• Financial Inclusion
Jun 17, 2019

The need for evidence-based policies in support of sustainable development is well recognized but there often is a gap between the availability of data and country needs. Collecting data is the first step to reliable information which allows to describe the use and lack of use of appropriate financial services by citizens and businesses in any given economy. Arab countries are taking action to address this gap and collect the financial inclusion data that they need.

As part of the Financial Inclusion for the Arab Region Initiative (FIARI), the Arab Monetary Fund (AMF) with the support of GIZ has developed a framework for data collection and monitoring to support evidence-based policies for financial inclusion. Countries in the Arab region, characterized by the greatest potential in financial inclusion worldwide, can now build comprehensive data bases that take into account their specific needs while aligning the methodology with international best practices.

Not only does the data collection and monitoring framework make it possible for Arab countries to create data systems that fit their needs but, once implemented on a wider scale, its harmonized surveys and indicators also allow to draw benchmarks for comparisons across the region.

The surveys allow to better identify the use of financial services by citizens and businesses – mostly microenterprises as well as small and medium-sized enterprises (MSMEs). The evidence serves governments to develop better policies that enable financial services market to flourish and the population to use financial services to improve their socio-economic perspectives.

This demand-side research further provides the basis for assessing the impact of financial inclusion or exclusion within a society over time. The surveys are directed towards users and non-users of financial services, describing them by their socio-economic profiles and targeting a representation of the total population of a country. It serves as a tool to monitor the financial market by the accessibility (physical; digital; legal, etc.), usage (e.g. appropriateness), and quality (e.g. affordability) of financial services.

There are two sets of survey instruments: one for capturing data about financial inclusion (or exclusion) of individuals or households, another one for collecting data among micro- and small businesses.

The Banque du Liban was first in the region to pilot the demand-side data survey, adapting it to the country-specific context. For example, it is measuring the ownership of accounts with a financial institution primarily among adults defined as 18 years and older, the legal minimum age for obtaining an account as is the case in Arab countries. Egypt is soon to follow suit.

FIARI’s demand-side data collection and monitoring framework is the most comprehensive one that has been so far developed for the Arab region. The framework stands out in multiple ways:

  • Content: it contains a simple, yet comprehensive set of questions based on the best practices in international experience such as World Bank’s Findex and European Central Bank’s SAFE survey for firms.
  • Modularity: it has been designed with a set of flexibly structured modules: (1) a simple survey to assess the use or lack of use of financial services, (2) an in-depth demand-side survey about the use of financial services and constraints, and (3) additional mini-surveys to deep dive into specific aspects of financial inclusion (e.g. gender aspects or informality).
  • Harmonization: its demand-side surveys contain a common set of core questions for all countries, that allow for cross-county comparison.
  • Customization: it allows countries to flexibly add elective questions based on their national policy needs using the mini surveys on topics of interest.
  • Comparability: it is compatible with global financial inclusion surveys and provides data for the internationally accepted core financial inclusion indicators.
  • Methodology: it proposes uniform sampling and data collection procedures to ensure cross-country comparability.
  • Measures: it proposes a set of measures using the demand-side data. These indicators include the generally accepted G20 and AFI measures and additional specific ones to provide deeper guidance for policy making.

The Arab region’s financial inclusion initiative has brought to life a data framework that offers its member states the tools they require to collect the data they desire for informed financial inclusion policies that its citizens deserve.

It has been a starting point for Arab central bankers to collaborate closer on regional level and will be a starting point for them to do so with the multiplicity of stakeholders in their countries. Those will find this journey rewarding, who acknowledge that better data means better policy means better impact.

By Piotr Korynski, Expert Advisor for the Financial Inclusion for the Arab Region Initiative (FIARI)

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