This article was originally posted on the Arabic Microfinance Gateway, which is one of the four language sites of the CGAP Microfinance Gateway, “your global online resource on financial inclusion.” We are proud to have them as a Media Partner for the 18th Microcredit Summit. Follow the Arabic Microfinance Gateway on social media @ArabicMFG and #18MCSummit.
>> An interview with Nasser Al-Kahtani, director of the Arab Gulf Program for Development (AGFUND) by Miranda Beshara, Arabic Microfinance Gateway Editor
According to the 2014 Global Findex, only 14% of adults (above 15 years old) in the Middle East* have an account at a formal financial institution. This rate rises to 21% when including data from other Arab developing countries (excluding the Gulf Countries); yet it remains the lowest level of financial inclusion in the world compared to a world average of 62%. What is needed to advance financial inclusion in the MENA region from AGFUND’s perspective?
There are great developments in the field of financial inclusion. A decade ago, we were just talking about the concept. Now we are discussing the importance of financial inclusion and how to further promote it. This is a tremendous development, and we believe that the future is promising.
As a matter of fact, the technical committee of the Advisory Board of the AGFUND banks has recently convened, and the focus of the discussions was on financial inclusion strategies, including the regulatory environment that promotes microfinance and financial inclusion in each country where we have established a bank for the poor.
The experience in each country and how each bank is involved in developing such strategies is worth noting. We have great experiences in Yemen and Sudan for example. The AGFUND Advisory Board also highlighted the importance of incorporating savings as part of promoting the financial inclusion of the poor.
We believe that the general climate in the region is set for the success of financial inclusion; we just need more enabling legislation and greater flexibility from central banks.
AGFUND is a leading regional development organization with a growing network of microfinance banks (a total of 9 and 4 in the pipeline). What are the key components of the AGFUND model and what are the lessons learned to date?
The AGFUND approach to financial inclusion is through the founding of microfinance banks for the poor at an accelerated rate — around one bank per year. We also apply the simple principle of “a straight line is the shortest way to reach the goal.”
Since the beginning of Prince Talal’s (the founder of AGFUND) initiative for the establishment of specialized banks for lending to the poor, the goal was clear, even though we have faced obstacles at the onset and even some disappointments. We had a lot of skeptics telling us that our project is not realistic but we have had surprising successes, and there are important lessons learned to extract from our experience to date.
The fundamental difference is between the lending requirements from AGFUND banks and traditional ones. Moreover, AGFUND does not require prior experience in new staff. We work with them to become experts in the field and we rely on our network of banks to build the staff capacity. Most importantly, the AGFUND banks offer innovate products that meet the needs of the clients. We also help borrowers become entrepreneurs and switch from job seekers to job makers, thus creating employment and spurring economic development in their communities.
As the main sponsor and partner for the 18th Microcredit Summit to be held in Abu Dhabi, what are AGFUND’s expectations from the Summit?
We expect that the Summit will be a great success as witnessed by the partnerships formed for the preparatory work and the increasing participation from important personalities and decision makers. Furthermore, the Summit Agenda includes the most important current topics on effective ways to reach the most vulnerable and marginalized groups and what financial and non-financial services and strategies for financial inclusion will be needed in order to enhance inclusive, just, and sustainable economic growth that would improve the standards of living and provide a decent life for the poorest.
At the Summit, AGFUND will host the ceremony for its International Prize for Pioneering Human Development Projects honoring the 2015 innovative projects to alleviate unemployment among the youth. The theme and categories for the 2016 Awards will be also announced during the celebration. Also not to miss the Summit Trainings and the Research Symposium (organized for the first time) offered on the third and last day of the Summit. We expect the participation of more than 700 people this year, and we hope that the Summit will serve as the launching pad for the expansion of financial inclusion in the Arab region.
Please consult the 18th Microcredit Summit site for additional information and registration.
*The 2014 Global Findex regional indicators for the Middle East only include six countries: Egypt, Iraq, Lebanon, Jordan, Palestine, and Yemen.