The Capital Markets Authority is preparing to organize the Arab Financial Inclusion Day before the end of Ramadan

Bethlehem – Ma’an – The Capital Markets Authority seeks to bring about financial inclusion in Palestine, which aims to increase the level of awareness and financial capabilities of the community in its various segments and to ensure that all individuals and society have access to financial services from their sources.

Financial inclusion is an effective strategic tool to develop infrastructure, encourage investment and achieve financial sustainability. On the one hand, it helps to meet the challenges of poverty and unemployment, and on the other hand, it promotes economic growth by paying attention to small, micro and medium-sized enterprises.

What do we mean by financial inclusion?

It represents an important link to create jobs and mitigate the impact of economic and financial fluctuations. It depends on several pillars, the most important of which are: the availability of financial services, and the use of financial services for citizens; and providing the appropriate quality of financial services.

Together, these elements lead to the promotion of social development, the improvement of living standards of citizens, the strengthening of trust in financial service providers, and the education of service consumers about the rights and duties they have to protect their rights.

Every individual or institution in the community should also find suitable financial products that meet his needs, such as: savings accounts, payment and transfer services, insurance, finance and credit, and financial leasing, provided it is provided by banks, insurance companies. , and licensed financial institutions.

The transition to financial digitization:

Within its strategic plan (2021-2025), the Capital Markets Authority works to strengthen the role of the insurance sector in financial inclusion, through the horizontal expansion of insurance services and products, and to provide an empowering environment for the development of innovative insurance products that meet the needs of different groups, especially smallholder farmers and entrepreneurs, such as micro-insurance products, index-based agricultural insurance, and others.

The government is also working to improve insurance awareness among the target groups on the one hand, and on the other hand we seek to develop a system to deal with complaints and protect the rights of consumers of insurance services and products.

The Government seeks, within its partnership in the “Innovative Guidelines for Financial Inclusion for Small and Medium-sized Enterprises in Palestine” Program implemented by GIZ on behalf of the German Ministry of Economic Cooperation and Development (BMZ), to establish Palestine’s presence in the world of financial technology.

But access to financial inclusion requires joint efforts to develop the necessary programs and plans and to provide an adequate infrastructure, especially since the countries that have succeeded in promoting the use of electronic payment instruments in financial transactions initially had the government sector.

Consequently, the application of financial inclusion should include all banking and non-banking economic sectors such as the insurance sector, but this sector should be developed according to the Capital Market Authority because the insurance portfolio is currently focused only on motor insurance. Consequently, there is no insurance that meets the needs of specific groups of society, apart from the poor insurance culture among members of society. According to current statistics, the insurance industry’s penetration rate is low in Palestine, where the insurance penetration rate did not exceed 2% by the end of 2021, while the per capita share of the insurance portfolio was only about 68.4 US dollars.

Challenges for implementing the financial inclusion strategy

Since the start of the implementation of the national strategy for financial inclusion in 2018, it has faced extraordinary problems and challenges, including: the occupation policy and the seizure of funds, then the Corona pandemic and its aftermath.

According to the government, the rates of application of financial inclusion will not be a noticeable increase, but rather stability. Under the current circumstances, it is an achievement in itself. The decline in the levels of total income of the community, weakens the purchasing power of citizens, and the erosion of investment opportunities before obtaining funds and investments are some of the challenges facing the promotion of financial inclusion. Confidence levels were also negatively affected during the Corona pandemic period and the subsequent work disruption and deferral of loan installments.

Reach the audiences with financial inclusion

There is a set of programs and activities aimed at reaching the target groups in the strategy, such as remote areas, smallholder farmers, and small and medium business owners, with the aim of promoting the use of financial technology and insurance technology, in addition to the development of desirable and innovative financial products. Dr. Bashar Abu Zaarour, Director-General of the General Administration for Innovation and Digital Finance at the Government, says:Providing the regulatory and supervisory framework for the operation of electronic platforms for the sale of non-bank financial services, as well as the development of micro-insurance products, and directing policies on the creation and provision of insurance products. The essence of the national strategy for financial inclusion is to expand the scope of the formal financial sector at the expense of the informal financial system, and this is also clearly reflected in the strategy of the Capital Markets Authority, and this comes through awareness and education. , urges service providers and advises them to develop financial products that meet the needs of the groups operating in the informal economy, obtain insurance and financial leasing services through electronic platforms and through electronic payment methods.

