Middle East banks fail to offer access to finance

Middle East and North African banks must do more to offer ordinary people and smaller businesses in the region broad, reliable and equal access to financing, the World Bank said on Thursday.

"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-capitalised 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.

The region includes Gulf Arab states whose oil and gas reserves and small populations, make them some of the wealthiest countries in the world.