Impact of Financial Sector development on Africa Economic Growth

 

The rise of Africa’s financial services sector in recent years has been remarkable. From a relatively under-explored and under-invested sector a mere decade ago, today, this sector is considered to be one of the continent’s brightest prospects. This is due to the fact that financial sector development has been on the agenda of African policymakers for some time now as (aside from profitable opportunities for investors) continued development of this sector has the potential to transform the lives of millions of people across the continent. For instance, access to credit by the SME/the more informal businesses have the ability to provide jobs, create safety networks and, ultimately play a role in reducing poverty.

With this in mind, various policy reforms over the past decade have contributed to an environment more conducive to financial sector development and, where Governments have made progress in introducing much needed regulatory frameworks, information systems and regulatory institutions – all aimed at enabling and facilitating further development of this sector.

The transformation, however, is not something that will happen overnight, in a week, a month or a year. And, while most African countries still lag behind the rest of the world in the adoption of banking and insurance products, this creates substantial scope for continued future development. Thus offering profitable opportunities for investors who are willing to take on some risk and are innovative – as their success will depend of their ability to devise new products, or new ways to deliver their product offering that suits the nature of both the targeted markets and consumers therein, across the African continent.