ADDRESS BY HON. KWADWO BAAH-WIREDU, MINISTER OF FINANCE AND ECONOMIC PLANNING, GHANA ON MAKING FINANCE WORK FOR AFRICA PARTNERSHIP FORUM –JUNE 17, 2008

Mr. Chairman,
Governors of Various Central Banks,
Representatives of Development Partners,
Representatives of Regional and Sectoral Organizations,
Executives of Financial Services Providers,
Senior Policy Makers,
Independent Financial Sector Experts,
Invited Guests,
Friends of the International and Local Media,
Distinguished Ladies and Gentlemen,

I am very honoured today to be invited to the opening session of this Partnership Forum on Making Finance Work for Africa as the Minister of Finance and Economic Planning, Ghana.

2. Ladies and gentlemen, financial sector development is increasingly becoming a priority for African policy makers. A growing economy needs strong private investment driven by strong, innovative financial institutions.

3. The key to deepening the financial sector development of Africa rests in a conscious effort of working together to share best practices and to promote regional integration of financial services.

4. It is clear that the Partnership for Making Finance Work for Africa recognizes this goal and is motivated to making it an African development priority underpinned by efficient cooperation among African Governments, development partners, the private sector and other stakeholders.

5. Mr. Chairman, ladies and gentlemen, over the past decade, policy reforms as well as improved governance have been adopted in many African countries to reverse the dismal macroeconomic conditions; thereby transforming it into a facilitating environment with laid down important foundations for growth.

6. The performance of national financial sectors however still falls short of its full potential as it is still characterized by:

• Limited access to and high costs of finance to African firms for enterprise growth.
• Small portion of approximately 20% of adults in Sub-Saharan Africa holds bank accounts at a formal or semi-formal institution.
• Currently, private sector credit as a ratio of GDP standing at 14% is still insufficient to drive growth and private sector development even though the availability of credit has improved.
• Interest cost, administrative expenses and collateral requirements for loans are significantly higher in Africa compared to the rest of the world.

7. I am glad to say that innovative financial operators and the emergence of strong regional banks are evolving the scenery of African banking. With the improved penetration of ICT and mobile telephony, new possibilities for the provision of financial services create easy access to an extensive and large number of Africans.

8. This has created an integrated financial market in Africa thereby perpetuating economies of scale which is very essential in building efficient financial and capital markets.

9. Mr. Chairman, Ladies and Gentlemen, in line with this, the 2007 G8 Heiligendamm Declaration on Africa’s “Growth & Development” emphasize that:

“Countries with functioning financial markets grow faster and achieve lower poverty rates by helping to channel resources to their most productive use, reduce dependence on external financing, and facilitate risk management.

Financial sector deficiencies such as the lack of long term financing in local currency, pose key obstacles that act to constrain African investors, including small scale and informal entrepreneurs and women”.

10. Ladies and Gentlemen, our major concern should be how we can increase financial sector development support, overcome fragmentation and increase aid efficiency by addressing the following four key constraints for efficient development partner support within country-owned developments:
• Lack of coordination between the private sector and other stakeholders
• The constraint of African Financial Sector Development Initiatives hindered by knowledge gaps in important areas, inappropriate application of global best practices to African contexts and contradictory policy advice
• The lack of country-owned comprehensive financial sector development strategies and action plans and
• The lack of information and understanding of the importance of financial sector impediments to development as financial sector agenda is still been omitted from national and regional development plans and by extension development partner support programs.

11. Ladies and gentlemen, I would like to conclude by saying that African governments, development partners and the private sector collectively need to work together as a unified financial system in order to strategize implementable solutions to the development of the African financial sector.

12. On this note, I declare this Partnership Forum for Making Finance Work for Africa formally opened.

Thank you.