Event Report - MFW4A/AfDB ECOWAS Financial Sector Dialogue

Jul 29, 2019

The African Development Bank (AfDB) and Making Finance Work for Africa (MFW4A), in collaboration with the Consortium for Economic Research in Africa (CREA), gathered in Abidjan, from 27 to 28 September 2018, government officials, central banks representatives, financial institutions (international and national) and the private sector from the Economic Community of West African States (ECOWAS) for a policy dialogue aimed at accelerating the development of the financial sector in West Africa.

The two-day dialogue focused on several themes including financial inclusion, climate finance, capital markets, institutional investors and insurance. The discussion highlighted the progress, opportunities, challenges, and prospects for a strong and integrated financial system to support adequate funding for the regional economic transformation.

Financial sector challenges in the ECOWAS zone

  • Continue reforms for stronger financial integration

Regional financial integration involves trade-offs between short-term costs such as loss of customs revenue or sovereignty, and long-term gains such as access to larger markets and extended funding opportunities. The political commitment of heads of states would achieve this integration and will provide financial stability, while aiming to implement the regional single currency and promote alternative financing. In order to achieve these objectives following a pragmatic timetable for monetary convergence, effective collaboration between the West African Monetary Zone (WAMZ) and the Central Bank of West African States (BCEAO) is desirable.

  • Remove barriers to a better integration of the banking sector

Although important institutional and governance objectives have been achieved, drastic reduction in correspondent banking, high level of non-performing loans and regulatory insecurity remain major threats to financial stability. To overcome these challenges, a deposit insurance system and a single identifier (bank verification number) must be established in members states.

  • Accelerate the integration of capital markets

Integration of all West African stock exchanges would increase market capitalization and encourage efficient mobilization of resources needed to finance the region’s economies. Issues such as post-transaction settlement currency, existence of three time zones and the need for a single securities regulatory framework should be taken into account. The sovereignty of ECOWAS member states with no stock exchange should also be addressed and the issue of a tax policy on stock market transactions discussed. Greater institutional support from development partners to ongoing initiatives towards financial markets integration is also expected.

  • Establish a permanent discussion framework among regulators for the development of new financial services

Mobile services and information technology penetration rates provide opportunities for bridging the digital divide. However, overlapping responsibilities between regulators leads to frictions that can hinder innovation. The AfDB and Development Finance Institutions (DFIs) could act as facilitators and contribute to the establishment of a framework enabling permanent exchanges between states, ICT regulatory bodies, financial sector regulators, financial institutions and Fintechs.

  • Take up the technological challenge to promote financial inclusion and integration

With technology being recognized as a catalyst, its integration must go beyond simple currency exchange or payments and strengthen access to finance as well as reduce liquidity-based economy. To this end, lessons should be learned from East African experience and bring all the players together. Infrastructure and technology safety issues must be considered in overcoming the problems of financial crime. The connectivity of Decentralized Financing Systems (DFS) to the electronic payment system would also help create a more effective mesh system.

  • Strengthen financial education

The private sector persistent reluctance to use the equity market to fund its activities, a lack of a rating culture, and limited financial knowledge at both households and sector level are constraints to the efficient mobilization of domestic resources. Financial education should therefore be popularized among economic actors in the informal sector and integrated into school teaching manuals. Donors will need to support national financial education programmes aimed primarily at Small and Medium-sized Enterprises (SMEs) and young people.

  • Promote new funding opportunities

International environmental commitments provide states with new financing opportunities in many areas, namely energy, sanitation, circular economy, etc. When it comes to green finance, few projects in this area can reach the completion stage due to low capacity of promoters and uncertainties in meeting the climate obligations of states. Capacity-building programmes for the private sector are needed for it to make the most of new funding opportunities available.


Technical and financial partners are already heavily engaged in the region through specific programmes and projects targeting the development of the financial sector. They expressed their readiness to support the regulatory changes under way, to strengthen the capacity of the players in the sector and to increase their support to credit institutions for private sector financing and greening projects.


Some of the presentations made during this regional dialogue are available below:

- ECOWAS Financial Sector Dialogue - West African Monetary Institute (WAMI) Presentation

- The African Insurance Landscape: Scaling Markets for Growth