Africa’s financial sector
Africa’s financial sector is underdeveloped. Many countries are plagued by corruption and heavily indebted. The populations of these countries themselves own little in the way of financial assets.
Financial sector in Africa
The number of people who have their own account is in Africa as low as nowhere else in the world. Only about 30% of the African population are registered with a bank. Despite some clear economic growth, for example, unemployment in Mozambique fell by 40% around the turn of the millennium, the financial sector in these countries is not picking up speed. This is mainly because the major banks in these countries focus on the few large companies.
The promotion of industrial products is the main concern in most states. Small investors are usually of little interest to banks, as no profit can be made with them. Since most people do not have a regular income, banks cannot do business with them in a targeted manner. The elites of these states, on the other hand, usually invest their money in countries with more favourable tax laws, such as Switzerland.
No economy - a major problem
Few states have their own economy and thus their own capital. In many countries, they depend on loans from the International Monetary Fund. However, this usually does not improve the precarious situation. In addition, banks such as KfW Development Bank help to support impoverished states and at least enable a few people to obtain a loan.
Small but few advantages
For the better-off states in Africa, one advantage of their low involvement in international financial transactions became apparent. During the crises of recent years, they were hardly affected by them. While the major industrialised nations suffered the consequences of the recession, the small economies in Africa remained stable. Their banks were significantly restricted in their decision-making freedom and therefore could only include very few high-risk securities in their portfolios. What was once perceived as a burden later proved to be life-saving. In addition, the economies of African states have been steadily growing since the end of the Cold War. Although the growth is comparatively low, it can still be seen as a glimmer of hope. The Football World Cup in particular has brought an economic boom to southern Africa, which has also significantly strengthened the financial markets.
