Banking in Africa

This paper takes stock of the current state of banking systems across sub-Saharan Africa. It also discusses recent developments including innovations that might help Africa leapfrog more traditional banking models. It documents financial development across different dimensions, in international comparison, but also illustrating variation within the region and over time.

Though the focus of the paper is on the overall banking systems of the region, it includes chapters on:

• Household access to finance in international comparison;
• The role of microfinance in Africa;
• Overcoming Barriers to Financial Inclusion: Branch Expansion, Field Experiments, and Technology

Key findings include:

• African banks are well capitalized and over-liquid but lend less to the private sector than banks in non-African developing countries;
• African enterprises and households are less likely to use financial services than their peers in other developing countries;
• To help overcome remaining challenges in deepening and broadening financial inclusion in Africa future research is needed in the following key areas:
  • The short-term nature of financing in the region;
  • The quality of access to finance for small enterprises;
  • Regulatory reform with an emphasis on cross-border regulation;
  • The political economy of financial sector reform.