Banks in the Egyptian market will start on 27 April the activities of the financial inclusion week, according to the instructions that banks received from Gamal Negm, the deputy governor of the Central Bank of Egypt (CBE).
27 April of every year coincides with the Arab day for financial inclusion, which was decided by the Council of Arab Central Banks Governors and the Arab monetary institutions.
On 19 March, the CBE held an extensive meeting with bank officials to discuss their suggestions to unify the activities to be carried out on that day.
The CBE said in a letter to banks last week that the meeting is part of the efforts to sustain the concept of financial inclusion, including the establishment of a central management that would seek to enhance financial inclusion in Egypt, which requires the participation of all banks, especially in data collection.
The activities directed by the CBE include the banks being present outside of their headquarters in remote areas, clubs, and universities, and presenting banking products that suit these segments of customers.
According to the CBE, banks must notify the management of banking affairs in the sector of supervision in the CBE of the places in which they will be present. Customers also should be able to open accounts without expenses or a minimum limit, under the slogan “an account for every citizen”, with data provided about the accounts opened during that period.
The CBE stressed that banks must adhere to the rules of initiating the activity of marketing banking products according to the letter issued on 19 April by the deputy governor. The letters also said banks must publish banners to include the slogans of the Arabic financial inclusion week and the CBE in all branches of the banks.
The CBE’s controls, which banks must abide by, include printing two introductory brochures about financial inclusion to be distributed to the public and to workers in the financial sector. They must also carry out press coverage of the event, announce the activities through each bank, and send introductory text messages to customers for two weeks before the Arab financial inclusion day.
The meaning of financial inclusion for citizens
The CBE has put two definitions for financial inclusion. The first is for citizens, and it means each individual or institution’s ability in society to have financial products suitable for their needs, including saving accounts, current accounts, insurance, financing, credit, and other products and financial services.
According to the CBE, these products must be offered through legal channels, such as banks, the Egypt Post, and civil organisations. Their prices should also be suitable, and they must be obtainable for consumers.
The CBE noted that it aims to allow all segments of society to have suitable opportunities to manage their finances and safely save to guarantee that citizens will not resort to unofficial means that are not subject to any form of supervision, which may expose citizens to fraud or excess fees.
The importance of financial inclusion
The CBE said that financial inclusion is a main reason for economic growth and a state’s financial independence, stressing that the state’s economic state will not improve as long as a large number of individuals and institutions are financially excluded from the official financial sector.
The bank added that financial inclusion guarantees the development of financial institutions to offer cheaper financial products that take the best interest of consumers into consideration.
“Financial inclusion is concerned with many segments of society, especially the marginalised ones or those who do not find products to suit their needs, such as the poor and those with limited incomes, especially women, in addition to owners of small and medium enterprises (SMEs), children, and young people,” the CBE said.
He stressed that financial inclusion ensures that all classes find suitable financial products for their needs to lead enhancing the individual’s living conditions.
How to achieve financial inclusion
The CBE said that for any country to reach financial inclusion, a study must be conducted to understand whether or not the available financial services are suitable, as well as the needs of consumers for different financial services.
The CBE noted that protecting consumers is important in that case to increase people’s trust in the financial and banking sector. It added that the matter is usually carried out by providing customers with honest and fair services for reasonable prices and all the needed information in all levels of dealing with financial service providers and providing advisory services when needed and looking into their complaints thoroughly.
The importance of developing new services and financial products that depend on savings, insurance, and payment means meeting the needs of all of society’s segments, the CBE stressed. The state must also pay attention to raising financial awareness, which can only happen through cooperation with government agencies in order to allow the target segments to benefit from the advantages, including SMEs, young people, and women.
The definition of financial inclusion for the financial sector
The CBE explained that financial inclusion’s definition for the financial sector means providing financial services to different segments of society, whether individuals or institutions, and enabling them to access these services with reasonable prices and high quality through the official channels of the official financial system.
The CBE noted that studies have proved a close relationship between financial inclusion and economic growth, noting that making financing available for SMEs helps economic growth.
Financial inclusion also achieves a public interest in regards to creating jobs, contributing to reducing poverty, improving living conditions, and providing financial services easily for reasonable expenses, such as making payments through mobile phones.
The role of central banks in enhancing financial inclusion
The CBE said that central banks play a major role in enhancing financial inclusion by setting rules and controls that aim to facilitate the procedures of banking transactions, approve the provision of simplified financial services, make the role of credit query more prominent, and stimulate the financial sector—especially banks to spread financial culture.
How to enhance financial inclusion
The CBE said that enhancing financial inclusion can be done through expanding the network of branches that offer financial services, paying attention to establishing small branches or offices to finance microenterprises, and increasing ATMs.
This can also be done through developing the payment and national settlement systems as well as working on developing and improving communication through expanding digital financial services using payments done through mobile phones.
The CBE stressed upon the importance of establishing comprehensive databases that include records of credit data history of individuals and SMEs, in addition to a database of transferred assets.
The role of financial protection of consumers in enhancing financial inclusion
Regarding the role of financial protection of consumers, the CBE said that it must be ensured that customers receive fair treatment and facilitated financial services for good prices. They must also be provided with accurate data during all the phases in which they deal with banks. They must also be aware of the advantages and risks of each banking product and stay up to date with any changes.
The CBE noted that advisory services can be provided to consumers based on their needs and the complexity of the products offered to them, as well as protecting all their financial information and a supervisory system. The correct ways to deal with their complaints must also be provided, and they must be honest, transparent, and based on the best international practices in this aspect.
It is important to educate customers about financial services, the financial protection provided to them, and their rights and responsibilities, the CBE stressed.
The role of banks in enhancing financial inclusion
The CBE said that banks must come up with new financial products that depend on saving and insurance, not just loaning and financing, with the provision of training for workers in the field.
The CBE stressed that there must be competition between banks by providing their customers with more options and by increasing competitiveness to maintain the quality of services.
The CBE also stressed the importance of reducing the fees imposed on customers and the unsuitable financial services offered to them in exchange for commissions. According to the CBE, it is also important to take into consideration the circumstances of customers without burdening them with loans, in addition to lessening the financing requirements in coordination with the CBE.
The role of financial education in enhancing financial inclusion
The CBE explained that the goal of financial inclusion is to create an integrated financial system that enhances and develops higher levels of awareness in all segments of society, as well as helps citizens make sound investment decisions with the lowest degree of risk possible.
What must be done to help the segments targeted by financial inclusion advance?
A patriotic strategy must be set in order to enhance the levels of financial education as well as measure the extent of its success, while making sure the government and private sectors take part in the process, the CBE said.
The CBE stressed the importance of paying the utmost attention to enhancing financial awareness and knowledge among owners and managers of SMEs, as well as take into account the lack of experience of new consumers regarding the usage of financial services in order to help them understand their rights and responsibilities.
The CBE also stressed the importance of creating consumer awareness programmes through public awareness campaigns that aim to enable customers make financial decisions that suit their needs.