Senegal: Financial System Stability Assessment Update

IMF Staff Country Reports, April 18, 2005

Source details

The banking sector remains the cornerstone of the financial sector.
Risk concentration remains the main source of vulnerability.
The largest microfinance institutions (MFI) are sound, but smaller MFIs are weaker and need to be consolidated and better supervised.
Commercial banks and large MFIs provide credit to small- and medium-sized enterprises, but access to financial services suffers from asymmetries of information and flaws in the judicial system.
The development of the regional capital market has not met expectations.

Banking sector: identified as the central pillar of the financial system; primary vulnerabilities arise from risk concentration.
Microfinance sector:
- Largest MFIs: sound.
- Smaller MFIs: weaker; require consolidation and enhanced supervision.
Credit intermediation: commercial banks and large MFIs are key providers of credit to small- and medium-sized enterprises, but effectiveness is limited by information asymmetries and judicial system weaknesses.
Capital markets: regional capital market development has fallen short of expectations.

Strengthen supervision and regulatory oversight, particularly targeted at smaller MFIs, to support consolidation where appropriate.
Address information asymmetries that hinder SME access to finance (e.g., improve credit information, borrower profiling).
Reform judicial processes affecting creditor rights and contract enforcement to reduce barriers to financial access.
Reassess measures to promote regional capital market development given current underperformance.

Senegal: Financial System Stability Assessment Update, IMF Staff Country Reports 2005, 126.

Senegal: Financial System Stability Assessment Update
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