Africa must institute stronger financial control mechanisms and build capacity for customer due diligence and corporate governance to attract capital and ensure greater financial stability, participants heard at a pan-African banking conference focused on intra- and extra-African trade.
But they also heard concerns about financial crime, illicit financial flows (IFFs) and high know-your-customer (KYC) compliance costs, and the negative impact these have on the African financial sector and business productivity.
Participants were attending the Third Annual Forum on Customer Due Diligence and Corporate Governance, organised by the African Export-Import Bank (Afreximbank), the Pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade.
Afreximbank’s executive vice-president, corporate governance and legal services, Dr George Elombi, told delegates that financial crime and compliance weaknesses adversely affected financial markets and economies.
“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.
Participants concluded 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
Other conclusions included 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.
Illicit financial flows
Rwanda’s minister of finance and economic planning, Claver Gatete, raised the alarm over the rising level of IFFs from the continent. He said these should be a source of concern to everyone, especially as access to finance and capital was a key constraint to growth and economic development.
The forum, which gathered bankers, regulators, and representatives of financial institutions and corporate entities from Africa, also attracted the Vienna-based International Anti-Corruption Academy and the International Finance Corporation.
Categories: Trade Based Financial crimes News