Africa Financial Industry Summit examines the challenges facing Africa’s financial sector

By Aurélie Benoit, Aurélie M'Bida, Joël Té-Léssia Assoko, Quentin Velluet
Posted on Monday, 28 November 2022 10:51

François Jurd de Girancourt, Paul-Harry Aithnard, Settor Amediku, Hakim Ben Hammouda © MONTAGE JA

On 28 and 29 November, the Africa Financial Industry Summit in Lomé will be an opportunity for the sector’s major players to debate the current issues and future challenges of African finance.

During two days of debates, panels, workshops, round tables and keynotes, the financial industry will tackle a wide range of issues that drive its daily life. These include green finance, price wars in mobile money, innovation at the time of AfCFTA, digital payments and trade finance, insurance consolidation, artificial intelligence, credit risks, financial inclusion and crypto-currencies.

Watch the opening session live here.

But what do financial sector players really expect from the second edition of the Africa Financial Industry Summit (Afis)*?

We give you an overview of the two days.

A world-class industry

How does one develop a world-class financial industry?

A high rate of banking, helping finance non-wage earners (90% of the African population) and SMEs, and greater resilience (respected regulation and healthy competition) are the three ingredients necessary for its advent, according to François Jurd de Girancourt, partner at McKinsey in Casablanca.

He sees Africa divided into four distinct groups. “The Maghreb and Southern Africa are regions with a strong banking tradition, where mobile money penetration is low,” he says. This group of countries still needs to make progress when it comes to defining frameworks that are conducive to innovation and lowering the costs of the services offered. East Africa and Ghana, for their part, combine a preponderance of mobile money within a context of already well-developed banking sectors.

“Tomorrow’s battle will be over access to micro-credit, which mobile platforms can boost. For their part, regulators must protect consumers, particularly with regard to the level of interest rates charged,” says Girancourt.

Egypt and Nigeria, two giants of the continent with a combined population of over 300 million, are both well-banked and innovative markets where regulators are giving some freedom to the fintech ecosystem.

Finally, the French-speaking countries are described as being “in transition”, as their markets are not really dominated by banks (about 20% penetration) or mobile money services (50% penetration).

“They still have a lot of work to do on market penetration and are moving in the right direction when it comes to financing the real economy. Providing credit growth to individuals and SMEs via these innovative products is also an opportunity for banks to diversify their balance sheets, where public debt often still represents more than a third of assets,” says Girancourt.

Taking advantage of the AfCFTA

Several roundtables and panels will address the issue of the common market. What role should the continent’s financial institutions play in implementing, accelerating and making the African Continental Free Trade Area (AfCFTA) project a success? And, most importantly, how can we leverage this breakthrough for intra-African trade and fuel growth and transformation in the financial sector?

For Amediku Kwabla Settor, Director of the Payment Systems Department at the Central Bank of Ghana (BoG), there are three main challenges to the full-scale rollout of the AfCFTA. These are: the commitment of member countries; managing the policy aspects of the FTA without compromising its economic benefits; and the current state of the global macroeconomic environment.

Within this framework, the financial sector must be able to play its full role in addressing these obstacles. “The financial services sector can show leadership by directing the process, for example through the AACB [Association of African Central Banks] network, and by pursuing sound monetary policies,” says the BoG economist.

Moreover, he says, financial regulators must “form alliances within the region to push the agenda forward. To date, the AACB has already helped put in place initiatives to facilitate cross-border payments through the integration of payment systems. This system will provide the necessary infrastructure for intra-regional trade.

Financial inclusion and sustainable finance

Three major topics will be addressed at the Afis with regard to financial inclusion: innovation, defragmentation between the various industry players and the gender issue, according to Paul-Harry Aithnard, CEO of Ecobank Côte d’Ivoire and Executive Regional Director for the Uemoa zone.

As far as innovation is concerned, the ideal would be an alliance between all the players (banks, insurance companies but also telcos) to develop innovation centers, with incubators and gas pedals that allow fintechs to come and develop and, thus, propose low-cost technological solutions, he explains. “For example, we have formed Côte d’Ivoire Fintech Association (CIFA), which I chair, which is preparing a white paper, taking stock and making recommendations to regulators as well as public policymakers on the levers to use to accelerate the development of fintechs in Côte d’Ivoire.”

If we want to have an impact, we need to pool our strengths,” continues the executive. “This is what happened with the “Silicon Savannah” around Nairobi. It’s about collaboration between players in the ecosystem, not about merging our activities. This is how we will be able to position French-speaking countries as a place of reference for innovation.”

The second topic is to encourage players to defragment their proposals and create a chain of response to financial inclusion. “I know that banks, telcos and microfinance are sometimes in competition. But on the issue of financial inclusion in the rural world, for example with regard to farmers, we need to work together to solve very practical problems,” says the banker. “In remote rural areas, where there are no banks but where there are microfinances and cell phone users, partnerships can be formed with financing coming from the bank, but disbursed in microfinance agencies and on clients’ phones through microcredits. In emerging countries such as India, this exists.”

Finally, we need to have a strong and assertive bias towards financing women,” says Paul-Harry Aithnard. “This is what Ecobank is trying to do through its Ellever program, which offers not only financing, but also training and digitalization. If we can include women, we will solve more than half of the problem of financial inclusion.

Regulatory framework

The summit will also be an opportunity for financial industry players to make their voices heard on the issue of financial regulation. This is a sensitive issue in view of the criticism regularly levelled at certain international standards, which are deemed to be poorly adapted to the African context.

“The rules defined in the Basel agreements in particular are too restrictive,” laments Hakim Ben Hammouda, Secretary General of the Afis Supervisory Board.

For this former Tunisian Minister of Economy and Finance, it is time for the continent to emancipate itself on this point.

“The objective of these two days is to meet to structure the debate so that all Africans learn from each other. And this is all the more important in these times of crisis, when it is a question of maintaining resilient economies thanks to a banking sector freed from legislation imposed by external institutions,” the economist analyzes.

* The Africa Financial Industry Summit (AFIS) is the main platform of the African private sector,  founded by Jeune Afrique Media Group in 2021, with the support of IFC (World Bank Group), and is “younger brother” of the Africa CEO Forum.

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