Several Arab countries, such as Egypt, Jordan, and the UAE, have started to implement comprehensive strategies to increase financial inclusion, including for SMEs, the Managing Director of the International Monetary Fund (IMF), Christine Lagarde, said, affirming the importance of supporting member countries on SME financial inclusion.
“Based on our recent work, we plan to provide advice that is more granular and tailored to each specific country needs and reflects international experience. We will also coordinate our support with other regional and international organisations,” she mentioned on Sunday in her speech at the World Government Summit in Dubai.
IMF’s new paper on SME financial inclusion will be launched on Tuesday in Cairo, Lagarde noted, adding, “We hope that this will mark the start of a deeper engagement with our members in this important policy area.”
SMEs represent 96% of registered companies in Arab countries, she added, elaborating, “SMEs’ companies employ half of the labour force, yet their access to finance is the lowest in the world. SMEs in the region is only 7% of total bank lending.”
Closing SMEs financial inclusion gap would yield multiple economic benefits, such as boosting annual economic growth by up to 1%, potentially leading to about 15m new jobs by 2025 in the Arab region.
Benefits also includes increasing the effectiveness of fiscal and monetary policies, by improving domestic revenue mobilisation and monetary policy transmission, Lagarde stated.
Supporting and enabling SMEs is a key component of any inclusive growth agenda, she added, affirming that during the 2018 Marrakesh Conference, policymakers across the region made it clear that making growth more inclusive is a top priority.
Arab countries have made progress, but there is still much to be done to increase growth and job opportunities for all, she said.
Increasing financial access came up as a key aspect of SME development and the inclusive growth agenda, Lagarde noted, adding that over the past year, IMF has looked closely into international experience and policies to increase SME financial inclusion. We are now proposing to operationalise this agenda to better serve our members.