Financial sector reforms

The Bank strives to support governments to comprehensively reform their financial sectors  so as  to develop market-based, efficient, competitive, and sound financial systems that will better serve development and growth objectives in Africa.

The history of financial sector reforms in Africa dates back to the late 1980s with the liberalization of interest rates, lifting of barriers to entry and exits in the sector, and the privatization of state-owned financial intermediaries. Recognizing that such reforms failed to achieve meaningful structural and institutional reforms, governments in Africa embarked in the second phase of reforms that targeted strengthening regulatory frameworks and making central banks more independent. More recently reform efforts have targeted enhancing corporate governance with the aim of improving transparency and accountability of institutions. The outcomes of these reforms are positive. In several countries, the contribution of the financial sector to GDP has increased and growth in capital markets has been recorded.

Over the years, the Bank has supported several of its RMCs in their efforts to reform their financial sectors. More recently, the Bank’s support for  Egypt’s Financial Sector Reform Program (2005- 2008) through a Budget Support Loan of US$ 500 million is strengthening the financial sector, resulting in more resilient and competitive bank/non-bank financial institutions along with insurance companies that will accelerate economic growth and development.

The Bank is also supporting initiatives in the financial sector that are promoting regional economic integration. In this regard, through a grant of US$ 23 million, the Bank is supporting efforts by the West African Monetary Institute (WAMI) to upgrade payment systems in The Gambia, Guinea and Sierra Leone to the same level as those in Ghana and Nigeria. The harmonization of payment systems in five of the six West African Monetary Zone (WAMZ)member countries will contribute to the realization of the objective to create a single currency in the sub-region.