International Monetary Fund African Department Financial Inclusion in the ECCAS region: where do we stand ECCAS Regional Conference, Brazzaville, Congo Boriana Yontcheva Resident Representative Cameroon African Department IMF Outline 1. Access to financial a service is very uneven e 2. Where to we stand in ECCAS 3. Causes 4. Reforms Brazzaville, Congo 1
Financial Inclusion tremendously around the world Afrique Subsaharienne: Distribution des subventions aux carburants Source: Arze del Granado, Coady, and Gillingham (2010). Only half of the world population has a bank account 3 Access varies a lot across SSA Account at a formal financial institution(% age 15+), 2011 Account used to receive wages (% age 15+), 2011 Brazzaville, Congo 2
but is relatively lower in the subregion 50% 40% Financial Inclusion - a Regional Comparison 30% 20% 10% 0% Angola Burundi Cameroon Central African Rep. Chad Congo, Dem. Rep. Congo, Rep. Gabon Rwanda CEMAC SSA Frontier and Emerging 5 particularly for vulnerable populations such as the poor 75% 60% 45% Financial Inclusion by Income poorest 20% richest 20% 30% 15% 0% -15% ngola A Bu urundi Came eroon Central African Rep. Congo, Dem. Rep. Congo, Rep. Chad Ga abon Rw wanda MAC CE SSA Frontier and Eme erging 6 Brazzaville, Congo 3
and women 50% 40% 30% 20% Men Women Financial Inclusion by Gender 10% 0% Angola B urundi Cam eroon Central Africa n Rep. Chad Congo, Dem m. Rep. Congo o, Rep. Gabon Rwanda C EMAC SSA Frontier and Em merging 7 Country comparison are useful but benchmarking Step1: identify the benchmark Financial Sector Development Economic development «Special» circumstances Offshore center, Population/ oil exporters etc Démographics (tool: World Bank: FINSTAT) 9 Brazzaville, Congo 4
Step 2: Identify the gap 6 5 4 3 FinGap=Benchmark/Actual level Facts 1. Many financial sectors in the region are relatively underdeveloped 2. The size of the gap is not related to the economic development 2 1 0 Equatorial Guinea Seychelles Liberia Gabon Chad Congo, Republic of Sierra Leone Botswana Guinea Central African Republic Congo, Democratic Rep. Guinea-Bissau Lesotho Ghana Zambia Madagascar Cameroon Swaziland Mauritius Tanzania Gambia, The Comoros Rwanda Uganda Cabo Verde Niger Côte d'ivoire Angola Burkina Faso Mali Eritrea Benin Malawi South Africa Namibia Kenya Burundi Mozambique Togo Nigeria São Tomé and Príncipe Senegal 10 Step 3: what are the factors that explain financial sector development Financial sector «gap» Can be explained by GDP/capita Inflation Debt Natural resources Institutional Variables (business climate, government effectiveness etc Financial sector specific variable (depth of credit bureau) Financial Depth and Inclusion in Africa IMF Working Paper Adrian Alter and Boriana Yontcheva 11 Brazzaville, Congo 5
Factors explaining financial sectors development in Africa As expected and elsewhere macroeconomics (inflation and GDP) matter CFA zone countries with better business climate and better institutions have more developed financial sectors Countries with more developed credit bureau coverage have more developed financial sectors 12 Financial access varies across SSA but some countries have seen a very rapid improvement Commercial bank branches (per 100,000 adults), 2005 Commercial bank branches (per 100,000 adults), 2012 Brazzaville, Congo 6
Financial access varies across SSA but some countries have seen a very rapid improvement Example: Rwanda: Number of bank branches per 100,000000 inhabitants. Actual level Benchmark Source: Finstat Potential reforms 15 Brazzaville, Congo 7
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