Financial Exclusion in Mauritania: Challenges Faced by Forcibly Displaced Persons

Forced displacement can have a significant impact on individuals’ access to basic necessities, including financial services. In Mauritania, forcibly displaced persons face unique challenges when trying to access formal financial services. This article highlights the key issues that contribute to their exclusion from the financial sector.

Limited Access to Bank Credit

Short-term loans dominate bank credit market

Bank credit to the private sector in Mauritania is largely short-term, making it difficult for small and medium-sized enterprises (SMEs) and displaced individuals to access long-term loans. The lack of information about potential borrowers hinders the ability of financial institutions to assess creditworthiness.

Consequences of limited bank credit

The restriction on accessing bank credit forces displaced persons to rely on informal lenders, who often charge exorbitant interest rates. This exacerbates their financial difficulties and perpetuates poverty.

Mobile Money Framework

No national framework for mobile money or e-payments

Despite the existence of GIMTEL Switch, a national switch for cards, there is no framework in place for mobile money or e-payments. This limits the financial inclusion of those with modest means, making it difficult for them to access basic financial services.

Impact on digital payments

The absence of a mobile money framework hinders the development of digital payment systems, which are crucial for promoting financial inclusion and reducing cash-based transactions.

Regulatory Barriers

Inadequate KYC regulations

The development of mobile money and e-money is on hold due to inadequate Know-Your-Customer (KYC) regulations. These regulations are not suitable for small transactions, creating an obstacle for the growth of digital financial services.

Limited usage of digital ID system

Although there is a robust national digital ID system in place, it has not been leveraged to implement the risk-based approach (RBA) in financial services. This hampers the ability of financial institutions to assess creditworthiness and provide loans to displaced persons.

Recommendations for Improvement

Upgrade bank regulatory standards

Upgraded bank regulatory standards and stronger supervision are needed to improve banking sector soundness and foster financial inclusion, as recommended by the IMF and US Department of State.

Develop mobile money regulations

Developing specific mobile money regulations will help create a conducive environment for the growth of digital financial services in Mauritania.

Conclusion

The challenges faced by forcibly displaced persons in accessing formal financial services in Mauritania are significant. Addressing these regulatory barriers and creating an enabling environment is crucial to promoting financial inclusion and reducing poverty among displaced populations.