Spreading access to finance critical
Dec 14, 2007
A World Bank report “Access to Finance†released recently showed that the lack of access to financial services in Africa can slow development. The report showed that on the continent there was only one bank branch for every 100,000 Africans and that only one in five people have access to any sor
A World Bank report “Access to Finance†released recently showed that the lack of access to financial services in Africa can slow development. The report showed that on the continent there was only one bank branch for every 100,000 Africans and that only one in five people have access to any sort of financial service.
In a related development at the official opening of KCB branch in Kampala, Kenyan High Commissioner Japheth Getugi said there was a great need for regional institutions to cement relations between countries.
The financial sector serves to aggregate disparate monies and then channels them to the productive sectors of society. The channelling of these funds is most efficiently done by the private sector but if funds are aggregated then governments can also tap into these resources to finance public goods.
Therefore the deeper your financial sector the more funds will be brought into the formal economy and so be distributed to the sectors of the economy in need.
In the absence of a vibrant financial sector capital -- a key factor of production is scarce, therefore expensive and to the extent that it is expensive slows down development as the productive sectors of the economy are starved of cash.
Western economies lend their development to the ability to aggregate monies and deploy them cheaply and effectively to drive the economy and we need to follow suit if we are to take our place in the league of serious nations.
The government has gone some way to strengthening the financial sector by ensuring only credible names are invited to participate in the industry and by strengthening the central bank’s supervisory function.
But more needs to be done. Government needs to improve its fiscal discipline as a way to lower the cost of money, provide incentives for increased savings by workers and promote the capital markets as a vehicle for raising money.
In a related development at the official opening of KCB branch in Kampala, Kenyan High Commissioner Japheth Getugi said there was a great need for regional institutions to cement relations between countries.
The financial sector serves to aggregate disparate monies and then channels them to the productive sectors of society. The channelling of these funds is most efficiently done by the private sector but if funds are aggregated then governments can also tap into these resources to finance public goods.
Therefore the deeper your financial sector the more funds will be brought into the formal economy and so be distributed to the sectors of the economy in need.
In the absence of a vibrant financial sector capital -- a key factor of production is scarce, therefore expensive and to the extent that it is expensive slows down development as the productive sectors of the economy are starved of cash.
Western economies lend their development to the ability to aggregate monies and deploy them cheaply and effectively to drive the economy and we need to follow suit if we are to take our place in the league of serious nations.
The government has gone some way to strengthening the financial sector by ensuring only credible names are invited to participate in the industry and by strengthening the central bank’s supervisory function.
But more needs to be done. Government needs to improve its fiscal discipline as a way to lower the cost of money, provide incentives for increased savings by workers and promote the capital markets as a vehicle for raising money.