What makes good governance? #4 in series: The banking sector

ONE WAY OF LOOKING AT GOVERNANCE

Below is just one way in which to view governance. Governance comes in many forms from business owners to governments. Everyone judges governance differently. Always think about whether there are other ways to look at governance.

GROWTH IN SUB-SAHARAN AFRICA

Over the past two decades Sub-Saharan Africa has seen a huge amount of growth in the economy. This has come from growth in mobile phone technology, tourism, agriculture, banking and many more. This growth needs to be sustained if businesses are going to continue to grow. The international banking sector needs to be involved in this growth. The international banking sector should be encouraged by governments and businesses to invest in Sub-Saharan Africa.

DEFINING THE BANKING SYSTEM

A banking system is a group of organizations that provide various financial services to people. The banking system is made up of different branches of banks. These banks can provide you with a bank account that keeps your money safe. They can also offer loans or investments if you want to start a business.

THE BANKING SYSTEM AND GOVERNANCE

Those in power can help create rules that means the banking system has to act in a certain way. These rules can stop banks from taking advantage of people and giving them loans which they cannot repay and then demanding that they pay them back when someone has no money to do so.

People can judge whether those with governance are helpful by looking at the banking systems in place. A growth in the banking sector may suggest that there is more investment in businesses. This investment can be good for people as infrastructure improves when businesses grow. When infrastructure grows people get more access to schools, hospitals and jobs.

WHY REGULATION OF BANKING IS IMPORTANT

Although banking systems can be good for looking after your wealth, they need to be watched to make sure that their actions are ethical. Regulation of banks happens when the government or other organizations set certain rules banks have to follow. Without these rules banks can start to harm people who use them by loaning them money they cannot pay back. The African Business Magazine has talked about how Ghana, Kenya and Zambia have all improved the regulation of their banking systems. Improving regulation means banks are more likely to respect the money of those who are using the service.

Governments and organizations should be encouraged to regulate banking systems to make them strong and work well for people. They should also encourage banking systems to become more accessible to people in rural as well as urban areas. Innovative ideas on the banking system could really help advance investment and keep the growth in Sub-Saharan Africa going.

IN SUMMARY

Encouraging the banking sector to invest in countries in Sub-Saharan Africa could accelerate growth even further. When thinking about what governments and businesses do and how they help people think about whether they encourage investment and regulate banks is just one way to achieve this.

There are many different ways to judge what is good governance and the banking sector is just one of many ways in which good governance can be measured.

ALICE RUBBRA

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