This publication describes explicitly how the financial sector development is crucial for economic development and inclusive development. The link between financial development and economic development lies on the functions that financial services perform including liquidity provision, information production, price discovery, risk management and governance. All these functions when applied can have positive effects in economic development.
In Africa, between the 1980s and 1990s, the government in a bid to enhance the developmental potential of finance, chose to liberalize their financial sectors as part of the structural adjustment programmes by the IMF and World Bank. According to the report however, despite all measures taken to improve the performance of financial sector for economic growth, the financial markets and corresponding economy in Africa is considerably less-developed than anywhere else in the world on all measures of financial development. Notwithstanding, the African financial sector have addressed the crisis remarkably well especially if compared to other developing regions.
This publication sheds light on the project underwent by the AERC on the theme: Financial Sector Reform and Development in Africa. The project covers issues such as financial regionalization and globalization, financial liberalization and how it impacts growth, financial inclusion and finance for SMEs, financial sector innovations including mobile money, banking sector and stock markets development in sub-Saharan Africa. This project was analyzed implicitly to uncover ways to financial sector development in Africa.
This report is straight to the point and concise. However, graphical representations will suffice in explaining the financial sector development in sub-Saharan Africa showing each countries growth or the lack of it and comparing through the years. Also, the report fails to address how the solutions highlighted could be implemented to solve the problems in the financial sector development.
AUTHOR: Isaac Otchere, Witness Simbanegavi & Lemma W. Senbet
YEAR OF PUBLICATION: 2017