The Banking Executive Magazine - June 2025 Issue

tributes to broader financial inclu- sion efforts, particularly through its integration with the IFETAA pro- gramme. FINANCIAL INCLUSION: UNLOCKING CAPITAL FOR MSMES Despite these advances, access to fi- nance remains a major bottleneck for MSMEs across the Mediterranean. According to the International Mon- etary Fund (IMF), only 20% of firms in Africa and the Arab region have access to a bank loan or line of credit. Interest rates are often prohib- itively high averaging 25% in some African countries, compared to 9% in India or Vietnam. To address this challenge, UNIDO has launched the IFETAA pro- gramme—Islamic and Arab Finance for Economic Transformation in Africa, the Arab Region and beyond. IFETAA aims to mobilize Islamic fi- nance to support MSME growth, re- silience, and competitiveness. With nearly $4 trillion in Islamic financial assets globally (expected to reach $6 trillion by 2026), there is significant untapped potential to channel this capital into the real economy. IFETAA works by identifying and screening investment-ready projects, providing technical assistance to im- prove bankability, and setting up de- risking mechanisms such as guarantees and revolving funds. It also delivers capacity building to Is- lamic financial institutions and sup- ports policy reforms to improve the enabling environment. The pro- gramme is implemented in partner- ship with the Union of Arab Banks (UAB), the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), and other stakeholders. Importantly, IFETAA is not a stand- alone initiative. It is closely linked with EDIP and other UNIDO pro- grammes that build the capacity of MSMEs, enhance financial literacy, and promote inclusive entrepreneur- ship. Together, these efforts aim to create a self-sustaining ecosystem where MSMEs can access the capital, skills, and markets they need to thrive. THE WAY FORWARD: A SHARED INDUSTRIAL FUTURE The Euro-Mediterranean region stands at a crossroads. On one hand, it faces shared challenges: youth un- employment, climate vulnerability, and economic fragmentation. On the other, it holds immense potential for industrial cooperation, innovation, and inclusive growth. Sustainable industrialization—an- chored in regional integration and in- clusive finance—offers a pathway to unlock this potential. But it requires coordinated action. Governments must align industrial and financial policies with sustainability goals. De- velopment partners must invest in in- frastructure, skills, and innovation. And financial institutions must ex- pand access to affordable, long-term capital for MSMEs. the BANKING EXECUTIVE 10 ISSUE 198 JUNE 2025