have been far worse.

Initiatives in digital finance, mobile money, agent banking, electronic know your client processes and financing small and medium-sized enterprises played a critical part in mitigating the effects of the crisis. However, it is important to note that financial inclusion is in everyone’s interest, not just the poor. This has been widely accepted over the past decade, which is why developing and developed countries realized that financial inclusion challenges and solutions are topics of global convergence. The challenge of financial inclusion today  is not only to bring unbanked people into the formal financial system, the challenge is also to keep people within that system. Financial education is key in serving this purpose. The vision of leaving no one behind is for everyone.

Developing a NFIS is an opportunity to implement a number of financial inclusion policy solutions, such as digitalization, gender inclusive finance, financial consumer protection and financial education. These  have a high potential to help economies to mitigate the impact of the pandemic, move forward towards economic recovery, and ultimately support the underserved and marginalized. We are therefore presented with a chance to design and implement strategies for inclusion of youth, women, and MSME’s, among others. This ambition is closely aligned with the AFI network’s commitment endorsed at our Annual Meeting in Kigali in 2019 – the Kigali Statement – to leave no one behind.

For over a decade, AFI has been supporting the development and implementation of NFIS and working closely with members on building a unique practical knowledge that will be shared with you during this workshop. In 2019, our members endorsed the AFI Policy Model for National Financial Inclusion Strategy, an important knowledge product which guides members to develop, coordinate and monitor a NFIS. AFI NFIS Policy Model is a public good available from AFI website and we are pleased to share it with you.

Colleagues allow me to emphasize, a National financial inclusion strategy is an important tool to ensure that there is a defined way of enhancing financial inclusion and that the progress is measured. It also ensures that the effort is comprehensive, effective, and inclusive by including all relevant stakeholders. Having a documented and yet dynamic NFIS is a key step in ensuring that financial inclusion targets are achieved.

In the AFI network 41 countries already have a documented NFIS and 15 are in some stage of NFIS development. Of these, six AFI member institutions are part of the AMF and all six have developed or are developing and implementing NFIS. Our members have made 82 Maya Declaration Commitments on some aspect of development, implementation and revision with additional initiatives of NFIS. Given the critical importance of having an NFIS and continuous review and revision of it in order to remain effective, it is only imperative that AFI continues to build capacities on the topic.

We are pleased that AFI members from the Arab region are here to share their experiences and knowledge and engage in peer-to peer learning.  As a global policy leadership alliance of regulators, we continue to provide tailor made services which meet members’ needs and to provide solutions that help them reach their financial inclusion goals.

I trust that you will find the presentations and discussions today informative, and I wish you a productive workshop, and once again I would like to thank our partners in FIARI, the AMF, GIZ and the World Bank for joining this important journey.