Banks need to expand finance to small and medium enterprises (SMEs) in the Arab world in order to create jobs, especially in countries afflicted by unrest, say the heads of the World Bank and the Arab Monetary Fund.
Too much credit was going to a select few big borrowers at the expense of small firms, said Farrukh Iqbal, director of the strategic cooperation department in Mena region of the World Bank.
"A future priority for the region should be to develop more adequate access to finance for SMEs," he said.
"At present only 8 per cent on average of bank lending goes to SMEs. This is a very low ratio by international standards."
Discontent at a lack of jobs was one of the contributors to unrest fanning out across many parts of the Mena region this year. Unemployment is as high as 25 per cent among youths in the Arab World, according to the Institute of International Finance. Considered the engines of growth in many economies, small firms also play a vital role in creating jobs where they have sufficient capital to expand.
