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AFRACA Sub Regional workshop August 18-20, 2010 Accra, Ghana

AFRACA Sub Regional workshop August 18-20, 2010 Accra, Ghana. RURAL FINANCE INTERMEDIATION FOR GROWTH & WEALTH CREATION IN AFRICA Summary of Conclusion. LESSONS FROM ADB GHANA.

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AFRACA Sub Regional workshop August 18-20, 2010 Accra, Ghana

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  1. AFRACASub Regional workshopAugust 18-20, 2010Accra, Ghana RURAL FINANCE INTERMEDIATION FOR GROWTH & WEALTH CREATION IN AFRICA Summary of Conclusion

  2. LESSONS FROM ADB GHANA • With appropriate corporate governance, strong management culture, favorable legal and regulatory framework, Agricultural Development Banks and Micro-finance institutions should be able to fulfill their mandate of provision of sustainable financial services to rural Africa.

  3. THE GAMBIA EXPERIENCE • The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector…Together, we can and must build inclusive financial sectors that help people improve their lives

  4. RURAL BANKING IN GHANA The presence of rural banks in Ghana has helped in no small measure in creating a dependable channel for savings and credit among rural dwellers. Access to credit through the rural banking sector in Ghana has really enhanced development through the generation of jobs and all kinds of economic activity including those relating to agriculture, fishing, transportation, cottage industries, trading and commerce, education and health care among many others

  5. RISK MANAGEMENT • Unlike most other entrepreneurs, agriculture. The business of agriculture is often characterized by high variability of production outcomes or production risks. • producers are not able to predict with certainty the amount of outputs that the production process will yield due to external factors such as weather, pest and diseases. • Risks in agriculture affects both the farmer the Institution lending to the farmer for agricultural purposes. • Agriculture is an inherently risky economic activity with a large array of uncontrollable elements which can affect output production and prices.

  6. The agricultural sector offers a tremendous opportunity for economic growth, poverty reduction and employment generation on a sustainable basis in Africa. • Risk in the agricultural sector has threatened its growth and constrained the willingness of the financial institutions to support the sector. Unless there is a paradigm shift in favour of agriculture, through legislative support, capacity building, the sector may not be able to grow in Africa.

  7. ROLE OF REGULATORS The essence of regulation is to ensure that deposit taking institutions operate in a safe and sound manner A sound financial system is important because of the key role it plays in the economy: intermediation, maturity transformation, facilitating payment flows, etc Empirical studies confirm that countries with well functioning financial systems grow faster.

  8. Appropriate regulation and supervision is necessary to achieve safety and soundness as well as protection for depositors and creditors. In that regard, deposit taking institutions require closer supervision than non-deposit taking institutions.

  9. Financial inclusion is essential for poverty reduction and wealth creation Regulatory policy can contribute by: engendering a safe and sound financial system; supporting the creation and development of appropriate institutions, products and services for meeting the needs of the poor and excluded; encouraging the harnessing of technology to deliver cost-effective financial services; and balancing the need for regulation with the risks posed to the financial sector.

  10. Client Protection • Avoidance of over-indebtedness • Transparent pricing • Appropriate collection practices • Ethical staff behavior • Mechanism for redress of grievances • Privacy of client data • Bedrock of good practice for microfinance institutions and associations worldwide. • GHAMFIN has signed onto Transparency International and Smart Campaign • GHAMFIN also promotes these as a content of workshops on Governance • Content of planned Social Performance Management workshops

  11. In Ghana, the need for Client Protection is well established • All the three approaches, Education, Regulation and Code of Conduct, are engaged • Consumer Education empowers clients to protect themselves, • Statutory Regulation sets out the state’s provisions for client protection • Self Regulation (Code of Conduct) provides for the industry protecting the clients • For effective client protection therefore, all these arms must be present and operate harmoniously as they complement each other. • As a public good, consumer education should be the joint responsibility of the state and the industry.

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