Financial Infrastructure

hand holding a credit card

Financial infrastructure comprises a set of market institutions, networks and shared physical infrastructure that enable the effective operation of financial intermediaries, the exchange of information and data, and the settlement of payments between wholesale and retail market participants. A safe and efficient financial infrastructure fosters financial stability and is imperative for the successful operation of modern integrated financial markets.

Financial infrastructure broadly includes collateral registries, credit bureaus, credit ratings, and payment and settlement systems.

Collateral registries provide a tool for borrowers to use their movable assets as collateral against loans. It allows potential lenders to assess their standing in the order of priority of claims against such assets.

Credit bureaus allow lenders to assess creditworthiness by providing credit information about a borrower. They also allow borrowers to establish a reputation or “credit record”.  

Credit rating agencies provide independent forward-looking assessments on the credit worthiness of issuers.

Payment systems - the set of rules, procedures, and network infrastructure for transferring money between two or more financial institutions and their customers - play a key role in the functioning of financial markets, maintaining and promoting financial stability and facilitating the development of the economy.

Financial infrastructure in Africa is generally in its nascent stages of development. Credit bureaus, collateral registries and credit rating systems are only beginning to be developed in several African countries. On a cross-regional comparative basis, sub-Saharan Africa has the least developed payment and settlement systems, with many economies predominantly cash-based and several countries still using manual check processing and clearing houses.