Article Type : Research Article
Authors : Abu Karsh SM
Keywords : Microfinance; Microfinancing; Middle east; Banking institutions; Microfinance industry; low-income; Financial solutions
The present study explores the rise of
microfinance in the Middle East. The study investigates more regarding
microfinance institutions, economic development, and direct and indirect
benefits linked with microfinance institutions. The research examines how
states use microfinances are to reduce poverty and support solutions that
improve reconciliations. Banking institutions often treat low-income
individuals and SMEs harshly. They
restrict financial help, as they fear losing money loaned due to lack reliable
source of income to repay the loan debt or collateral. Consequently,
microfinancing institutions exploits this by offering these individuals and
SMES microcredit and microloans solutions. The present study employed secondary
sources for data collection aligned with the research topic and specific
objectives. The selection criteria for the secondary sources include
qualitative research papers investigating if Microfinancing exists and the
potential opportunities for Middle Eastern countries where access to finance
and capital markets are limited. The findings suggest that Microfinancing is
present in the Middle East, but significant barriers exist restricting the
industry's growth. Thus, the findings underline the need to remove these
barriers for the microfinancing sector to reach the same levels as other global
parts, particularly developed economies. Microfinancing institutions across the
Middle East are predominantly not-for-profit due to their lack of incentives to
transform into for-profit organisations.
Global banking institutions have always put profits
first before people. They consistently refuse to finance individuals and
business with limited access to financial resources. Banking institutions fear
profit erosion from loan defaults rather than attempting to find workable
finance solutions low-income persons and SMEs. Therefore, these individuals are
forced to seek financial resources from family, friends, or shylocks, who
extort them with high interest rates, making it impossible for them to afford
the loans. Microfinancing is an attractive solution for individuals with
limited access to financial support. The microfinance sector offers people the
opportunity to self-sustain with income-producing activities by giving access
to borrowing, savings, and insurance activities [1]. By offering these people
the opportunity to gain self-sufficiency, they can obtain basic human needs,
living standards, and personal improvement through increased enthusiasm,
motivation, and passion. Empirical studies focusing on the rise of microfinance
in the Middle East are limited, with huge literature gaps. The majority of
existing studies on the same fail to critically analyse Microfinancing in the
Middle East. For example, there is a research gap on the main reasons the poor
cannot develop economically, including limited access to loans and formal
banking systems. Their access to acceptable collateral, assets, and legal
documents are limited. Besides, commercial banks' control and monitoring of
loans are less profitable; thus, unattractive to most people. Therefore, more
studies are needed better to understand the microfinance institutions across
the Middle East and provide people with necessary insights on the most
profitable funds accessible. Consequently, the present study investigates
microfinance adoption in the Middle East. The paper explores the delivery
methods microfinance institutions often adopt and identifies future
opportunities within the microfinance sector and how these can be applied to
benefit individuals.
The present study was a systematic review including prior primary and secondary qualitative research. The studies used focussed on microfinancing as a solution to individuals and small businesses with limited access to finance. The dependent variable in this research paper is the survival of unemployed individuals on low incomes with limited access to finance from banking institutions. The independent variable is to examine if Microfinancing is the solution that will offer these people access to finance in the Middle East. To prove that there is truth in the independent variable, a review of previous peer journals, publications, and other trusted sources will be undertaken to see how the authors have witnessed the success and rise of Microfinancing, particularly in the Middle East and the research is supported by my views and recommendations. Secondary research is undertaken to examine the future opportunities for Microfinancing and how they can benefit individuals and small business across the Middle East. This study can benefit individuals, business, policymakers, and the academic community in exploiting these opportunities to improve their understanding on microfinancing. Besides, academics can use this study to get background information on future studies comparing banking and microfinance institutions.
Defining microfinance
Microfinancing give people with a low income or unemployed the opportunity to access small finance packages in the form of small business loans using existing ethical lending practices to become self-sufficient. The people can be individuals or groups who conduct business activities as small businesses. Microfinancing consists of credit offerings through loans, savings accounts, micro-insurance, and the ability to transfer money [2].
