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Financial inclusion of SMEs in the Middle East and Central Asia

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Financial inclusion of SMEs in the Middle East and Central Asia Empty Financial inclusion of SMEs in the Middle East and Central Asia

Post by claud39 on Fri Feb 22, 2019 6:44 am

http://www.uabonline.org/en/news/arabicnews/15751604158816051608160415751604160515751604161016/60778/2




Financial inclusion of SMEs in the Middle East and Central Asia


21/02/2019





Financial inclusion of SMEs in the Middle East and Central Asia Rc_155073294255_23







In a statement published on its website, the International Monetary Fund stressed the importance of policymakers from around the world recognizing the importance of financial inclusion. The financial inclusion of small and medium-sized enterprises is a key element in the challenges facing many countries in diversifying their economies and achieving economic growth. Middle East and Central Asia (MENA, Afghanistan, Pakistan, the Caucasus and Central Asia), but the two regions are lagging behind most other areas in terms of their accessibility Z funding. 
Improved financial coverage of SMEs can contribute to increased economic growth, job creation, enhanced fiscal and fiscal policy effectiveness, and may also contribute to financial stability. There are potentially significant potential benefits in the Middle East, North Africa, Afghanistan, Pakistan, the Caucasus and Central Asia: in some cases, the annual economic growth rate may increase by up to 1%, resulting in some 16 million new jobs in the two regions 2025. 
International experience indicates that there are many factors that can help increase bank credit available to SMEs, including:
Economic fundamentals and characteristics of the financial sector, such as macroeconomic stability, downsizing of the public sector (to avoid SME competition in access to credit), financial sector safety, a competitive banking system and more generally an open and competitive economy capable of giving impetus to SME investments And increased demand for credit. 
Institutional factors, such as governance systems, strong regulatory and financial regulatory capabilities, availability of credit information, favorable business environment, including modern security and insolvency frameworks, and legal systems that allow sufficient enforcement of property rights and contracts.
In addition, alternative channels can facilitate increased access by SMEs to finance, including through the supply of bank credit. Comparative country experiences indicate that capital markets can play such a role in various stages of SME development. Similarly, financial technology can work to reduce restrictions on bank credit (eg, credit information or credit competition) and open up new financing channels for small and medium enterprises. But capital markets and financial technology are still emerging in the Middle East, North Africa, Afghanistan, Pakistan, the Caucasus and Central Asia. 
However, a range of policies and reforms have already been implemented in various countries of the two regions to support the financial coverage of SMEs, including direct intervention to enhance bank credit, such as through state-owned banks dedicated to small and medium enterprises, credit collateral systems and interest rate regulations. In recent years, a growing number of countries are also developing national strategies to address key obstacles to achieving household and corporate financial inclusion.
One of the most important conclusions is that partial approaches, such as policies focused solely on the provision of direct public financing or guarantees, are unlikely to yield significant benefits. On the other hand, facilitating SMEs' access to finance in a viable, safe and sustainable manner requires the adoption of a comprehensive approach covering the basic building blocks mentioned above, from macroeconomic aspects to legal and regulatory aspects. This approach could also create a positive circle in which the benefits of SME transparency and the informal characterization of the economy would be offset, resulting in broader benefits for the economy and stronger demand for credit. Finally, specific policy and regulatory frameworks are needed to encourage the development of financing for SMEs through increased reliance on capital markets and modern technology.
claud39
claud39
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