A Culturally Competent Banking Alternative for the MENA Region

“No culture can live if it attempts to be exclusive” Mahatma Gandhi.

If you ask the average person from the Middle East and North Africa (MENA) region whether they have a standard checking or saving account, they will likely respond “No”. MENA countries consistently rate among the lowest in participation of the population in the banking sector. In Morocco, which is relatively developed, only 28.41% of the population has a retail banking account, and in the Palestinian territories and Iraq, that number drops to 25.02% and 20.33% respectively [1]. Though many reasons can be cited for this, a very important factor that is neglected by Western institutions is Islam’s vehement disapproval of earning or charging interest by its adherents. In Morocco, for example, Islam is constitutionalized and over 99% of the population is Muslim [2]. Although levels of religiosity differ, 38% of the population claims to be religious, with another 44% claiming to be somewhat religious [3]. In an informal interview, the Moroccan Shadow Minister of Finance commented that the general population’s refusal to participate in the modern interest and lending-based system is in large part due to religious consciousness. Statistics show that even outside the MENA region, countries with a majority Muslim population have lower participation in traditional retail banking as compared to their regional peers; Pakistan (18.05%) and Indonesia (48.39%) are prime examples of this phenomenon [1]. This issue not only affects western banks from developing new markets in the MENA region, but it also harms countries with underbanked populations. Studies show that meaningfully increasing financial inclusion in emerging markets countries can increase GDP by over 14% [4]. There is no sense in trying to force a way of doing things on these populations, so what should these nations and banking institutions do?

“If you have knowledge, let others light their candles in it” Margaret Fuller.

Institutions should seek a culturally competent solution to increase participation by the population in the MENA region. Fortunately, the solution already exists, Islamic financing and banking. In a nutshell, the principles of Islamic banking avoid the use of interest and structure loans in the form of partnerships. This service allows for the removal of the key component which prevents practicing Muslims from participating in the modern financial system. The Islamic banking industry has grown considerably over the past few years, reaching $2 trillion in 2020 [5]. However, this figure mostly consists of capital from relatively developed Gulf states whose populations have more average wealth than their counterparts within MENA. In less-developed MENA countries, lack of access to information hampers the population’s ability to be informed of the availability of Islamic banking services. The main issue is not that there isn’t a solution, the issue is that people in the MENA region do not know enough about the particulars of Islamic banking and its adherence to their religious principles. This lack of access to information prevents people from trusting these institutions and modernizing their finances by utilizing Islamic banking services. International institutions such as the World Bank and the International Monetary Fund, as well as NGOs seeking to tackle this issue, should concentrate their efforts and resources on promoting and facilitating access to Islamic banking services to populations of underbanked MENA nations. Doing so would present the opportunity for a massive return on their investment; Affected nations would likely experience a surge of economic growth through the onboarding of such a significant amount of unutilized capital into their financial systems.


  1. World Bank, 2017. “People with bank accounts, percent of the population over 14 years of age, 2017 – Country rankings.” World Bank Data. Republished by theglobaleconomy.com.
  2. U.S. Department of State, 2019. “2019 Report on International Religious Freedom: Morocco.” Office of International Religious Freedom. https://www.state.gov/reports/2019-report-on-international-religious-freedom/morocco/
  3. Arab Barometer, 2019. “Arab Barometer – Wave V.” Morocco Country Report, P. 13. https://www.arabbarometer.org/wp-content/uploads/ABV_Morocco_Report_Public-Opinion_Arab-Barometer_2019.pdf
  4. Rahwa Senay, 2021. “How Financial Inclusion is Driving Fairer Growth in Emerging Markets.” Lazard Asset Management Research & Insights.
  5. Research and Market, 2021. “Islamic Finance Market – Growth, Trends, Covid-19 Impact, and Forecasts (2021-2026).” General Report Description. https://www.researchandmarkets.com/reports/4758280/islamic-finance-market-growth-trends-covid-19?utm_source=GNOM&utm_medium=PressRelease&utm_code=rqx342&utm_campaign=1611909+-+Global+Islamic+Finance+Market+to+2026%3a+GCC+is+Highly+Competitive+with+Bank+Al-Rajhi%2c+Dubai+Islamic+Bank+and+Kuwait+House+Finance+Dominating&utm_exec=elco286prd

Hadi Hussaini, CFA (MBA 2023) has four years of experience in asset management working at The TCW Group and Morgan Stanley. He is now a PR & Communications officer of the London Business School Student Administration and an intern at the Wheeler Institute focused on content generation to drive workforce inclusivity and sustainable development in the Middle East and Africa. 

The Wheeler Institute is seeking to understand, illuminate and offer solutions to the challenges faced by the developing world, with an aim to identify the role of business in addressing these challenges and a focus on the implications and actions for those in developing countries. In support of our students, we approach this blog section as a reflective platform and a space where individuals can generate debate as long term agents of positive change.

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