finance institutions. The Burkina Faso CRR comments: effect of limiting African banks‘ access to foreign markets.226 219 With regard to access to credit and microfinance, the CRM noted that the Burkinabe banking and financial system is an example of the financial dualism that characterises African economies. Indeed, its institutional mechanism is based on a Western model of an integrated and transparent market economy. Consequently, its rules and practices are not adapted to funding the activities of the poorest population groups and informal activities, which are thus excluded from the formal financial system. The banks are more interested in large projects and show little interest in traders, farmers, artisans and small transport owners. Notably, the CRRs‘ engagement with the Basel frameworks is not very detailed. It reflects broadly the analysis of the AfDB (although, given the timeframe in which they were produced, they discuss compliance with the Basel I and Basel II iterations), pointing out some failings in compliance. The reports do not, however, all cover these issues systematically and consistently. It would be of value if the CRRs used a common template to record those principles that countries had successfully complied with and those that they had failed to comply with.227 It is, however, clear that the banking system in Africa is experiencing challenges in meeting is obligations. An exception in this regard is South Africa, which at the time of its review was moving to Basel II. While noting that this changeover would demand considerable investment ‗in time and resources‘, it commends South Africa‘s role in assisting other countries in the region to deal with Basel II – this being an example of peer support that the APRM encourages. Only a small minority – around 22% – of Africans220 has access to formal and semi-formal financial services. Recent economic development on the continent, its rapidly expanding middle class, and legal reforms in the sector have combined to spur growth of the banking sector. In addition, cross-border banking (at pan-African or regional level) by Africa-based institutions has established itself on the continent. According to the IMF, these institutions now have more presence on the continent than foreign banks. They are also the largest single arrangers of syndicated loans.221 A related issue requiring attention is cross-border banking supervision. This refers to cooperation between regulators in different countries in overseeing the operations of transnational banks. This encompasses matters related to licencing and ownership (in other words, how are banks to conduct expansion into other countries); accounting and data standards (different countries have different standards and systems); consolidated supervision (maintaining supervision over the operations of whole banking groups); and home-host supervision (cooperation across borders between regulatory authorities in different countries to monitor multinational banking operations); as well as crossborder crisis management.228 While there are some concerns that regulatory frameworks are obsolete and require modernising,222 there have also been some successes in reform. This is recorded in the Mozambique CRR.223 The Ethiopia CRR remarks that the country‘s banks are sound because of well-implemented legislation.224 The Nigeria CRR commends the progress of consolidation in the banking industry.225 The CRRs also show a particular concern for the difficulties that ordinary people and small enterprises face in getting credit. Thus, the Algeria CRR says that the banking system does not extend credit to SMEs, and millions have no access to small-scale finance.229 The Burkina Faso and Lesotho CRRs note that smaller firms find it difficult to raise credit.230 The Uganda CRR records difficulty in accessing finance, even microfinance.231 The Mozambique CRR says that stringent conditions for lending make credit difficult.232 In Nigeria, banks are not This concurs with other analyses on the continent. A study by the AfDB presented a view of Africa‘s banking system as competitive compared to other developing regions and generally resilient and well regulated. But it also noted that some of its regulatory authorities were still using the Basel I framework, even though revisions – Basel II and more recently, in the wake of the subprime crisis, Basel III – have been introduced. At present, it suggests, Basel III may exceed the capacity of most African regulatory authorities, but this would have the 226 219 220 221 222 223 224 225 Burkina Faso CRR, p. 333. South Africa CRR, p. 85. Enoch C, P Mathieu and M Mecagni, PanAfrican banks: opportunities and challenges for cross-border oversight (Washington: IMF 2015), p. 10-13 Algeria CRR, p. 213. Mozambique CRR, pp. 146, 158. Ethiopia CRR, p, 134. Nigeria CRR, p. 168. 227 228 229 230 231 232 48 Nyantakyi EB and M Sy, The Banking System in Africa: Main Facts and Challenges (African Economic Brief, Volume 6, issue 5, 2015). The Sierra Leone CRR provides a worthwhile template, see Sierra Leone CRR, p. 225. Enoch et al, above n. 216, pp. 35-46. Algeria CRR, pp. 282-283. Burkina Faso CRR, p. 245; Ghana CRR, p. 114. Uganda CRR, p. 260. Mozambique CRR, p. 120.