IFC Tasks African Banks on Risk Management

Saadia Khairi, vice president and chief risk officer, IFC has said that African banks aspiring to rapid expansion can become more stable and profitable by increasing their focus on risk management systems that will meet the challenges posed by a globally integrated financial sector. IFC is a member of the World Bank Group. 

Speaking after the IFC-sponsored Africa Risk Management Banking Forum, Khairi said that African banks are facing greater risks because of rapid growth, increased lending, and new technologies and sectors, such as microfinance, mobile banking, and housing and agriculture finance. 

“Many banks in Africa are unable to properly measure credit, market, and operational risks and these banks have been building more complex balance sheets. African banks weathered the worst of the 2008 global financial crisis and are taking risk management seriously, but they cannot be complacent. Improved risk governance will help turn Africa’s rapid growth into sustainable growth,” said Khairi.   

IFC launched its Global Risk Advisory Program in 2008 in response to the global crisis to help client financial institutions better understand risk and implement systems to help them weather future shocks. IFC focusses on all aspects of sound risk management, including risk governance, market risk, liquidity risk, credit risk, operational risk, asset liability management, and capital adequacy. 

“One lesson from the 2008 crisis is that all of these risk areas are interconnected and that one type of risk can often be transformed into another type,” said Khairi.

“Improved risk management is essential in Africa, where lending volumes are hitting record highs.
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The African Risk Management Banking Forum, an event hosted by IFC and This is Africa, a Financial Times publication, brought together senior banking executives, regulators, and academics to discuss risk management issues and help African financial institutions understand, formulate, and implement effective risk management strategies and processes.

Since 2009, IFC has held 150 risk management financial sector workshops and conferences in
36 countries around the world. IFC’s Investment Services offer long-term financing and guarantees, often in local currencies, helping strengthen the financial infrastructure in emerging markets. 

The Cape Town event was support by UKAID, Japan, IFC’s Access to Finance Business Line, and IFC’s Conflict Affected States in Africa Initiative (CASA) and its partners Ireland, the Netherlands, and Norway.