Alternative Approaches to Financial Inclusion of SME (A-FIN)

Within the Palestinian Territories only a little more than every third adult uses formal financial services. While this is higher than the MENA average, a survey of 2016 revealed that not more than 15% of women participate in the financial sector. Remarkable achievements on the side of the financial infrastructure, financial education, consumer protection and regarding microfinance sector have been made. Nevertheless, access to and use of finance for small and medium-sized enterprises (SME) and start-ups as well as lack of trust in financial services remains a challenge. It is estimated that there is demand for SME finance of between USD 630 and 900 million which cannot be met every year. Policy makers are therefore focusing on financial inclusion of SME, deepened financial awareness leading to trust and responsible financial decisions as well as on the promotion of alternative and technology-based financial products and business models (“Fintech”).

Acknowledging the enormous potential these “Fintechs” offer for improving the financial inclusion of broad sections of the population, the government, regulators and private stakeholders agreed upon a national strategy for financial inclusion in 2018: the emphasis of this strategy is on using technology and on educating and protecting the population. In addition and as a result of the 2020 corona virus pandemic, the need for innovative technological business models that replace cash and mobility has become particularly urgent. This, and the provision of further services than loans namely “alternative financial products”, are on the agenda of the regulators for the coming period.

The project “Alternative Approaches to Financial Inclusion of SME (A-FIN)” builds on the already established relationship with the Palestinian regulatory authorities – the Palestine Monetary Authority (PMA) and the Palestinian Capital Market Authority (PCMA) – through GIZ support since 2012 and under the regional project “Financial Inclusion in the MENA Region (FIMENA)”. The project aims to strengthen the framework conditions for innovative financial services for SME by supporting the PMA and the PCMA in their role as Fintech promoters and enabling regulators as well as in their efforts to create trust in alternative and digital financing options.

Further information: A-FIN Factsheet, A-FIN project description and Blogpost “Making Fintech Work for Palestinian Enterprises”.

Partners in the Palestinian Territories