For the 28 jurisdictions that are members of the Basel Committee on Banking Supervision, adopting Basel banking standards is a given. But why are some non-member developing countries embracing the reforms when they don’t have to? The answers vary by country, but the final lesson is that regulators should carefully evaluate the advantages and disadvantages of adopting Basel regulations in whole or in part for their nation’s unique situation.
In any economy, banks play the critical role of re-allocating capital, from surplus areas into deficit areas. It is a role that sees them take deposits from the public and use the same to issue loans to businesses, both large and small. But that process hasn’t been happening much in Sub-Saharan Africa. Instead, banks, motivated by risk-aversion, have been funneling liquidity into the coffers of governments through government-issued debt securities. SSA banks must get back to the business of lending to the private sector if they are to escalate shareholder returns.
Ghana is currently experiencing a rapid and massive technological revolution in its banking industry as well as in other sectors of its economy. The innate benefits associated with the use of digital technologies in service delivery have required a myriad of banks to heavily invest in information-technology infrastructure and systems.
It’s not news that many economies of the developing world face barriers to financial inclusion, making it difficult for citizens to both borrow and save; but the good news is that help has arrived in the linking of mobile payments with remittances. From sub-Saharan Africa to Latin America and the Caribbean, mobile money is bringing the previously underbanked into the fold.