Unlike in the West where interest rates hover at, or near, the zero-bound, with interest rates in Kenya and Nigeria for example between 8% to 14%, there is much scope for compression in Africa as monetary policy gains traction and inflation falls, which will in turn help unlock still more growth. The Africa growth story is just only beginning.
In particular, the new capital adequacy standards under Basel II should lead to enhanced financial stability as banks are able to: (1) provide capital commensurate to their risk-taking activities; (2) properly assess the risks they are taking while supervisors should be able to evaluate the soundness of these assessments; and (3) appropriately disclose pertinent information.