A thriving financial sector is an important driver of macroeconomic development and therefore also important for poverty reduction.

Despite the clear progress made in strengthening the African financial sector through a wave of reforms and the privatisation of national financial institutions, there remain many challenges to overcome. Only 20 percent of people in sub-Saharan Africa have a bank account. Limited access to finance restricts the growth of private companies, and the high cost of credit generally discourages them from tapping investment funds.

Loans made available by banks and microfinance institutions to businesses and private households are still far too small to enhance growth and significantly reduce poverty.

Africa’s businesses can only boost economic development if they are able to grow and create new jobs. A precondition for this is better access to financial services at an affordable price.

Partnership: Making Finance Work for Africa

Making Finance Work for Africa (MFW4A) raises efficiency and effectiveness of measures aimed at developing the financial sector in Africa.

Cooperative networks of African partners and international donors are developing innovative tools; the exchange of experiences is becoming broader, and there is an expanding body of empirical data available. International best practices and experiences in the field of financial system development are being adapted to suit the needs of African financial systems.

The partnership also aims coordination between the different projects operated by international donors, and to gear them more closely toward their partners’ priorities, especially in the private sector. Financial sector development is to be integrated increasingly into national and regional development strategies. With these approaches, MFW4A is contributing to the implementation of the Paris Declaration and the Accra Agenda for Action.

MFW4A Secretariat

The MFW4A Secretariat was set up by the African Development Bank in Tunis, in July 2008. It is the central coordinating body and the driving force behind the partnership’s activities.

The Secretariat is supported by:

• German development cooperation
• Agence Française de Développement (AFD)
• African Development Bank (AfDB) Group
• Department for International Development (DFID), UK
• European Investment Bank (EIB)
• Financial Sector Reform and Strengthening Initiative (FIRST)
• Dutch Ministry of Foreign Affairs (MinBuZa)
• Swedish International Development Cooperation Agency (SIDA)
• World Bank.

The Secretariat is responsible for comprehensive donor mapping and maintains an online platform for MFW4A knowledge management and information sharing. It coordinates joint activities between the partners, organises conferences on special topics, stages MFW4A partnership forums, and handles public relations work for the group.

Germany is the largest donor and holds the chair of the Supervisory Committee.

MFW4A 2008 Partnership Forum in Accra – Thematic priorities

The first Partnership Forum for MFW4A was held in Accra, Ghana, in June 2008. It brought together more than 350 representatives of central banks, finance ministries and the private sector, as well as financial experts and representatives of international donors.

The following thematic priorities were formulated for MFW4A:

• a legal, regulatory and judicial framework
• financial infrastructure (credit offices, payment systems)
• market distortions due to state interventions
• cross-sectoral financial sector strategies
• country and sector analyses, empirical research
• financial capability
• agricultural finance
• financial products and innovation
• medium and long-term financing.

GIZ and MFW4A

On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), GIZ supports MFW4A through its project ‘Support for the Making Finance Work for Africa Partnership.’ It is actively involved in establishing the MFW4A Secretariat, advising on organisational development, strategic orientation, process management inputs, and financial contributions.

In addition to helping build up the Secretariat, GIZ is implementing joint activities together with its African partners and other donors in different priority areas. These include:

• the Financial Capability Action Plan, which involves developing and piloting new instruments and best practices to promote basic financial education and consumer protection;
• the agricultural finance sector, where African’s own experiences are being leveraged with the use of existing tools, and research is being conducted on innovative forms of investment in value chains;
• a joint programme with the World Bank to conduct studies on regional financial sector integration, key performance indicators (KPI), and improving the legal framework;
• cooperation with the German Development Institute (DIE) to investigate success factors for the implementation of financial sector strategies in Africa;
• through cooperation with Deutsche Welle, a German international broadcaster, African journalists learn about the financial sector, which in turn improves financial reporting, transparency and civil society participation;
• a study, conducted jointly with the African Development Bank and the World Bank, to assess the implications of the financial crisis for the development of financial market supervision in Africa, both nationally and internationally.

To improve the cooperation between donors at country level, the project supports national MFW4A workshops where the stakeholders discuss and set out priorities for national development strategies. Through harmonised financial sector projects implemented in African countries, support is provided for the preparation of programme-based approaches (PBA) in coordination with the BMZ regional divisions and the implementing organisations.

German development cooperation and MFW4A

A joint steering group coordinates the contributions made by German development cooperation.

Further information

• Website MFW4A
  www.mfw4a.org
• World Bank Publication
  go.worldbank.org/WVFPF5CYJ0