Johannesburg - African regulators must be wary of growing cross-border financial risks as the continent’s banking system becomes increasingly sophisticated over the next decade, according to South African Finance Minister Nhlanhla Nene.
With high economic growth and a young population, the continent’s financial system will rapidly gain customers and expand across countries, Nene said at a conference hosted by the Economist in Johannesburg today.
“The more complex African banking becomes, the more likely it may create a financial crisis,” Nene said.
“This in turn raises new challenges in terms of the complexity and management of regional banks’ operations.”
Barclays, Old Mutual and Bob Diamond’s Atlas Mara Co-Nvest are among financial companies seeking to spur capital-markets growth in Africa, where a third of economies are expanding at more than 6 percent annually, according to the World Bank.
Such growth requires added supervision if the continent is to avoid financial crises like that of 2008, said Nene, who took up his post in May.
“We have a solid regulatory framework, but we need to upgrade as the situation becomes more complex,” he said.
“This can be particularly challenging in countries where supervisors and other authorities have limited resources.” - Bloomberg News