Why Majority of Mena Population Is Unbanked
Did you know that the Middle East is the most financially excluded region in the world? The 4% of unbanked adults in the Middle East still don’t have bank accounts just because they don’t think that they need one.
If we compare the Middle East to Africa or South Asia, it is more likely for a person in Africa to have a bank account than in the Middle East- Iraq, Jordan, Lebanon, Egypt, Yemen and the West Bank and Gaza.
According to a survey made by the World Bank in 2001 and 2014, the Middle East preserves the lowest account of ownership rate of the six developing regions. When the percentage of the unbanked population was expected to fall, the region was still stuck with that distinction despite having the greatest room for improvement.
On the other hand, globally the 62% of adults have a bank account or at a credit union, cooperative or even at a micro financial institution, however; only 14% of adults have an account in the Middle East. When you dig into numbers, about 70%-80% of their population is not included in the financial sector. This basically means that they are not able to borrow money or even save money digitally but in that region, people tend to borrow money informally from family and friends.
So what causes this? One of the biggest reasons is the poverty. The 77% of the unbanked in the Middle East are considered as poor. The other 23% of the people think that having a bank account is very expensive.
Even though this information seems very pessimistic, the Fintech start-ups have become the daylight in the financial sector. There are over 12 start-ups in 12 Arab countries and 3-4 based in the United Arab Emirates, Lebanon, Jordan or Egypt. The fintech start-ups provide a variety of services to corporate, governmental and private partners. Moreover, the MENA region have started a model called ‘’pre-bank financing’’ in Morocco and Lebanon; aiming to aid those early stage innovative start-ups which aim to support the job creation in the region and to improve their economy. A new study has also shown the most mature sector, payments include the start-ups- offering bill payments, online as well as mobile payment solutions and of course wallets. In the following years, it is expected for the unbanked population to decrease immensely due to lower costs, accessibility and the ease of usage.