2 ND AFRACA CENTRAL BANKS’ FORUM

1. 2ND AFRACA CENTRAL BANKS’ FORUM FORUM HIGHLIGHTS

2. Overview • The forum covered several topics around the theme of promoting financial inclusiveness • Challenges of enhancing financial inclusion were discussed in detail and lessons drawn from country experiences on the best way forward • The following were some of the highlights:

3. Emerging Role of Central banks • Central banks have the responsibility of ensuring sound and stable financial systems. • There is need for comprehensive legal and regulatory frameworks, operational independence and budgetary independence. • There is need to establish different agencies that can provide regulatory oversight over non – deposit taking financial institutions.

4. Factors Limiting Financial Access • Low incomes; • High cost of financial services; • Low availability of informal initiatives • Lack of documentation • Lack of financial education • Infrastructure • High risk profiles • Long gestation periods

5. Lessons from Finscope Studies • Affordability and physical access are the two major constraints that must be addressed in order to encourage financial access. • Informal services can supplement the formal financial services (as demonstrated in Kenya). • Though creation of an enabling environment is necessary, Government actions and financial sector innovation are needed to move the access frontier forward.

6. World financial Crisis -Lessons for Africa: • There’s need to stick to the fundamentals of sound lending practices • There’s need to know the risks involved in lending • There’s need to put in place appropriate risk management policies and procedures.

7. Food Security Issues • Africa continues to face food security challenges due to factors such as low productivity • Africa’s food potential is grossly underdeveloped • Global surge in food prices presents both risks and opportunities for Africa • Financial inclusion is cardinal in facilitating improved food security and poverty alleviation

8. Housing Issues • Access to housing is a basic need • Huge gap between demand and supply of housing units in Africa • Cost of financing construction of houses beyond the reach of the majority • Need for partnerships among financial institutions and primary mortgage providers to increase access

9. Way Forward in Promoting Financial Inclusiveness • Governments could help shape market developments by formulating policies that enhance financial access • Policies aimed at improving inclusiveness should include • A vision for the financial sector; • An enabling Legal, Regulatory and Supervisory Framework; and • Improvement of the lending environment.

10. Way Forward in Promoting Financial Inclusiveness • Governments must develop infrastructure using appropriate PPP models • Need to ensure that small scale farmers are provided with technical support and financial education • Need for partnerships between banks and primary mortgage providers to enhance market access of housing loans

11. Way Forward in Promoting Financial Inclusiveness • Financial institutions need to adopt a microfinance approach rather than focussing on micro loans only • Financial institutions should invest in technology and innovation to tailor their services to the needs of the financially excluded • Central banks could play a role in re-engineering financial institutions to meet developmental needs of African economies