Ladies and Gentlemen
When it comes to our Arab Region economies, we could say that despite the improvement in growth rate compared to the previous year, as it is indicated in the AMF estimates with a growth of 2.6% in 2014, this rate remains still less than we aspire to and it is also highly inhomogeneous among the Arab countries. Indeed, while this rate reveals a better economic performance in Arab oil exporting countries as a result of the improvement in oil production and growing private investments, it reflects the importance of the challenges faced by oil importing countries. In fact, despite the resumption of the investment activity in some of these countries, but the outlook for growth is still below potential, especially in light of the relatively low level of preventive margins provided by the public finance and their external accounts.
This is in addition to the high unemployment rates in the region specifically amongst youth, which reaches to the average of 17.4% in the Arab countries. It is the highest rate when compared to other regions, confirming, as known, that our region’s needs are estimated in around 28 million-job opportunity in the coming 7 years.
Ladies and Gentlemen,
The need to improve the infrastructure of the financial sector in our region is evident. It is the key to an effective risk management framework and a sustainable financial inclusion strategy. This need is underscored further when accompanied by the increase witnessed in cash flows and loans granted to consumers and SMEs. The effectiveness of the financial sector infrastructure emerges as well from the prudential mechanisms embedded in its systems against risks and from the required catalysts of banks' lending activities needed to boost the economy.
Credit reporting and credit information sharing systems are highly valued, besides the other elements of the financial sector infrastructure like the payment and settlement systems and the secured lending systems. Their value has been highly confirmed especially in the aftermath of the recent Global Financial crisis, where the reluctance of some financial institutions to lend due to the lack of sufficient information about the customers has been noticed, and the amendments of international standards specifically Basel III and the new liquidity requirements, have generated important implications; hence revealing the significance of credit information in risk and assets quality assessment.
It’s worth mentioning here the valuable contribution of credit reporting systems in providing detailed data needed by financial institutions in order to better manage the credit risks and identify the risk profile of each client accurately, which would facilitate decreasing non-performing loans and improving credit terms to the which is an advantage to committed clients.
Realizing an advanced credit industry does not solely depend on efficient credit reporting systems. In fact, there is also a strong need to review and develop the rules and systems of the financial institutions in order to facilitate and expedite the credit approval decision-process, besides launching added-value services that meet the demands of all categories of clients. However, while improving credit information systems, the focus should also go to strengthening the importance of protecting personal data and securing the systems against any violation that would affect the clients, and the overall trust in these systems.
Ladies and Gentlemen,
Holding this conference here in the Arab region and in the amazing city of Dubai adds to its significance, taking into consideration the enormous efforts that the Arab authorities have exerted during the past period, to implementing sound financial sector infrastructures, with special attention paid to developing credit information systems.
Most Arab countries have shown great interest in developing their credit reporting systems either through developing credit risk registries managed by central banks, or licensing specialized credit bureaus to provide such services. This has helped improving the depth of credit information indicator measured by the Business Climate Report of the World Bank. The 2014 Report shows that half of the Arab countries have scored between 4 and the highest score of 6. This remains a noticeable improvement compared to the past years.
However, additional efforts are also needed to evaluate the efficiency of the current credit reporting systems in the Arab countries and the extent of benefit the clients are getting out of those systems.
Needless to say, the achievements vary from one Arab country to another; some have went extra miles already by having systems that provide scoring and rating services targeting SMEs above all, in addition to receiving information from all data suppliers, while in other countries, credit risk registries are still lacking the necessary reform to cope with the advancements of ICT.
Ladies and Gentlemen,
The Arab Monetary Fund is always keen on developing its programs and policies to be in harmony with the development needs of the financial sector and financial markets in the Arab countries. Relevantly, the AMF, in cooperation with the World Bank and the International Finance Corporation, has launched a series of technical assistance initiatives. The most important ones are the "Arab Credit Reporting Initiative" and the "Arab Secured Lending Initiative", designed to support financial stability and enhancing access to finance and financial services in the Arab countries.
In the context of those initiatives, a comprehensive evaluation of the aforementioned systems is being conducted in order to identify the needs for reform in each country, as well as raising the level of local and regional awareness on the importance of these systems, by conducting local workshops and regional conferences. As of today, the AMF and IFC have visited 13 Arab countries during the period between 2009 and 2013 and provided the authorities with relevant recommendations.
I would like hereby to extend my deepest appreciation and gratitude to the country where the AMF is headquartered, the UAE, for all the facilities it provides and which has enabled the AMF to realize its objectives.
Ladies and Gentlemen,
Exchange of experiences and expertise is one of the major elements of development. Therefore, I hope that this conference leads to fostering collaboration opportunities amongst credit bureaus as well as building cooperation bridges between them and the other relevant organizations and companies concerned with credit reporting systems.
I also wish that this conference would deepen our knowledge of the several aspects and issues that pertain to the credit reporting industry, benefiting from the high-profile experts who are present today.
In conclusion, I would like to thank the organizers once again for the excellent organization, as well as all of you for attending, wishing you all the success.
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