Navigating Africa’s Financial Future with Dr. Patrick Njoroge with Ifechukwu Mary-cynthia Anunobi

Thank you. Glad to be here.

Please.

Wow, thank you, and glad to be here. The concept of finance really is that finance helps us in terms of making transactions. So that's really the first benefit, in terms of facilitating the underlying transaction of goods. So that is trade. It also helps us in terms of savings, intertemporal trade: I save some money now for the future, moving purchasing power or wealth from this year to next year when I'm going to spend it. That is important, but there are other elements, one of which is risk management. We face a lot of risks: weather, accidents, health, etc. Finance helps us navigate that space as well. So it is important to see the wider context of finance rather than just a narrow concept of what do I have in my pocket. The point though is that finance is not static because those items are not static. The way we trade today will probably not be the way we are going to trade next year or next decade. Also, the risks we face today are probably different. So finance also changes with society.

Yes.

Wow, thank you. I think first on this is to be clear about the risks that are in the economy. Policy makers, both on the financial sector or in the fiscal side, need to be more attuned to the risks we face. As I said, the developments that take place in our economy will create new risks. We need to be clear about those risks and be ready to deal with them. That is the first thing. Secondly, the risks that may come from outside, from other parts of the world. You cannot think your economy is an island; that would be a big mistake. What happens in a neighboring country or in a different part of the world can quickly become a tsunami in your space, so you have to deal with that. Thirdly, we need to be clear how to resolve issues. Policy makers need to have solutions for each one of these risks, including bank failure. How do you resolve a bank when it collapses to minimize the cost and be clear who will bear the burden? There are standard best practices, and I would strongly encourage policy makers to adopt best practices in each of these areas. It may involve changing laws, tightening requirements like capital requirements, but that is the journey we are on. For the benefit of our people, we need a strong financial system, one that is not susceptible to shocks because we will be getting shocks routinely, some huge, that could capsize an economy.