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The Fariz-Gates arrangement

Mar 12,2018 - Last updated at Mar 12,2018

Central Bank of Jordan (CBJ) Governor Ziad Fariz will leave for the future a legacy which will be identified by two main buzzwords. These are financial inclusion and governance in the banking sector.

Banking corporate governance focuses on transparency, sound management, separation between management and ownership and absence of concentration. Historically, banks in Jordan started as corporations but ended up being family businesses. There are exceptions, such as the Housing Bank, but the rest are almost invariably identified with a family.

When Fariz started applying governance, he insisted that the general manager of a bank or its CEO for that matter be separate from the chairman of the board. Families used to hire someone they can control as a CEO or chairman. Gradually and eventually, banks are now closer to the true meaning of governance with all its downstream ramifications than any time before.

As for financial inclusion, the CBJ is trying hard to de-cash the Jordanian economy, and expand the use of banking facilities and services. There is still a relatively large segment of the population, who are mostly poor, who prefer to maintain their cash close at hand rather than go through the hassle of opening a deposit account, whose balance would be zero in less than a week.

Yet, without a deposit record, these people would be denied many banking services. If they establish a track record, they become entitled to small loans, they can go through tax transactions much smoother and their loanability would improve.

To make life easier, many of these financial transactions, including settlement of telephone, water and electricity bills, can be done through the Internet. Making sure that the change in the banking ecosystem as a result of ICT technological applications does not alienate the underprivileged and low-income groups is a rigorous effort which needs to be exerted to include them in the financial system.

To bridge this gap, the CBJ and the Bill and Melinda Gates Foundation signed an agreement on the Mobile Money for Resilience or MM4R initiative.

The first part of this agreement focuses on enabling the Syrian refugees and Jordanians to be able to have the resilience to adjust to Cash Transfer Programmes.

Simultaneously, the CBJ is “committed to accelerating financial inclusion via digital financial services [DFS]”. According to a pamphlet on the MM4R initiative, “CBJ has [already] created an enabling environment for DFS and has led the development of the infrastructure with the Jordan Mobile Payment [Jo Mo Pay] platform”.

These seemingly small steps add up to new infrastructure which would enhance economic opportunities and make resilience a built-in attribute of Jordan’s mobile payments systems.

The CBJ’s steps should be taken as guidelines on how to prepare a blueprint for the gradual and steady march towards knowledge economy. It is not only big strategies and visions which matter, but these well-placed, well-designed and well-implemented small conscious steps which turn a dream into tangible reality.

Fariz and the CBJ deserve our acknowledgment and gratitude.

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