The simplicity of microfinancing
The size of the microloans being offered by institutions can range from as little as $100 up to a maximum amount of $25,000 [3]. However, the maximum limit will vary and be set by institutions worldwide. The micro financiers will charge interest rates on the loans and state the repayment plan. Some micro financiers will require the recipient to set aside part of their income into a separate bank account. Micro financiers can access this savings account if the recipient defaults on loan repayment. If the recipient repays the loan without bankruptcy, then the money in the savings account becomes the recipient's property. Microfinancing is not just about offering small business loans. Microfinancing institutions will typically include traditional bank accounts and provide educational activities that will teach the individuals about managing cash flow and bookkeeping. Still, there needs to be more financial products and services available.
History
Microfinancing is not a new concept as it has been in
existence since the early 18th century. History suggests that microfinance
first occurred with the poor Irish citizens given direct access to micro
lending through the Irish Loan Fund system to improve their basic living
standards. During the 1970s, the popularity of microfinancing started to rise
on a large scale with institutions such as the Grameen Bank and SKS
Microfinance. SKS Microfinance was founded in India in 1998 to serve the large
communities of people in India with little or no income. Its business model was
simple. Rather than offering microfinance to individuals, it worked by pooling
groups of five people together, which gave them the added benefit that the
loan's chances were better. Due to its popularity, microfinancing has become an
acceptable method for offering financing and banking activities worldwide.
Microfinance is the prepared financing solution for
those people who cannot access finance through traditional banks. Microfinancing
provides these people with access to small business loans that will help them
become self-sufficient and successful entrepreneurs. The benefits of
microfinance extend beyond the direct effects of giving these people access to
an alternative source of financing. People who have developed successful
businesses contribute to economic growth in a small way by creating jobs,
increasing trade, and taxation within their community and country. Unemployed
or low-income people will usually be encouraged to deposit some income into a
savings account. During uncertain economic times, these people can rely upon
their savings to repay their loans and still enjoy a better quality of life.
When economic times are good, these people can enjoy life and sustain a better
lifestyle for their families and themselves. Access to microfinance benefits
people living in harmony and removes the chance to use survival crisis tactics
to access basic human needs. The survival crisis tactics can disrupt and harm
communities, as evidenced in many African countries and some parts of the
Middle East, such as Lebanon and Yemen. Social unrest exists because people
demand democratic reforms and improvements in their basic living standards. Microfinancing
institutes provide a growth platform in many economies by increasing their
economies of scale (International Finance Corporation, 2018). The growth in
economies of scale can lead to a significant improvement in three areas, namely
(i) operational efficiency improvements, (ii) financial profitability
improvement, and (iii) an increase in self-sustainability. Financial
profitability improves as revenues increase and operating costs decrease for
the microfinancing institutes, and as such, the institute can become more
competitive in the marketplace. In countries with many microfinancing
institutions, gaining a competitive advantage is critical.
The World Bank's Global Findex is quoted as saying that there are 1.7 billion adults living without formal savings or credit across the world; these people are considered financially excluded (The World Bank, 2017). Microfinancing has been a pivotal service that has been made available by many global organisations. Consequently, the latest estimates provided by the World Bank that microfinancing activities have helped over 500 million people (The World Bank, 2017) improve their lifestyles [4]. The Consultative Group to Assist the Poor (CGAP) provides a widely different estimate of 120 million people who have gained the benefit of receiving microfinancing activities. Based upon these statistics, if they are proven accurate, a large part of the global population is still not being served and needs access to Microfinancing. In 2020, the size of the global microfinance market in terms of revenue was valued at US$178.84 billion (Allied Market Research, 2021). Allied Market Research predicts that this market to grow to US$496.90 by 2030. This growth represents a growth of 10.8% (CAGR). Figure 1 demonstrates the projected revenue growth in this industry by provider type (Allied Market Research, 2021).
