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Mukhisa Kituyi, secretary-general of the UN Conference on Trade and Development

According to recent reports, African central banks are holding back their own development by not keeping up with the new wave of innovation sweeping the financial arena.

According to a report in the FT the head of a UN economic agency and industry executive  Mukhisa Kituyi, secretary-general of the UN Conference on Trade and Development, said recently that regulators did not have “adequate understanding . . . of the changing environment” in the sector.  He said that less than a third of people in sub-Saharan Africa have access to proper financial services which works to eradicate poverty through financial sector development.

Also, according to a recent report Banking in sub-Saharan Africa – Interim Report on Digital Financial Inclusion:” “From a regulatory and supervisory perspective, a first set of challenges concerns trust and consumer confidence. Striking the right balance between leveraging opportunities and safeguarding against risks is critical to reaping the benefits of digital finance. Unfortunately, regulatory and supervisory capacity has generally not kept pace with changing market dynamics.

The report points out that trust in digital financial services is now under extreme threat by a number of challenges including, but not limited to, agent fraud, system failure, weak data security and privacy, and the questionable safety of customer funds, particularly where non-bank players are involved.

The report continued: “Technological advances carry with them significant compliance issues, including Know Your Customer and AML-CFT procedures, especially in countries with ineffective identification. These advances also create challenges in terms of maintaining a level playing field for service providers.”

David Ashiagbor (MFW4A) speaking at a recent industry event said that out of 590 million adults in SSA, 350 million do not have access to an account at a bank or with another type of financial institution. “According to Global Findex data, financial exclusion affects a particularly high proportion of women, young people and people living in rural areas. For traditional banks, building brick-and-mortar branches in low-population density areas is typically not economically viable. Even those who do have a current account often lack access to other basic financial services, including savings accounts, loans and insurance products. With only 34% of adults formally banked, there is huge potential for the development of financial services in Africa to meet the needs of the unbanked.”

by Bill Boyle
IBS Intelligence Senior Editor