FEMISE is proud to launch its latest series of policy briefs, stemming from insightful conference papers presented at the FEMISE annual conference. These briefs are rooted in scientific research and offer actionable political recommendations to address critical challenges in the Euro-Mediterranean region.

The objective if this new series of Policy Briefs is to provide policy makers, international organisers, researchers and stakeholders in the EU-Med region with research-based policy recommendations that: advocate a better EU-Med integration;  promote mobilization of investments towards green transition and sustainable economies; empower young people through innovation and entrepreneurship advocacy; and facilitate a better and more equal integration of youth and women, aiming to create pathways for decent employment.

These Policy Briefs aspire to drive impactful dialogue and action across the EU-Med region.

Context

Entrepreneurship in South Mediterranean countries continues to face deep structural constraints, particularly limited access to finance, weak formal financial systems, and high barriers for small and informal businesses. While digital technologies are rapidly transforming financial services worldwide, their potential to support entrepreneurs in the Southern Mediterranean remains largely underexploited.

Levels of digital financial inclusion in countries such as Algeria, Egypt, Jordan, Morocco, and Tunisia remain significantly below global and European averages, reflecting persistent digital divides, regulatory barriers, and gaps in infrastructure and financial literacy. In this context, digital financial inclusion has emerged as a promising pathway to expand access to financial services, reduce transaction costs, and enable entrepreneurs—especially those traditionally excluded from formal finance—to start, sustain, and grow their businesses.

This policy brief situates digital financial inclusion at the intersection of entrepreneurship, economic freedom, and institutional reform, highlighting its relevance for inclusive growth and private sector development across the South Mediterranean region.

Summary

This policy brief examines the extent to which digital financial inclusion can stimulate entrepreneurship in South Mediterranean countries, focusing on Algeria, Egypt, Jordan, Morocco, and Tunisia. Drawing on panel data covering the period 2006–2021, the analysis shows that digital financial inclusion plays a statistically significant and economically meaningful role in fostering entrepreneurial activity across the region.

The findings indicate that even modest improvements in digital financial inclusion can generate substantial gains in entrepreneurship. In particular, a 1% increase in the digital financial inclusion index is associated with nearly a 6% rise in entrepreneurial activity. However, the impact of digital finance is not automatic: its effectiveness depends heavily on the broader institutional environment. Countries with higher levels of economic freedom, stronger governance, and fewer regulatory barriers are better positioned to translate digital financial tools into entrepreneurial growth.

The brief also highlights persistent gaps in digital payments usage, mobile banking, and online financial services compared to European benchmarks, underscoring the need for targeted policy action. It concludes that digital financial inclusion and economic freedom are mutually reinforcing and must be pursued together to unlock entrepreneurship’s full potential.

To achieve this, the policy brief calls for investments in digital financial infrastructure, expanded digital and financial literacy, stronger consumer protection frameworks, innovation-friendly regulation, and improved business environments. Together, these measures can help ensure that digital finance becomes a catalyst for inclusive entrepreneurship and sustainable development in the South Mediterranean region.

Read the full Policy Brief no.11 here

This Policy Brief is part of the FEMISE Policy Brief Series and is based on the FEMISE Conference Paper no.17. entitled: «Digital financial inclusion: A silver bullet for entrepreneurship in South Mediterranean countries» with the same authors.

The opinions and contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of FEMISE, IEMED, ERF or the AECID