Figure
1: Provider
segmentation of the microfinance industry.
History
Microfinancing solutions can be found in developing countries where most people fit into low or no income. Alattas and Tayachi point out that the Middle East is no exception to having unemployed or low-income people. These people have the land that contains natural resources, but they are limited with access to capital and limited mindset to help them exploit them. Microfinance steps in to help these people. There need to be more microfinancing companies in the Middle East to help these people. Many micro-financing institutions in the Middle East were unregulated. The International Finance Corporation states that in recent years, the transformations in the Middle East have involved transforming microcredit programs into registered microfinancing institutions (International Finance Corporation, 2018). The critical reasons for the high level of unregulated institutions include (i) the lack of a framework for legalities and regulations and (ii) the expected increase in the level of taxation because of regulating the industry. During the early stages of microfinancing institutions, employees had concerns about this transformation process. Their problems were twofold – (i) uncertainty about their future and (ii) their personal beliefs. Alattas and Tayachi show that Egypt was the leading country in the MENA region, with the most significant number of 14 microfinancing institutions as of 2016. These fourteen institutional providers served over 868,000 borrowers, with women accounting for 55.7% of the borrowers. Other statistics for the Egyptian economy that the authors revealed include:
Based upon the research undertaken by Alattas and
Tayachi, other Middle Eastern countries that had adopted Microfinancing as of
2016 included Jordan with seven microfinancing institutions and Yemen with 6
microfinancing institutions. The authors did not present statistics at this
date for other larger Middle Eastern countries such as Bahrain, Saudi Arabia, United
Arab Emirates, or Turkey. The statistics have not varied much since 2016.
According to the Impact Finance Barometer 2021 report, the number of borrowers
in the MENA was at 3% across the MENA region (Convergences, 2021). The report
highlighted that the percentage of women borrowers was 59% compared to the
global average of 81%. The portfolio yield was compared to other regions. The
portfolio yield for MENA (18.7%) was lower than 22.3%, recorded for different
areas.
Present situation
The microfinance industry has become well established
in the Middle East and is expected to continue to grow in the future. The
regulatory environment in most Middle Eastern countries has taken shape, which
has been a critical factor in the industry's growth. The regulatory environment
has set down the framework of rules, policies, and procedures that have been
needed to remove the unscrupulous players. The regulatory environment has
provided additional transparency and accountability amongst the micro-financial
institutions. Many microfinancing businesses have changed from a not-for-profit
status to for-profit companies due to the transformation across the industry
and in each country in the Middle East (International Finance Corporation,
2018). Consequently, the increase in the number of for-profit companies has
brought operational efficiencies across each country, plus improvements in the
economies of scale. The improvement in the regulatory environment plus the
growth in the number of institutions has enabled more financial products to be
made available, plus rates that are more competitive and fees. The increase in
the number of microfinance institutions has provided the opportunity to serve a
more significant number of low-income people. For-profit microfinance
institutions need to survive and survive sustainably for the long term. To
serve low-income people, they are constantly in need of fresh capital. Before
transforming to for-profit companies, the traditional form of funding for
not-for-profit institutions was donor funding, but this is not a reliable
funding source as this type of funding has become limited in recent years.
