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Afreximbank Forum ends with call for strengthened financial control mechanisms and capacity building on corporate governance

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Afreximbank Forum ends with call for strengthened financial control mechanisms and capacity building on corporate governance

Afreximbank Forum ends with call for strengthened financial control mechanisms and capacity building on corporate governance
Photo credit: Afreximbank

Africa must institute stronger financial control mechanisms and capacity-building for customer due diligence and corporate governance in order to attract capital competitively and ensure greater financial stability and sustainable development, participants in the Third Annual Forum on Customer Due Diligence and Corporate Governance organised by the African Export-Import Bank’s (Afreximbank) have said.

In conclusions at the end of the two-day Forum held in Kigali on 26 and 27 October, the close to 200 participants said that strong corporate governance was critical to ensuring the integrity and credibility of financial systems and to reducing the vulnerability of African economies to financial instability and shocks

They called on African financial institutions to engage frequently with their boards and senior management and to assess the adequacy and accuracy of information being submitted them.

Other conclusions include the need for government bodies and institutions to foster initiatives to promote good corporate governance practices and for effective capacity building and collaboration to be established between the public and private sectors in order to enhance corporate governance and customer due diligence.

Given the fast-changing business dynamics and the growth of online banking, mobile payments and other electronic platforms, the participants expressed the need for a strong technology-driven approach to corporate governance and customer due diligence so as to increase effectiveness and responsiveness to change.

The participants, in addition, welcomed the Afreximbank initiative to establish an online African Customer Due Diligence Repository Platform to serve as a centralized source of primary data required to conduct customer due diligence checks on African counterparties.

In an address to the Forum, John Rangombwa, Governor of the National Bank of Rwanda, had said that previous global financial crises had shown that weaknesses in governance contributed to systemic vulnerability and failures. He argued that financial institutions and regulators had a critical role to play in putting in place regulations and monitoring mechanisms to ensure sustained stability of the financial sector.

Participating in the Forum were representatives of regulatory bodies, financial institutions, and legal firms from more than 20 African countries, who were joined by international experts and Rwandan government officials.


Forum hears call to tackle Africa’s $50 billion annual loss to illicit financial flows

The estimated $50 billion being lost annually by Africa due to illicit financial flows should be a source of concern to the continent, especially as access to finance and capital was a key constraint to growth and economic development, Claver Gatete, Minister of Finance and Economic Planning of Rwanda, said on Wednesday in Kigali.

Declaring open the third Annual Customer Due Diligence and Corporate Governance Forum organised by the African Export-Import Bank (Afreximbank), Mr. Gatete noted that over the last 50 years, Africa had lost in excess of $1.7 trillion to illicit financial flows. That amount roughly equalled all the official development assistance it received during the same period.

The illicit activities had significant implications for growth and economic development and for the financial soundness of banks and corporates, he said, pointing out that they undercut legitimate economic activities, discouraged investment, bred suspicion and undermined government legitimacy.

The minister urged African financial institutions, regulatory bodies and governments to work together to establish mechanisms that would ensure a healthier financial landscape and help prevent financial crimes as well as strengthen investors’ confidence in the continent.

Also speaking, Dr. George Elombi, Afreximbank Executive Vice-President in charge of Corporate Governance and Legal Services, told participants that the high cost of conducting customer due diligence adversely affected the stability of the African financial sector and the productivity of corporate entities.

“Financial crimes, compounded by weak corporate governance capacity, have the potential to derail legitimate economic activity and slow down the development of financial markets essential for optimal allocation of capital to support the structural transformation of resource-constrained African economies,” he said.

He announced that Afreximbank was preparing to launch an online African Customer Due Diligence Repository Platform to provide a centralized source of primary data required to conduct customer due diligence checks on African counterparties. That platform would allow subscribers to conduct due diligences at a low cost, thereby decreasing the cost of trade finance in Africa.

Afreximbank was also increasing awareness on the need to look inward for financial resources through its Africa Direct Investment Initiative, continued Dr. Elombi. It was, in addition, promoting the use of African credit rating agencies by African entities as a way to commoditize corporate and banking-related information in order to ensure greater access to credit at reduced compliance costs.

The Forum, which is being organised in collaboration with the Rwanda Development Board, follows two editions held in Dakar in 2014 and in Seychelles in 2015.

The more than 200 participants include bankers, regulators, and representatives of financial institutions and corporate entities from Africa and beyond. It is featuring open discussions and presentations by experts, including from the International Anti-Corruption Academy in Vienna, the International Finance Corporation, the Rwanda Governance Board and several international and African banks.

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