Building on connectivity to transform financial inclusion in Arab countries

A new Global Findex Note, “Digital Connectivity and Financial Inclusion in Arab Countries”, reviews the region’s progress on financial inclusion, assesses financial vulnerabilities, and identifies pathways to build greater economic resilience — drawing on the latest evidence from the Global Findex 2025.

High connectivity rates are not yet enabling high financial inclusion in Arab countries

Across the low- and middle-income Arab economies in Africa and Asia, 90 percent of adults own a phone, higher than the world’s low- and middle-income average of 84 percent. In countries like Iraq, Jordan, and Lebanon, high rates of smartphone ownership are driving higher than average internet use. Social media is popular, with nearly 60 percent of adults across the region engaging on these platforms. People also read news online, access learning materials, and increasingly use government services. The highest share of adults accessing online information to learn, train, or educate is in Lebanon and the West Bank.

When it comes to financial account ownership, however, the situation looks dramatically different. Only 40 percent of adults in low- and middle-income Arab countries have a bank or fintech account (such as mobile money). While the account ownership rate has grown by 16 percentage points since 2014, progress has been slower than in other low- and middle-income countries, where fintech innovations have accelerated account adoption to reach an average of 75 percent of all adults.

Equity in account ownership is also low in many Arab countries. Women are 17 percentage points less likely than men on average to have their own financial account, and adults living in the lowest 40% of households by income are 13 percentage points less likely to have one than those living in the wealthiest 60% of households. Rural adults are also less likely than urbanites to have accounts by 8 percentage points.

The gaps can be even wider when it comes to using accounts, particularly for saving and borrowing. While 31% of adults save, only 13% do so through an account. Instead, most rely on informal methods like savings clubs or trusted individuals. Borrowing shows a similar pattern: 55% of adults borrow, but only 8% use formal lenders, with family and friends as the main source of credit. As with account ownership, account usage shows significant gaps for women and poor adults.

And though digital payment usage is growing, they remain underused. In 2024, nearly 30% of adults made or received a digital payment, twice the rate from a decade ago. Countries with strong payment infrastructure and supportive policies show how adoption can accelerate. Government-to-person transfers have been especially effective, with most recipients receiving funds directly into accounts. Merchant payments still remain rare, though, with only 8% of adults using them.

Financial health remains a challenge in Arab countries

Despite the limited rates of financial inclusion among adults in low- and middle-income Arab countries, when asked if they could access emergency funds equivalent to 5 percent of per capita income, 54 percent of adults said yes. Reliance on family or friends, while still the least reliable source globally, works better in Arab countries, where over half who would turn to relatives say the money would not be hard to get.

Yet at the same time, less than half of adults in developing Arab countries could manage their expenses for more than a month if they lost their main source of income. This highlights the importance of formal financial products, including saving, borrowing, and insurance, to help build resilience.

Affording health-related expenses is also a challenge. About one in five adults in Arab countries borrow for medical purposes, relying almost exclusively on informal sources of credit. This aligns with the finding that more than a quarter of adults in Arab countries identify medical expenses as their biggest financial worry, highlighting the link between health shocks and financial vulnerability.

Affordability is the primary barrier to digital and financial inclusion

The main barrier to both digital and financial inclusion in Arab countries is cost. Among adults in low- and middle-income countries who either have no phone or only a basic model, half report that they cannot afford to buy a smartphone. Similarly, the largest share of adults without accounts say they don’t have enough money to make an account worthwhile, or that accounts are too expensive.

There’s also a confidence factor. Between 40% and 65% of adults without accounts say they would need help using one if they opened it. In Lebanon and Morocco, 20% of adults without accounts had one in the past, suggesting that negative or unhelpful experiences with banks or fintechs may  have discouraged continued use.

These data suggest that the foundations for financial inclusion are solid. The phones are in hand, the internet is accessible, and people are already comfortable with digital activities. The challenge now is translating digital engagement into financial inclusion that meaningfully improves people’s economic resilience and opportunities—and doing it equitably, so that women, poorer adults, and rural residents can engage in the formal economy.

Source : World Bank