For most African states, the small scale of national markets constrains financial sector growth and efficiency, contributing to higher costs, a narrowed range of financial product offerings and the exclusion of numerous Africans from formal financial services. African states have long noted the limits imposed by their scale and set various courses on the pathway of economic regionalization, establishing a mosaic of regional agreements and bodies. Each African state is a member of on average four regional agreements relating to trade and/or finance. Making Finance Work for Africa. Regional financial integration, when set within the broader context of the financial sector reform agenda, offers one set of strategies to help unlock the efficiency of scale and market forces of competition.
While Africa has taken some steps toward regional financial integration, many of the benefits seem to be elusive. What aspects of financial sector integrations have the regions attained, and what should be prioritized among that which remains? What financial regulations, infrastructure and instruments should be tapped to deepen the financial sector and drive shared economic growth? Regional economic communities in Africa frequently focus upon the long term goal of a monetary union and prioritize convergence criteria, marginalizing discussions on banking supervision, payment systems, credit information and other pieces in the backbone of financial system. Yet the regionalization of these elements can offer significant gains either in conjunction with or in absence of a monetary union. History also suggests that the timeline achieving monetary union is long, while modest interim steps can advance the larger agenda and be realized in a relatively short timeframe.