Donor funding is not a sustainable form of funding. Similarly, not-for-profit
institutions sought funding from other development finance institutions and
commercial banks. These two types of financing approaches have limited the
not-for-profit corporations' leverage capabilities as (i) the institutions had
to rely upon donor funding to increase their equity and (ii) the limitations on
the financial leverage ratios that were placed upon these corporations because
of their legal status (International Finance Corporation, 2018). Development
finance institutions and commercial banks often say that these not-for-profit
organisations are too risky to lend or invest in due to the regulatory leverage
limitations. Therefore, for these microfinance institutions to survive long
term, they had to change their legal structure from not-for-profit to
for-profit. The for-profit microfinance institutions received a better
reputation than not-for-profit institutions. The for-profit microfinance
institutions were able to survive longer as they could increase their financial
leverage as they could raise new equity or other funding sources. The
regulations in some countries across the Middle East prevent microfinance
institutions from offering savings products (International Finance Corporation,
2018). Yemen and Syria are the only countries in the Middle East that allow
microfinance banks and non-bank financial institutions to offer savings to
low-income people. Consequently, transformation in the industry took place. In
Yemen, the Al Kuraimi Islamic Microfinance Bank, previously a money exchange
company, is now a microfinance bank. A similar transformation occurred in
Syria, with the FMFI transforming from an NGO into a non-bank financial
institution. (International Finance Corporation, 2018). The gender demographic
across the Middle East is about two-thirds female who seeks assistance from
microfinance institutions (Triodos Investment Management, 2018). The female
gender manages a range of small size businesses. Their participation in
small-scale enterprises provides a greater level of independence and improved
status amongst the population, and they are favourably looked upon as economic
contributors. Gender inequality still exists, with women more likely to be
unemployed than men, so more women are applying for microfinance assistance.
The MENA region has seen a broader impact on the political and socio-economic
status with an influx of refugees due to the various civil unrests. It is
reported that there are an estimated 1.5 million refugees situated in Lebanon.
Lebanon's total population is 5.9 million. One in four people in Lebanon is a
refugee, most of whom have arrived from Syria. A similar status of refugees can
be found in Jordan. With a population of 9.9 million, Jordan is host to 1.4
million refugees, mainly from Syria. There is significant political pressure in
these two countries to provide microfinance to the refugees. This political
pressure arises because these refugees may not return to their home countries
and decide to stay in these countries. On the other side, microfinance
institutions do not wish to provide loans if they become exposed to the risk
that these refugees return to their country and do not repay the loans.
Research indicates that microfinancing in Palestine was needed to provide
economic development and stability [5]. The authors' study examined the conceptual
framework of how microfinancing institutions helped improve the direct and
indirect economic development of Palestine.
Regulatory environment
Microfinancing has become an essential component of
expanding access to financial products which traditionally would not be offered
to the unemployed or low-income people. Microfinancing has not reached its full
potential due to the regulatory environment in many Middle Eastern countries.
The regulatory climate or non-existence of such an environment can be a
significant barrier for microfinance institutions. Triodos states that
countries with little or no regulatory environment need to develop a solid legal
and regulatory framework (Triodos Investment Management, 2018). In addition to
the substantial legal and regulatory framework, there is a need to provide
specialised support services. A robust regulatory framework coupled with
technical support services will assist in making the microfinancing industry
stronger in countries with little or no regulatory environment. Middle Eastern
countries of Jordan and Yemen are prime examples of the regulatory environment
limiting the type of financial products that microfinance institutions can
offer and restrictions on their credit offering to the public. These
limitations vary between the countries. In the case of Jordan, the loan cap is
linked to the microfinance institution's outstanding portfolio of equity. The loan
cap is based on 0.2% of the total portfolio or equity (Triodos Investment
Management, 2018). The loan cap is 0.1% of the institution's equity or
outstanding portfolio in Yemen. These loan cap levels can be increased by
increasing its portfolio of equity. This is not always the case in other
countries. Tunisia, for example, has a loan cap of 20,000 Tunisian dinars. In
Egypt, the loan cap is 100,000 Egyptian pounds.
