Financial Systems in Sub-Saharan Africa: A Comparative Study

This paper compares eleven financial systems of sub-Saharan Africa over the 1980s and early 1990s in terms of:

• Their performance in monetary management;
• The performance of their banking sectors, the spread of financial distress, and the different methods of financial restructuring used to address this problem;
• Processes of financial deepening and diversification, and assesses the prospects for further financial development;
• The role of informal and semiformal financial mechanisms and institutions.

It recommends that:

• The macro-financial framework has to remain steady;
• The monetary management has to be improved;
• Legal, regulatory and prudential frameworks have to be reformed;
• The supervision has to be strengthened;
• Property rights and contract laws have to be effectively enforced;
• Financial competition has to be increased.

Some sub-Saharan countries have already implemented such policy measures and have successfully reformed their financial system.