Conference to Explore West African Regional Financial Integration
October 22, 2013
- Focus on potential benefits for private sector of financial integration
- Event will also highlight risks from interconnected financial systems
- Discussions to review stronger domestic, regional supervision
As the countries of Sub-Saharan Africa build upon their recent economic successes, attention increasingly has focused on the importance of financial sector development in stimulating continued progress.
One key element of this process is cross-border financial integration—a topic that will be the centerpiece of a conference of West African policymakers and financial sector leaders to be held October 28 in Accra, Ghana.
Co-sponsored by the government of Ghana and the IMF, the one-day conference on the Opportunities and Challenges of Financial Integration in West Africa will bring together senior policymakers from the Economic Community of West African States. Participants will include finance ministers and central bank governors, financial sector representatives, and experts from international financial institutions.
“At a time of rapid and positive economic change in Africa, financial integration has emerged as an increasingly important factor that can help lift the region to the next stage of development,” said Naoyuki Shinohara, IMF Deputy Managing Director, who will co-chair the event. “This is certainly the case for the countries of West Africa, where a dynamic financial environment offers considerable promise—but also some risks.”
Ghana Vice President Kwesi Amissah-Arthur will join Shinohara in welcoming regional participants to the event. Discussions will focus on the potential benefits of financial integration for private sector development and the mobilization of long-term financing for infrastructure, while also highlighting the risks from larger and more interconnected financial systems.
Drawing on the experience of other regions, the conference will crystallize lessons and concrete steps that West African countries can take to maximize the benefits of financial integration and minimize its risks.
“The joint organization of this conference is an example of the close cooperation between the Government of Ghana and the IMF,” said Antoinette Sayeh, Director of the IMF African Department. “As a dynamic economy with regional importance and large infrastructure needs, Ghana can greatly benefit from and contribute to regional financial integration. At the same time, it is starting to adjust to the more challenging financial landscape, making it an ideal place to host this event.”
West Africa has recently seen an impressive growth in its financial sector, accompanied by the rapid rise of African banks with cross-border operations. This dynamic expansion has contributed to stronger competition—including with foreign banks in the region—and financial deepening. But it has also widened the spectrum of risks. The Ghana conference will provide a forum for policymakers to examine the central issues they face in the coming years as they move to forge stronger domestic and regional supervisory arrangements that can help mitigate those emerging risks.
An important theme of the conference will be the lessons that can be drawn from the experience of other regions undergoing financial sector integration. As part of that discussion, José Viñals, IMF Financial Counselor and Director of the IMF’s Monetary and Capital Markets Department, will discuss the issues of supervision and regulation of cross-border banking from an international perspective.
“The opportunities brought by fast-growing cross-border financial groups in Africa pose challenges to regulators and supervisors,” Viñals said. “Enhanced coordination arrangements on supervisory cooperation and information sharing between home and host jurisdictions will be needed to preserve financial stability.”
Financing for infrastructure
Another crucial challenge facing West Africa as it builds upon its recent economic gains is the mobilization of long-term financing for infrastructure development. The conference will examine the approaches to creating a regulatory environment that can enable developers, investors and financiers to raise the capital needed to advance West Africa’s plans for expanding its transportation, energy and related infrastructure networks.
Sub-Saharan Africa has been one of the world’s economic bright spots in recent years, posting the second-fastest rate of growth after emerging Asia. Regional output is expected to expand 5 percent in 2013 and 6 percent next year. Going forward, sustaining this performance will require overcoming such constraints to growth as those imposed by infrastructure gaps. Regionally mobilized long-term financing could help fill those gaps.