The good intention of having a regulatory environment
is supposed to provide extra security to microfinance institutions. Still, the
limitations that are placed can hinder the promotion of these institutions and
can be deemed to be undesirable intentions. Apart from the limits mentioned,
some regulations limit the amount of lending that can be done as part of their
normal business activities. This limitation is a barrier that prevents
microfinance institutions from upscaling their business operations. The
microfinance institutions could be serving a more significant market segment
where the needs are far higher than the capped loan that the banks do not
serve. The limitation on lending prevents low-income people from accessing
finance for education, home improvements, or even purchasing their own homes
(International Finance Corporation, 2018). Microfinance institutions can
bolster their presence in the marketplace where regulations exist that allow
these institutions to raise equity capital and add new financial services and
products. These institutions have a more significant segment of the low-income
population to be able to tap into. Deposit mobilisation and other financial
services can be found in the regulatory environment of countries such as Yemen
and Syria. Microfinance institutions in Jordan, Palestine, and Tunisia are
restricted from allowing these institutions to provide credit. This limitation
in Tunisia saw the rise of microfinance institutions that changed their
business structure from a not-for-profit organisation to for-profit ones. The
benefit arising from this transformation to a for-profit organisation allowed
these institutions to increase the size of their loan cap. The loan cap on a
for-profit institution was increased to 20,000 Tunisian dinars. The loan cap
was substantially less for not-for-profit organizations at 5,000 Tunisian
dinars. The regulatory environment did not provide any unique benefits in Egypt
if microfinance institutions changed their business structure to for-profit
organisations. The regulatory environment in Egypt provided many disincentives,
such as increases in fees that made operational expenses more expensive. The
increase in fees made some financial products not viable to offer to the
public. The Egyptian regulatory environment provided higher income tax rates,
thus creating a disincentive for microfinance institutions to transform into
for-profit organisations. The legislation also prevented those not-for-profit
organisations could not become shareholders in other companies. This
legislation prevented not-for-profit organisations from expanding their business
activities (International Finance Corporation, 2018). In Palestine, as of 2019,
8 microfinance institutions were operating under different business structures,
such as non-profit organisations, donor programs, non-government businesses,
and cooperatives. Similar to previous studies, women's empowerment was one of
the main reasons for the growth in microfinancing. The authors stated that this
new trend differed from many decades ago when women were not recognised for
economic development. Consequently, microfinance institutions have made some
significance in providing people with basic needs and improved employment
opportunities [6-13].
Barriers to Microfinance Development across the Middle
East
Barriers to the development of microfinance can be
classified into two labels – (i) generic barriers and (ii) country-specific
barriers.
The generic barriers listed below apply across the global industry for microfinance.
Porter's five forces include three forces from
'horizontal' competition--the threat of substitute products or services, the
threat of established rivals, the threat of new entrants--and two others from
'vertical' competition--the bargaining power of suppliers and the bargaining
power of customers. Figure 2 illustrates how Porter's Five Forces Model works
in the microfinancing industry.
Population
The Middle East comprises 17 countries, and the estimated population as of 2022 is 463,298,595 (World Population Review, 2022). The Middle East is diverse, with many ethnic groups including Arabs, Pakistanis, Sikhs, Egyptians, Jews, Filipinos, Hindus, Greeks, and Sri Lankans. The population demographics vary between each of the countries in the region. The five most and least populated countries in the area are illustrated in Table 1 (World Population Review, 2022).
Figure 2: Porter's Five Forces Model.
Table 1: Populated countries in the Middle East.
Most Populated |
Least Populated |
||
Country |
Population |
Country |
Population |
1. Egypt |
106 million |
6. Cyprus |
1 million |
2. Iran |
86 million |
7. Bahrain |
2 million |
3. Turkey |
85 million |
8. Qatar |
2 million |
4. Iraq |
42 million |
9. Kuwait |
4 million |
5. Saudi
Arabia |
35 million |
10. Oman |
5 million |
Unemployment
Unemployment remains a concern across the MENA region. According to World Bank data, the total unemployment level across the region in 2020 was 10.5% as a percentage of the entire labour force (The World Bank, 2022). The unemployment % increase from the previous year was due to the impact of Covid-19 and the enforced lockdowns that took place in these countries. The growth of unemployment adds pressure to those people already living on low or no incomes. Delving deeper into this unemployment %, 26.94% of the total youth labour force aged 15 to 24 years were unemployed (The World Bank, 2022). Youth unemployment across the region was extremely high. The World Bank report that youth unemployment is at a staggering 30% which is one of the highest rates across the world (The World Bank, 2022). The youth unemployment rate is high due to their countries' weak economies. The, fragile economies are not strong enough to provide employment or pensions to the youth. Consequently, social unrest occurs. Enter microfinance institutions into these countries with weak economies. Typically, the barriers to entry are low due to the low or non-existing regulatory environments. Microfinance institutions have developed special training programs to help the youth become more knowledgeable. The institutions have designed special loan packages specifically for the child.
