Financial inclusion in Jordan has increased from 24.6% in 2014 to 33.1% in 2017. 13.2% are informally served and 38 % remains excluded. The signing of the Maya Declaration in 2016 and the National Financial Inclusion Strategy 2018-2020 aims to increase financial inclusion to 42% by 2020 and to cut gender financial inequality to 30%.
Realizing that inadequate access to and usage of financial services limits opportunities to start and grow a business, create jobs and gain access to inputs, equipment, skills and knowledge, the Central Bank of Jordan (CBJ) has been developing an enabling policy and regulatory environment that allows Financial Service Providers (PSPs, banks and Micro Finance Institutions) to offer products and services through digital channels to financially excluded populations. However, uptake has been slow with 461,355 registered wallets (approximately 20% are 30 days active) and a mere 935 agents, some of which are likely to be double or triple counted.
As part of the strategy to increase financial inclusion, on 5th February 2019 the CBJ mandated that all banks should not refuse any customer the ability to open a “basic bank account” – this means the ability to have zero balance and lighter KYC, and is similar in principle to the 2004 Mzanzi account opening and which was in alignment with South Africa’s Financial Sector Charter. Another example is the Axis ASAP account in India.
Previously, the average minimum balance (to open a deposit account) was approximately 300 Jordanian Dinars / $500 and which was too high for 90% of the population.
The zero-balance instruction is set in a context where MFIs, the more “natural home” for these clients, are not able to take deposits. These at times seemingly contradictory instructions / regulations / policies from the CBJ has stymied the MFI and DFS sectors. However, with the 5th February instruction, there is opportunity for PSPs, MFIs and banks to work in synergy to graduate clients, however noting, that in the South African Mzanzi example many accounts were dormant. This paper explores the opportunity to form strategic partnerships between the FSPs by first examining the current situation and then looking at a strategic partnership framework.