2011 Partnership Forum: A Vital Effort to Improve African Finance Sectors

Sep 26, 2011 | Grégoire Bazie

Far from contradicting previous major events related the development of Africa’s financial sectors, the 2011 Making Finance Work for Africa Partnership (MFW4A) Forum held from September 15-16, 2011, in Addis Ababa, Ethiopia is hope-inspiring because it is the venue for initiation of initiatives.

Far from contradicting previous major events related the development of Africa’s financial sectors, the 2011 Making Finance Work for Africa Partnership (MFW4A) Forum held from September 15-16, 2011, in Addis Ababa, Ethiopia is hope-inspiring because it is the venue for initiation of initiatives.
In this regard, nothing important regarding the development of finance on the continent was left untouched during the Addis Ababa meeting which brought together a large number of people – national and international experts; members of government;
representatives of various banks, officials of small and medium enterprises (SME) as well as representatives of private sector microfinance institutions
and prominent researchers. Thus, discussions during the event focused on important issues ranging from delays by the continent’s financial sector to the need to improve the situation in order to better help development efforts as well as causes and challenges.
Furthermore, the forum, which was resolutely pragmatic, did not only focus on theoretical debates without looking at reality. In effect, besides challenges mentioned by some participants, the forum focused on ways and means of succeeding by drawing on precise successful examples. The forum was the venue for the sharing of experiences regarding reforms that have been undertaken by certain countries to improve access for their people to financing and to contribute to development. Sierra Leone’s Central Bank Governor, Sheku Sesay, presented actions that had been undertaken in his country since 2008 with the support of development partners to reform and relaunch the country’s financial sector which had become less competitive in his country after the civil war. “Our objective is to expand access to financial services and to strengthen the effectiveness of bank controls in order to reduce irregularities,” Mr. Sesay said drawing on his 22 years of experience at the World Bank.
A measure that has led to the creation of an appropriate governance structure, a secretariat hosted in his institution and a consultative forum of financial sector actors. These efforts have begun yielding fruits. The country’s bad debts are currently estimated at 10% as against 30% prior to the reforms which also concerned a number of legal measures including that relating to money laundering. After Sierra Leone’s Central Bank Governor, it was the turn of the Zambian Central Bank Governor, Austin Mwape, to share his experience on reforms in his country’s financial sector. The changes included, among others, carrying out a two-phase reinforcement of financial services provision and human resources development, improving coordination as well as monitoring and evaluation.
Thus, the monitoring-evaluation committee meets the first Tuesday of every month under the chairmanship of the Zambian finance minister.
In light of experiences shared during the forum, lessons were learned. First, conducting a good analysis of the situation in which financial sector reforms should take place. Second, a strategy should be designed taking into account the local and national context, as well as the different situations in various countries. Finally, ensuring, if necessary, the ownership of the process by States or the coordination of donors though initiators of reforms usually want to be independent. On this point, Mr. Sheku Sesay was very clear: «The Central Bank is autonomous. The head of state never calls me. The finance minister rarely calls me».
In short, besides the above-mentioned two cases relating to the changing of practices, participants focused on the examination of the overall issue of safeguarding African financial systems through the reform agenda on Banking regulation and supervision. Besides the issue of financial innovation relating to regulation, other important topics relating to the sector’s development were at the heart of informed exchanges during the workshops. Among them are the expansion of financial systems through policies supporting the financing of agriculture, SME financing, access to finance and innovation, regional financial integration as a catalyst for inter-regional and pan-African trade. From the quality of the participants and the relevance of the topics discussed with the aim of seeking solutions, the Partnership forum will be discussed for a long time. It is an important step in the process of improving African financial systems with the aim of making them more competitive so that they can help development efforts on the continent. In this regard, the conclusions of the Addis Ababa meeting could be useful during the Kinshasa meeting scheduled for November 2011.
Grégoire B. Bazie, Le Faso.net, Ouagadougou,
Burkina Faso