Broadening Financial Intermediation in Sub-Saharan Africa

Abstract

Financial system forms the channel between sources and users of savings. The structure and performance of the financial sector determine the effectiveness of this intermediation. Thus, it is a key determinant of economic development and long-term growth in an economy. Sub-Saharan Africa is not an exception to this. Their financial systems need to be developed in order to better serve economic development. Better financial intermediation will help sub-Saharan African economies in achieving higher income levels and catching up with other regions of the world. This chapter reviews the existing deficiencies in the financial sector and proposes a blueprint for reforms in sub-Saharan Africa. The key conclusion is that bank-based narrow financial markets should be broadened with more roles for other segments such as development banks and capital markets.