Insights from the MFW4A conference “Promoting Financial Capability and Consumer Protection, A Step Forward towards Financial Inclusion in Africa”,held in 2009, demonstrate the importance of responsible finance to unleash the potential of African financial sectors to drive economic development and reduce poverty across the continent. In the new approach to responsible finance governments, financial service providers,a variety of stakeholders and consumers engage in three mutually reinforcing pillars: consumer protection by governments, self-regulation by financial service providers (and other financial industry actors such as investors), and improvement of financial capability and consumer awareness at the client level. Above all, this approach to responsible finance encourages innovation to stimulate, expand and improve access to sound and safe financial services in developing markets.
Following the 2009 conference, responsible finance diagnostic studies on consumer protection regulation,self-regulation and financial capability have been commissioned and conducted in Ghana, Kenya, Tanzania,and Uganda. The objective of this report is to review these diagnostics, identify interesting practices within these countries, and present some thoughts for the future of responsible finance in Africa. Following a short introduction, the report summarizes each country diagnostic,including an introduction to the local financial sector, the current state of access to finance, and review of the diagnostic’s findings and recommendations for the improvement of consumer protection and financial capability.
The final section highlights interesting practices in the studied countries in three areas: consumer protection regulation, self-regulation and financial education and capability. Presenting these experiences allows greater knowledge sharing and provides an insight into the opportunities and challenges across these selected markets,and useful lessons for other African countries. It concludes each area with thoughts for the future of responsible finance in Africa, such as the value of cross-border learning and outreach; the need to find workable solutions to improve market conduct in semi-formal and informal markets; the usefulness of cross-market consumer protection regulations and oversight; and the value of strengthening existing industry associations and networks.In the field of financial capability, working in partnerships and towards a national strategy and using edutainment and mass media are also discussed.