“Financial systems across the Middle East and North Africa (MENA) proved resilient during the global financial crisis and subsequent political shocks,” the report, titled “Financial Access and Stability: A Roadmap for the Middle East and North Africa,” concludes.
But the report, compiled in consultation with member countries and Arab banks, says financial institutions fail to provide access to finance, contributing to relatively weak growth performance and inability to generate jobs.
“Large segments of the population and the enterprise sector — especially small and medium enterprises — remain deprived from finance due to the limited access to bank lending and other financial services, as well as the lack of suitable alternatives to bank finance,” it says.
It says MENA financial sectors are dominated by large, well-capitalized banks, but they are undiversified and uncompetitive, lacking in many cases insurance companies, mutual and pension funds, leasing, and factoring.
“Equity markets are large in many countries, but mainly dominated by financial institutions and infrastructure companies. Private fixed-income instruments and markets remain negligible,” it says.
Access to loans for housing has been problematic in some Arab states.
“We see large numbers of university graduates who don’t have access to opportunities and jobs; we see young couples who can’t get married because the housing finance market is almost non-existent,” Loic Chiquier, director of finance at the World Bank, said in a statement.
“All this just increases the sense of economic exclusion and political discontent,” he said.
Egypt and Tunisia have been in talks with international financial institutions as well as Western and Gulf Arab governments on financing to help them get through post-uprising economic troubles.
Arab central bank governors meeting in Qatar on Thursday said they would tell upcoming World Bank and IMF meetings that countries hit by unrest need more support.
Arab central bank governors “expressed their fears from an expected drop in growth rates this year,” they said after meeting in Doha.
The central bank governors also said they would offer support to each other.
“The governors expressed their support to all central banks in Arab countries that are witnessing political developments and transformations,” they said.
Arab finance ministers meeting in Abu Dhabi last week said their economies could withstand political upheaval and a global slowdown thanks to ample cash reserves and mutual support.