Market needs for microfinancing
Microfinance will always be an essential need because
it provides resources and access to capital to the financially underserved,
such as those who cannot get bank accounts, lines of credit, or loans from
traditional banking institutions. Microfinance helps economically underserved
people to invest in themselves and their businesses. One of the ways that
individuals can support inclusive entrepreneurship is through microfinance.
Microfinance institutions offer financial services, business development
services, and small loans to those entrepreneurs who find it challenging to
access finance. There may be many causes why low-income entrepreneurs cannot
access finance. Perhaps, they may have a bad credit history, do not have the
capital, or cannot provide the security needed to obtain a loan. The low-income
entrepreneurs present too much risk to traditional banking institutions in the
mainstream financial markets.
The financial inclusion of microfinance institutions
in the Middle East is slight. It is reported that only 18% of the population
has accounts with banking institutions. Most of these people are women (13/18
of the population). The problems have already been discussed above that outline
why this % participation is low in this region. Microfinancing provides an
excellent opportunity to be extended in this region and thus reach a greater
targeted group. The regulatory environment needs to be introduced into those
countries that do not have an environment or tightened further to provide extra
security, transparency, and accountability. There needs to be more clarity and
access to information, ensuring that the targeted group is aware of accessing
microfinance services and products. Microfinance institutions can be motivated
by introducing additional financial products such as payments, transfers,
remittances, and savings accounts. The microfinance institutions can proceed
further by introducing advanced technology such as POS, mobile banking, and
ATMs, provided the backend of the infrastructure exists to support this
technology. Offering such financial products and services can be a dominant
driver in encouraging microfinance institutions to transform into for-profit
organisations. The additional financial products and services can increase the
client base by tapping into new markets, increasing revenue stream
opportunities, improving customer loan repayments, and improving customer
satisfaction. Individuals accessing these financial products and services can
improve their lives and make financial independence sustainable. Alattas &
Tayachi announced that a survey was recently conducted showing that the
worldwide microfinance industry has the potential to grow at a rate of 16.61%
(Compound Annual Growth Rate). One of the key drivers likely to influence this
potential growth is the small and medium enterprises in the MENA region sitting
in the untapped financial sector. Small and medium enterprises are the backbone
of global economies. These enterprises are flexible, robust, enthusiastic, and
can become a hub for innovation, technologies, and ideas. These small and
medium enterprises must be allowed to thrive to boost economic development,
particularly in weaker economies. Small and medium enterprises are job
creators, particularly in the weaker economies. They provide financial growth
and stability to the economy. The boost in economic development will grow gross
domestic product and provide greater financial security. The growth in economic
development will lead to an increase in socio-economic welfare, thus improving
the lifestyles of everyone in a sustainable manner. Microfinancing platforms
that will reach potential customers in outer regions and communities. Online
financing will continue to witness significant growth in future years due to
the increased usage of smartphones and internet users.
