Ideas & Updates

Interview with Maha Bahou, Central Bank of Jordan “Our strategy is national, not institutional”

Ms. Maha Bahou is the Executive Manager for Payment Systems & Domestic Banking Operations and Financial Inclusion Department at the Central Bank of Jordan (CBJ).

The Government of Jordan has just joined our Alliance and Ms. Bahou offered some insight and perspective into their path to achieve an inclusive digital payments ecosystem.

The country’s growing ecosystem includes the Government along with the Central Bank, the Ministry of Finance and other Ministries, the private sector and development organizations– all of which play a critical role in the advancement of digital payments to improve people’s lives.

In fact, the Central Bank of Jordan (CBJ) launched in 2013 a national payments switch, JoMoPay, to provide access to payment services for the unbanked and underbanked. JoMoPay, owned by CBJ, seeks to allow low-cost, purchases and bill payment transactions, placing Jordan at the forefront of financial inclusion efforts both in the region and globally. In 2014, the Central Bank also created E-FAWATEER, a bill presentment and payments system to help citizens pay their bills and taxes digitally. Currently, CBJ is undergoing the development of a National Financial Inclusion Strategy (NFIS) which is expected to launch later this year.

1) What are the main elements of the new Financial Inclusion strategy? What is the role that digital payments play in order to provide quality access to financial services for the unbanked and underbanked? How do you see an enabling environment and regulation in place supporting that strategy?

Digital payments is one of the five key pillars we have identified for our National Financial Inclusion Strategy (NFIS). The other four are financial education, consumer protection, small and medium-enterprises (SMEs) and microfinance services. In addition, data collection, measurement and analysis, as well as evidence-based financial inclusion policies and targets, are incorporated as cross-cutting pillars.

As a safe and efficient payment system is essential for the financial infrastructure in a market economy, the CBJ has put in place a modern payment system that also provides an opportunity for all stakeholders to benefit from reduced risks and costs. The system is also readily accessible to provide a full range of digital financial services and products designed to meet the needs of vulnerable people and provide convenient delivery channels, to better support women, youth and refugees.

CBJ is considered a pioneer in the inter-agencies collaboration, especially in drafting rules and regulations to simplify KYC (Know Your Clients) requirements for vulnerable people.

2) It’s encouraging to learn from countries like Jordan, including what steps they have taken to build an inclusive payment ecosystem and champion a national financial inclusion strategy. What is your advice for other governments in bringing in other actors from the government, private sector, and development organizations into this network? What are some challenges and ways you have overcome them?

In Jordan, when we say it is a national financial inclusion strategy; then we mean it. Our strategy is “national” not “institutional” which means that all related stakeholders can participate, including private, public, and NGOs. Robust collaboration and coordination are not the only key ingredients for building a strategy. A successful program also requires the full commitment and involvement by all stakeholders from the very beginning.

From our perspective, stakeholder analysis, a clear framework and roadmap are important. So too are milestones and key performance indicators, regular monitoring, and assessment. It is useful to ensure that there is no one entity that should own the strategy—rather there should be a leading role or coordinator, but the ownership is for all. It’s critical to have high-level support and commitment from government which must believe in the value of financial inclusion. Of paramount importance, is that the government understand the impact on people’s everyday life, which is why building awareness of the issues is also a vital component.

The main challenges are in bringing in the right people to represent all stakeholders, as well as the bureaucratic procedures from the public sector who may often resist new approaches.

3) Jordan has a 150% mobile penetration, although it also has one of the highest percentages of unbanked people, with more than 75% of adults lacking access to bank accounts. How can you work to overcome consumer awareness and trust to bring more people to adopt the use of mobile wallets? What will be some of the key lessons to achieve scale in the digitization of payments in Jordan? Do you think the growth of digital financial services will support women and open doors for small and women-owned business?

One of the main reasons behind the idea of hosting and operating JoMoPay at CBJ was to build trust and confidence between people and the government. Simultaneously, we launched a financial education and awareness program in the kingdom. We also created clear consumer protection regulations for wallet holders and other Digital Financial Services (DFS).

Government commitment and support, must go hand in hand with a wide range of usages and large network of agents. Enrollment requirements are among the most important factors for adoption and scale-up. However, interoperability within the service providers, bank accounts, and other payment schemes can help pave the road for large-scale adoption.

We are focusing on specific targets within our users, mainly designing special features to meet the needs of women, youth and refugees. We strongly believe that DFS will support women who might face hurdles with mobility, or in their ability manage the household’s financial matters, or run their own business. We are considering scaling-up JoMoPay to facilitate lending and micro insurance services.

4) Jordan has been identified as one of the most welcoming countries for refugees, as 30% of its population is comprised of refugees. One unique component of Jordan’s commitment to financial inclusion has been the link to humanitarian work and collaboration with development organizations like the UN Refugee Agency (UNHCR), the World Food Programme (WFP), and humanitarian NGOs to devise strategies and improve regulations to digitize aid payments for the influx of refugees. As a host country, what are some of the innovations linked to digital payments that you are working to deploy at the policy, regulatory, and implementation level?

For years Jordan has been a major recipient of refugees from Palestine, Syria, Iraq and other regions in the Middle East and Northern Africa. With this in mind, we have developed our regulatory framework and some intervention policies to facilitate access to finance, not only for refugees but also for non-nationals in several of our initiatives. We’re working to enhance the economic participation of refugees and to provide them with what the market can support to improve their livelihoods. We collaborate with stakeholders from international and national organizations on a number of initiatives that will enable the refugees to obtain affordable access to formal financial services, including digital remittances, micro-savings and potentially micro credit. Uniquely, the financial education program is delivered as part of the school curriculum so that children receive the education needed to prepare them for the future whether they stay in Jordan or return to their homeland.