Dr adds. Abu Zaarour, “Part of the efforts made by the Palestinian Monetary Authority and electronic payment companies is to allow all segments of society to obtain electronic wallets without the need for a bank account. It contributes directly to the integration of segments and groups suffering from financial exclusion or transactions in the informal financial sector, to easily access and integrate into the formal financial sector.

Secure electronic transactions

Cyber ​​security and privacy are risks arising from the use of technological means, but the government – says dr. Abu Zaarour – The necessary precautionary measures are taken to reduce and control these risks, and any innovation before it is introduced in the financial market is subject to a trial period, within a set of controls and conditions, but it remains difficult to provide comprehensive guarantees regarding cyber security, because such type One of the risks is associated with the uses of electronic transactions.

However, the regulatory authorities, such as the Capital Markets Authority, affirm Abu Zaarour, “and to reduce cyber risks, the development and issuance of instructions for licensing electronic platforms for the sale of non-banking services provided by companies, almost completed. Licensed by the government, and according to these instructions, strict regulatory controls will be issued aimed at addressing the need for a set of procedures and controls by the operators of these platforms and service providers, aimed at reducing cyber and information security risks.

Fintech in Palestine

It is a way used to improve financial inclusion by accelerating access to financial services, in addition to developing financial products based on financial technologies such as crowdfunding funds, microfinance, index-based insurance, and others.

It also significantly contributes to increasing the efficiency of operational activities. In this context, the Capital Markets Authority worked in its five-year strategy for the years 2021-2025 to apply financial technology in the sectors it oversees, and the General Administration for Digital Finance and Innovation Services developed and developed the “Innovate” platform and introduced, which aims to provide guidance and supervisory guidance to innovators in the field of financial technology and in the early stages of the beginning of the emergence of the idea.

Abu Zaarour added, “The Capital Markets Authority seeks to use the uses of financial technology in the non-banking sectors, and these sectors are: the insurance sector, the security sector, the financial leasing sector, mortgage financing, and more recently the factoring. Sector, and the financial technology sector is a factor common to all these sectors.

The government is working to provide a breeding ground for this in addition to formulating policies and preparing its internal structure. At the beginning of the year 2021, the government worked to establish the General Administration for Digital Finance and Innovation Services, which is a department specialized in everything related to financial technology and innovative financial products.

Ibkkar platform and its objectives

Innovate is the first non-banking financial and regulatory advisory platform in the Arab region affiliated with the Palestinian Capital Markets Authority. Dr. say. Abu Zaarour: “It aims to improve and facilitate communication between the government and the owners of innovations and pioneering ideas in the field of financial technology and insurance, by answering the queries of innovators and their pioneering ideas through the financial services, improving financial inclusion, increasing access to non-bank financial services and products, contributing to the stability and integrity of the financial sector and protecting the rights of its clients.

Preparations for the Arab Financial Inclusion Day

The Arab Financial Inclusion Day, which falls on 28 April each year, is in line with the vision of the Arab Monetary Fund, which includes all Arab countries in its membership. The Fund decided to adopt this date a few years ago, during which member states work to implement activities and opportunities related to strengthening their financial inclusion.

In Palestine, says dr. Abu Zaarour, this year it will be implemented on 27/4/2022 before the end of the holy month of Ramadan, and a set of awareness messages and videos related to financial inclusion will be published through social media, in addition to the publication of ‘ a position paper in which the government discusses the key challenges facing the implementation of the national strategy of financial inclusion from launch to date, and what future steps will be taken in the light of a comprehensive assessment conducted during the current year will be implemented for this purpose. , and the reflection on developments arising from the Corona pandemic and its impact on improving financial inclusion in Palestine.

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