The development of the African banking sector involves more competition and a strategy focused on the consumer

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Competition in the African financial sector needs a boost. This is the imperative at the core of Financing Africa: Through the Crisis and Beyond, a joint publication by the African Development Bank (AfDB) and the World Bank, presented on May 29, 2013 in Marrakesh, during a session entitled “Maghreb Financial Sector Dialogue”, which took place on the sidelines of the AfDB’s 48th Annual meetings.

The work is based on the most recent data available to expose the new trends of the African financial sector, documenting landmark evolutions and illustrating the failures and the successes known in the sector with the aim of “improving and updating our knowledge,” said Issa Faye, Manager at the AfDB and co-author of the work.

The financial sector has been confronted with numerous challenges in Africa, according to Faye, who evoked the weak banking rate especially in the rural areas, or even the strong variability of capital among the different African countries.

Faye recommended that consumer banking services be put at the core of the sector’s development strategies and that competition between various banks be improved in order to benefit end-users. This reinforcement of competition goes through the implementation of appropriate legislation that is seldom updated in most African countries, namely regarding the security of savings for individuals.

A good example of the political will which can enable a healthy development of the banking sector is in Morocco, which “has known an uninterrupted process of reforms since 1991,” said Lahbib El Idrissi Lalami, Deputy Director of the Treasury and External Finances in that country.

These reforms are namely based on access to lending for individuals, he explained, describing as an example the evolution of micro-credit in Morocco, which expanded its clientele in ten years – nearly a million – reaching a capital of 4 billion dirhams (US $467,051,483).  

However, the financial sector in Morocco has known a few dysfunctions during the last few years. To resolve this issue, a new banking law was proposed to replace the one approved in 2006, which includes participating banks.

Al Barid Bank (the postal bank) was also created in 2007 to raise the rate of banking in Morocco, currently below 30%.

According to Mohamed El Moussaoui, a Board Member of the Al Barid Bank, “banking targets the population with modest revenues, part of a national policy to develop the banking sector.” The result: “the rate of banking in Morocco has reached 55% in 2010,” he said.

In addition, Morocco wishes to develop its banking network in Sub-Saharan Africa and to start its commercial expansion in the region, namely based on partnerships with other African countries, said Lamia Marzouki, Director of the partnership strategy for the new financial platform launched by the Sharifian Kingdom: Casablanca Finance City.

“Our African economies are small. We need to harmonize and work together to reach a critical mass that enables us to be on the radar of the international market,” Marzouki highlighted.

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