18. Risk Management and Compliance in Banking in Africa

This chapter covers compliance and how it affects the banking sector in Africa. Compliance is a governance system that equips a bank to act in accordance with the internal and external regulatory and supervisory requirements. It helps a bank to act within the law and survive through growth and profitability. Partial compliance is the same as total non-compliance, which has caused large banks to collapse, and others have been fined millions of dollars. The key lesson is, therefore: Comply or fail. Although the African banking sector has recorded increased market activity, its efficiency and stability are still below the global average. The country-specific analysis shows that whereas the stability of banks in Morocco is robust those in Ghana, Botswana and DR. Congo are fragile. This instability of banks in these countries has enormous implications for banks management and regulatory authorities in Africa.