African banks have shown remarkable growth over the past decade mainly due to a raft of reforms introduced in the financial sector, the World Bank said in a new study launched in Nairobi Tuesday.
The Bank, however, decried the low access to banking services for the majority of the people on the continent.
– Africa has been perpetually identified with conflict and instability and the idea of a stable growing financial sector is often dismissed without a second thought, said Patrick Honohan, the principal author of “Making Finance Work for Africa”, a study by the World Bank.
– Now, as more African countries are on a path of sustained economic growth, it is time to make sure that the financial institutions are able to play their role, noted Honohan, World Bank senior financial policy advisor.
The study points to emerging opportunities of increasing the availability of affordable finance, so that the enterprises end up with access to financial services that will help them invest in productivity and expand.
The study, which was launched after a two-day meeting in Nairobi, analyses the principal constraints that have held back the financial sector on the continent.
– We see more credit being granted, more mobilization of savings by the public and new entrants making the market more competitive, Honohan said, adding:
– It has been built on the firm foundation of improved microeconomic stability, budgetary stability, inflation rates are down right across Africa and technology for delivering financial services has improved dramatically. He cited the introduction of a money transfer service by Kenyas biggest mobile network provider as an example.
Safaricom on Tuesday launched a product known as M-Pesa where subscribers can transfer money through short message service. Honohan said many African financial sector regulators were willing to allow phone companies to do this as they were providing a useful service to people without access to banking services, usually in rural areas.
He said the volume of microfinance on the continent had risen despite it being a costly source of funds. – It is costly, but it gives you the possibility of turning your ideas into reality if you are poor, he said. He added that banks were now looking at the poor people to expand their business by opening branches in poor areas and introducing banking products with minimal requirements.
Honohan noted, though, that only 20 percent of adults in Sub-Saharan Africa hold a bank account in a formal or semi-formal institution.
Kilde: www.worldbank.org
