Africa’s financial systems have progressed over the past 20 years. Yet liberalization, privatization, and stabilization has yet to translate into more accessible financial services, especially credit, that reaches the majority of Africans. On average, banks in Africa are well capitalized and liquid. Still, the benefits of deeper, broader, and cheaper finance have not yet been reaped. Even though it weathered the 2008 global financial crisis, Africa will be affected by long-term trends that started before the crisis and have been reinforced by the crisis, especially the shifts in the distribution of global economic power. The BRIC countries, especially China and India, but, more recently, also Brazil, are playing a growing role in Africa. This book makes a series of recommendations to overcome them. They include focusing on increasing competition in the banking sector, expanding financial services, and expand financial literacy.
A landscape of the financial systems in Africa is presented. Evidence shows that Africa’s financial systems continue to be small in absolute and relative terms. They are based heavily on banks; few stock markets have sufficient liquidity; and the contractual savings industry is small and weak in most countries. The small size of financial systems also explains the high costs of intermediation and financial service provision, as well as the limited competition