The financial inclusion of microfinance institutions
in the Middle East is slight. It is reported that only 18% of the population
has accounts with banking institutions. Most of these people are women (13/18
of the population). The problems have already been discussed above that outline
why this % participation is low in this region. Microfinancing provides an
excellent opportunity to be extended in this region and thus reach a greater
targeted group. The regulatory environment needs to be introduced into those
countries that do not have an environment or tightened further to provide extra
security, transparency, and accountability. There needs to be more clarity and
access to information, ensuring that the targeted group is aware of accessing
microfinance services and products. Microfinance institutions can be motivated
by introducing additional financial products such as payments, transfers,
remittances, and savings accounts. The microfinance institutions can proceed
further by introducing advanced technology such as POS, mobile banking, and
ATMs, provided the backend of the infrastructure exists to support this
technology. Offering such financial products and services can be a dominant
driver in encouraging microfinance institutions to transform into for-profit
organisations. The additional financial products and services can increase the
client base by tapping into new markets, increasing revenue stream
opportunities, improving customer loan repayments, and improving customer
satisfaction. Individuals accessing these financial products and services can
improve their lives and make financial independence sustainable. Alattas &
Tayachi announced that a survey was recently conducted showing that the
worldwide microfinance industry has the potential to grow at a rate of 16.61%
(Compound Annual Growth Rate). One of the key drivers likely to influence this
potential growth is the small and medium enterprises in the MENA region sitting
in the untapped financial sector. Small and medium enterprises are the backbone
of global economies. These enterprises are flexible, robust, enthusiastic, and
can become a hub for innovation, technologies, and ideas. These small and
medium enterprises must be allowed to thrive to boost economic development,
particularly in weaker economies. Small and medium enterprises are job
creators, particularly in the weaker economies. They provide financial growth
and stability to the economy. The boost in economic development will grow gross
domestic product and provide greater financial security. The growth in economic
development will lead to an increase in socio-economic welfare, thus improving
the lifestyles of everyone in a sustainable manner. Microfinancing platforms
that will reach potential customers in outer regions and communities. Online
financing will continue to witness significant growth in future years due to
the increased usage of smartphones and internet users.
To summarise, the present study has explored the rise
of microfinance in the Middle East. The paper's objective is to explore
microfinance, specifically its existence and potential opportunities they offer
for the Middle East countries that face limited access to finance and capital
markets. The microfinance sector exists in the Middle East; however, its growth
has been restricted in the past by the non-existence or lack of regulations
existing in different countries coupled with access to the capital market. The
paper incorporates secondary data sources, critically analysing past
qualitative research studies to assess the existence of microfinancing
corporations and the openings they create for Middle East countries. The
present study findings indicate that microfinancing is present in the region;
however, significant barriers exist that restrict the growth and expansion of
the sector. These barriers should be eliminated and adopt new strategies
commonly employed in other regions for the region's microfinancing industry to
thrive. Research findings outline one of the main barriers as changes in the
regulatory environment, including the significant transformation of
not-for-profit organisations to for-profit organisations. Microfinance
institutions offer more financial products, including savings accounts. The
next important step that the microfinance institutions should take is
introducing more technically advanced financial products such as POS, ATMs,
online banking, and other solutions to low-income individuals and small
businesses. Data collection for the present study was based on secondary data
sources. One of its key strengths is providing adequate information and
empirical findings from similar past studies. Besides, official statistics were
valuable for comparisons as they dated back several decades. At the practical level,
many public documents and official statistics regarding the rise of
microfinance in the Middle East were freely available. Nonetheless, using
secondary data sources presented several limitations; for example, some
official statistics mirrored power biases, limiting the study's findings.
Additionally, other restrictions include some documents lacking authenticity by
missing some vital information. As earlier not, substantial literature gaps
exist on the rise of microfinance in the Middle East. For example, future
studies should explore promotion strategies of the microfinance industry in the
Middle East and North Africa (MENA) region. Such studies should explore legal
and practical guidance offered via microfinancing initiatives and how they
encourage the regional exchange and experience in financial inclusion and
microfinance, providing policymakers with a better comprehension of the
industry, potential concerns, and solutions. Future studies should also focus
on specific countries in the Middle East and compare the performance of various
microfinance institutions in the region.