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2nd Making Finance Work for Africa Advisory Council Meeting
Shapers of Africa’s financial sector development gathered this year at the Annual Meetings of the African Development Bank Group held in Marrakech, Morocco, from May 27-31. Representatives of African Finance Ministries, Central Banks, the private sector, and pan-African institutions used the occasion to engage each other and observers from the international development community in discussions on the development of Africa’s financial sector.
The Partnership for Making Finance Work for Africa (MFW4A) is an initiative established to support the efforts of African countries to accelerate economic growth and reduce poverty by promoting financial sector development. It is based on the understanding that the financial sector is a key driver of private sector investment, employment generation, and economic growth. After its inaugural meeting in Arusha, Tanzania, in 2012, the Partnership’s advisory committee continued its high-level policy dialogue designed to identify the strategic priorities for the long-term development of Africa’s financial sector. The second MFW4A Advisory Council Meeting took place during the AfDB Annual Meetings on Wednesday, May 29.
Towards greater efficiency in African financial markets
Gabriela Braun, Chair of the supervisory Committee and representative of the international donors (African Development Bank, European Investment Bank, World Bank, Agence française de développement, USAID and Consultative Group to Assist the Poor) opened this second advisory council session.
“The creation of a platform of dialogue with development partners enables us to better allocate our resources to a long-term development of Africa through a more efficient financial market,” she said. “Africa is on the verge of a great economic transformation that would be sustainable in the long run only with a sound financial sector. That’s why the measures discussed in the partnership Making Finance Work for Africa should be integrated into the economic policy agenda,” she said.
Stella Kilonzo, an accountant and business administrator, and former Chief Executive Officer of Kenya’s Capital Markets Authority, listed some of the priorities for a long-term development of a credible and accountable financial market in Africa.
“This is time for Africa, on the edge of an economic transformation, to efficiently attract funds and to better allocate them for Africa’s long-term development investment through accountable and efficient financial markets,” she said.
Measures to focus on
The creation of an accountable and efficient financial market in Africa, Kilonzo said, would attract substantial investments in important fields such as infrastructure, housing, renewable energy and agriculture, all key to long term development.
To succeed in making finance work for Africa, the delegates at the meeting agreed on the need to foster:
- greater harmonization of commercial laws and accounting standards
- the integration of Africa’s financial markets infrastructure
- the development of credible data
- credible assessments of risk
- the establishment of an appropriate balance between reliable regulatory systems and innovative financial products
- currency convertibility
- (a) free-trade regime(s)
- the creation of forums that facilitate dialogue for the promotion of efficiency and an enabling environment for financial markets on the continent
- greater trading volumes
To achieve these goals, however, a high level of commitment from African governments and public sectors would be needed, the delegates said.
They urged African banks to invest in ventures that promote job creation and long-term development. Investments in small and medium-sized enterprises, the delegates said, were important because these account for some 80 per cent of employment in Africa.