BEIRUT: The World Bank urged MENA’s financial sector to contribute more significantly toward generating 50-70 million jobs needed over the next 10 years, warning that restricted access to finance exposed region’s already shaky economic and political stability.

“Financial systems have not been inclusive enough, and failed to provide access to finance to large segments of the population and to the corporate sector,” Loic Cliquier, World Bank MENA region director, said at a seminar on the Central Bank’s premises Wednesday.

The seminar aims at discussing the findings of the September-issued World Bank report entitled “Financial Access and Stability: A roadmap for the Middle East and North Africa” which provides an analytical view of the financial sector across the MENA region.

The news conference was also attended by Central Bank Governor Riad Salameh.

Cliquier urged the region’s financial sector to contribute more in efforts to foster the region’s social and economic development. The Arab Spring, he said, had exposed the region’s inability to sustain economic growth at levels necessary to generate the quantity and quality of jobs needed.

“MENA’s financial sector can and should make a more important contribution to the future economic performance, and support essential policy objectives such as growth, job creation, transparency, and the reduction of economic and social exclusion,” he added.

The same view was echoed by Arab Monetary Fund chairman Jasim Mannai, who also stressed that the uprisings in the Arab world had highlighted the need to face up to youth unemployment in the region.

“Improving access to finance and financial services should be among our top priorities in short- and medium-term policies aiming to foster job creation, especially for the region’s youth,” he said.

The report shows that the region’s financial sector is dominated by very large and highly capitalized private banks on one hand, and bulky state-owned banks on the other. Both lack the competitiveness and highly diversified pool of financial products needed for more inclusive financing.

Moreover, the report shows that the region has among the highest loan concentration ratios in the world.

This reflects the financial sector’s focus on providing finance to large and well-connected corporations. A pattern which, the report says, crowds out small- and medium-sized firms, vital for fostering economic development.

Access to finance is being made harder because of the absence of alternative sources of finance.

“Essential nonbanking financial institutions such as insurance companies, mutual and pension funds, leasing, and factoring, are not well developed with few exceptions,” the World Bank report highlighted.

Additionally, it shows that, despite significant developments in stock markets in many nations, they remain dominated by big financial institutions and real estate companies.

Limited coverage of credit information, weak creditor rights and weaknesses in banking competition are also highlighted in the report as persistent structural weaknesses across the financial sector.

The “roadmap,” which is presented by the report, calls on both governments and the private sector to adopt an agenda aimed at overhauling the financial infrastructure.

“This agenda needs to include three sets of mutually reinforcing reforms to be successful: the strengthening of financial infrastructure, improvements in bank competition, and the development of nonbanking institutions and financial instruments,” the report stipulates.

However, such an agenda, the report adds, should have an emphasis on financial stability enabling MENA countries to expand access to finance, but at the same time preserve the resilience of their financial systems as increased access to finance is accompanied by increased default risks.

“Experience from elsewhere, notably central Europe, had shown the dangers of quickly improving access to finance without shoring up stability,” the report adds.

The full report can be accessed online at http://go.worldbank.org/J22BJ9CNL0