Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society, in contrast to financial exclusion where those services are not available or affordable. The term “financial inclusion” has gained importance since the early 2000s, a result of findings of financial exclusion and its direct correlation to unemployment and poverty. 

The United Nations defines the goals of financial inclusion as follows: access at a reasonable cost for all households to a full range of financial services, including savings or deposit services, payment and transfer services, credit and insurance; sound and safe institutions governed by clear regulation and industry performance standards; financial and institutional sustainability, to ensure continuity and certainty of investment; and competition to ensure choice and affordability for clients.

An estimated 2.5 billion working-age adults globally have no access to formal financial services delivered by regulated financial institutions. For example, 57 percent of adult citizens in the Middle East and North Africa or up to 180 million Arab citizens do not have access to formal financial services or do not have bank accounts or credit accounts. In Jordan, about 74 percent of citizens do not have bank accounts. 

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Some studies and experiences illustrate a strong relationship between financial inclusion and achieving sustainable development growth. Financial inclusion helps in poverty reduction; whilst achieving socio-economic development and financial stability. Financial services are strongly linked to the economic performance and assume a substantial role in the market efficiency for all sectors including individuals. Financial services contribute to Gross Domestic Product (GDP) and the creation of jobs. Considering the growing volume of financial services, financial exclusion becomes a real hurdle for capturing income generation opportunities and achieving economic welfare, especially for the unfortunate, women, youth, and migrants.

Greater access to financial services promotes social stability, stimulates economic growth and employment, and stabilizes the financial system. Yet, only a very limited number of people and businesses in Jordan have access to financial services. Microfinance is a means to advance financial inclusion. The sector, however, needs concerted public and private efforts under a common strategy, laws and regulations, and an efficient financial infrastructure to ensure its stability and outreach to a wider segment of the population.

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As a result, the Central Bank of Jordan (CBJ) announced the Kingdom’s 2018-2020 national strategy for financial inclusion. The plan entails highlighting digital payment services, microfinance, the financing of small and medium-sized enterprises, financial education, and consumer protection as the five key pillars in expanding the financial access of people and businesses in the Kingdom. The CBJ is committed to the national goal of expanding the access to finance from currently 24.6% of the adult population to 36.60% by 2020 while reducing the gender gap from 53% to 35%.

The SMEs and micro enterprises possess a high degree of interest for the Central Bank and Jordanian banks. The Fund for Governorates’ Development was founded with a capital of JD150 million, about USD440 million were collected for the SMEs sector with reasonable interest rates. In the same domain, the Jordanian Company for Loan Guarantee was restructured, and a private company was established to finance entrepreneur projects in addition to the foundation of funds to support certain sectors and activities. 

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The Arab banks need to assume more comprehensive role to serve the Arab communities whether directly within their social responsibility programs or via enhancing innovative financial services, in addition to providing financial tools and services that meet the needs of the poor, women, and excluded groups.