IMF: Financial Services still shallow in Africa

Managing Director of the International Monetary Fund (IMF), Christine Largade, has decried the low level of financial services in Africa, despite efforts by countries to reform and develop financial services sectors on the continent.

Largade is due in Nigeria from similar visits to Niger and South Africa.

Nigeria’s THISDAY Sunday quotes Largade as saying that innovative solutions to foster financial sector development could spur the much needed growth as well as strengthen financial ties between Africa and its partners in a mailed article titled: “It’s Time to Showcase a Confident Continent.”

According to her, while several other regions of the world had to address slow down and uncertainty, a lot of countries in Africa had been facing a contrasting challenge.

This, she identified as the need, “to respond to the growing demand for their bountiful resources and manage rising investment in the much-needed infrastructure investment. At the same time, growing economic uncertainty in the world is raising concerns across the continent, where vulnerability to global shocks remains high.”

Largade explained: “In the last decade or so Africa has sprung from being all too often a casualty of internal and external shocks, to gaining new confidence in its economic success. Perseverance with sound policies is paying off, and institutions such as the IMF have not been shy in showcasing how this continent has stuck to its task of reform and recovery.

“Africa’s natural resource wealth is attracting rising foreign investment to help develop and extract those resources. Domestic and foreign investment is increasingly addressing the large infrastructure gaps that many countries still face.
And spending in the social sectors, while still insufficient in many countries, has been rising steadily – reflected in better health and education outcomes.

“In Sub-Saharan Africa, growth has averaged five to six per cent a year over the past decade. That is good— but not good enough. In particular, the management of natural resource wealth poses both economic and governance challenges that will need to be addressed to ensure sustained and inclusive growth, and decisive progress in poverty reduction.”

Lagarde further pointed out that one of the consequences of greater engagement with the rest of the world was that other countries’ problems could soon become Africa’s problems, even as she declared that there was need for countries in the continent to focus on how they can best shield themselves from the effects of the crisis in Europe.

First-hand experience of key issues in each of these countries she would visit, Largade said would help her understand where and how the Fund can offer assistance to Africa.

She added: “My first port of call will be Nigeria, Africa’s most populous country and its largest oil producer. I look forward to discussing the comprehensive agenda that Nigeria’s leadership is formulating to tackle its economic challenges, including its dependence on oil and the need to accelerate job creation.

“Then I will visit Niger, one of Africa’s poorest countries but an economy with the promise of wealth from new mineral projects. Finally, I will travel to South Africa, one of the continent’s most developed economies and a key member of the Group of 20 advanced and emerging market economies.”