extending large amounts of credit, especially to sectors like agriculture.233 In Zambia, banks are lending more, but not across the board, with agriculture largely excluded. 234 In Sierra Leone, access to credit is difficult and costly.235 commercial banks, which can undermine innovation.242 Overall, as the Nigeria CRR notes,243 banks need to pay attention to designing and providing products and services to clients (and classes of clients) that are at present not well served. Another issue is that financial services are concentrated around urban (and generally more developed) centres. This point is explicitly made in the CRRs on Mozambique, Lesotho, Kenya and Sierra Leone.236 Some countries have attempted to deal with the exclusion of rural areas. The Sierra Leone CRR records:237 The Government of Sierra Leone has established a number of Community Banks in rural areas to provide improved access to finance for rural communities, including microfinance. However, the CRM has observed that these banks are often weak and need substantial restructuring if they are to continue to play a role in expanding financial services across the country. With the formal banking system difficult to access, often informal borrowing is the route many Africans are forced to take. In Mozambique and Tanzania, most people rely on traditional sources of credit.238 However, even microfinance institutions may have stringent rules, or charge high rates.239 Another gap in the banking industry is the difficulties that small formal-sector businesses encounter in getting credit. They suffer from the perception of risk, often because banks lack the means to do proper risk assessments. (As these are firms that have aspirations for expansion, micro-credit is inadequate.)240 The result is that this vital part of Africa‘s economy is struggling to play its potential role. The financial services industry needs ongoing reform and reconsideration. For example, the Kenya CRR refers to a residual lack of trust in the industry arising from past bankruptcies,241 while the Ethiopia CRR calls for reflection on the tight control the central bank has on 233 234 235 236 237 238 239 240 241 Nigeria CRR, p. 168. Zambia CRR, p. 261. Sierra Leone CRR, p.235. Mozambique CRR, p. 158; Kenya CRR, p. 174; Lesotho CRR, p. 110; Sierra Leone CRR, p. 239. Sierra Leone CRR, p. 319. Mozambique CRR, p. 159; Tanzania CRR, p. 197. Zambia CRR, p. 261; Kenya CRR, pp. 175-176. International Finance Corporation, Sustainable and responsible banking in Africa – a getting started guide (Nairobi: IFC) pp.13-14. Kenya CRR, p. 174-175. 242 243 49 Ethiopia CRR, p. 134. Nigeria CRR, p. 169.