How African Countries Can Improve Their Financial Services
African countries are known to be lacking in the world of financial services. If, however, Africa
is to improve on these financial services, then they must improve on the service sector in general.
Find out why below!
Services and the Economy
In developing countries, services play a crucial role in the improvement of a country’s economy
and in social development. This is because services provide competition, employment, and
income. When a country has good services, production processes are more likely to act as
‘inputs’ in economic activities. These activities include things like transport, telecommunication,
and financial services. By acting as inputs, services have the opportunity to improve or reduce
trade; however, this depends entirely on how well they are delivered to customers and users.
Should developing countries in Africa improve their services; more specifically, their financial
services, then foreign investors are more likely to invest in land and industries in the developing
countries. It should be noted, however, that in the past few decades, the global share of services
trade has increased in these countries.
Integrated Policies
After noting the importance of services in developing countries, they have begun to show more
interest in crafting policies. This is derived from the interest of increasing their economy’s
resilience. Integrated policies are, perhaps the future of the service sector.
Integrating policies does not matter at just the financial services level; instead, integrated policies
must be ensured at other levels, such as, socio-economic management and development policies.
These could include trade policies, as well as trade-negotiation strategies.
Beyond this, lessons from Lesotho and Uganda show that it is important for Africa to learn how
to pool resources together with the purpose of developing skills and capacities, to share
infrastructure, and to promote services.
The main challenges that are faced by policy-makers and by developing countries are as follows:
a lack in human resources, lack in valuable skills, a supply capacity which does not meet
standards at either a regional or international level, gaps in infrastructure, etc. It is the
combination of all of these challenges which makes it difficult for the sector of services to
improve.
Why it Matters
By improving other sectors in Africa, financial sectors are likely to improve as well. This is
because all of the sectors are connecting. By hiring those with more skills, and those with a
higher level of education, it is likely that money will be put back into the economy. By
increasing the output of goods, the African economy will benefit. It is the increase and the
improvement of several economies that is going to aid Africa in their financial sector. Thus far,
the country has been mostly left behind because of its lack in financial services, but this does not
have to be the way of the future for Africa.
Conclusion
It is important for the future of the country that Africa catches up in their financial service sector.
That being said, there are several things that must be done to help the country. Above, you can
read about how integrated policies will improve several sectors and about the correlation
between services and the economy.