Two decades ago Palestine’s financial sector emerged in spite of the on-going restrictions imposed by Israel on the mobility of people and goods, as well as access constraints to natural and financial resources. The Palestinians successfully established a financial sector composed of banks, a securities market, insurance companies, payments system, housing finance companies, microfinance institutions and financial leasing companies.
Now, the efforts of the Palestine Monetary Authority (PMA)—a member institution of the Alliance for Financial Inclusion since 2010—have positioned the country as a pioneer for financial inclusion in the Middle East and North Africa (MENA) region. Notably PMA stands out as the first member of the AFI Network from the area to announce a Maya Declaration Commitment to work toward unlocking the economic and social potential of the unbanked in Palestine by:
- Raising the level of financial literacy and awareness among Palestinians;
- Improving the financial products and services in order to facilitate access to finance;
- Promoting the principles of consumer protection.
PMA’s rising regional stature on financial inclusion was also recognized by the Arab Monetary Fund (AMF) earlier this year when the institution was chosen to develop guidelines for the MENA region on developing national financial inclusion strategies. AMF Governors are scheduled to officially endorse the guidelines at an upcoming meeting, enabling them to be utilized by the other 21 AMF member countries.
Since there is no national currency in the nation, PMA’s monetary powers and sovereignty are limited to the regulation and supervision of the banking sector in Palestine, along with payments system, microfinance institutions and money changers. The second regulatory authority in the Palestinian financial sector, the Palestine Capital Market Authority (PCMA), regulates and supervises the non-banking sector, including the securities market, financial leasing, mortgage finance companies, pension funds and insurance companies.
At the signing of the memorandum of understanding for the collaboration between PMA and PCMA on the establishment of the National Strategy for Financial Inclusion, PMA Governor Dr. Jihad Al-Wazir reinforced the need to raise awareness and improve financial education as well as reinforce consumer protection and facilitate access to funding resources and financial products and services: “The escalating demand for such services by consumers in Palestine has brought to light the pressing need to unite initiatives and action in order to avoid a redundancy of resources and efforts, and enable the expansion of financial inclusion across the largest possible segment of the targeted sectors.”
To address this demand the two institutions started developing the Palestinian National Strategy for Financial Inclusion in December 2013 with the support of AFI. This initiative has placed Palestine on a short list of two in the MENA region, along with Morocco, to have nationwide financial inclusion strategies. The strategy will aim to formulate a sound basis for the promotion and usage of various financial services and products by Palestinians at all social levels, including the marginalized and low-income segments. This will be done in a fair, transparent and affordable manner to best meet their needs.
Additionally, PMA received a Global Money Week Award in 2013 from Child & Youth Finance International for the organization of the best financial awareness program in the Middle East region. The institution also successfully launched the credit registry system, credit scoring system and the bounced check system. And its lead in the promotion of financial inclusion, particularly through the provision of technical assistance to fellow Arab Central Banks, has sparked a genuine interest in increasing inclusive finance in the MENA region, as institutions from Jordan, Morocco, Sudan, Syria, Tunisia, Yemen, and Egypt have followed the example of their Palestinian counterparts and recently joined the AFI Network, too.
ABOUT THE AUTHOR
Iskra Andreeva Aleksoska is the Grant Manager at the Alliance for Financial Inclusion.
Categories: Financial Inclusion Strategy