The Director-General of the West African Monetary Institute (WAMI), Mr. Abwaku Englama, has asked members of the Economic Community of West African States (ECOWAS) to speed up financial integration in the region as this remains the key to the socio-economic transformation of the 15-member economic bloc.
The privately-owned Vanguard newspaper on Friday reported that Mr. Englama also noted that enhanced co-operation among the private sector operators is also important for ensuring effective integration of the zone.
“Integrated financial markets, including insurance, are a key element in the transmission process and hence for the smooth conduct of monetary policy in the envisaged common central bank arrangement for the WAMZ,” the newspaper quoted the WAMI boss as saying.
“Financial integration also leads to better diversification of risks and makes a positive contribution to financial stability by improving the capacity of economies to absorb shocks.
“On the other hand, fully integrated financial markets also pave the way for shocks to propagate more quickly among market participants and across countries, which could necessitate appropriate safeguards,” he added.
The WAMI boss said integration of the insurance sector in a monetary union must be pursued consciously and conscientiously with clear time lines outlined for the various components of the integration efforts.
“The fierce urgency for the WAMZ is to adopt immediate and workable strategies to accelerate the integration process of the financial sector, particularly the insurance sub-sector in order to facilitate trade in goods and services within the Zone,” Englama explained.
He identified key challenges to the achievement of the regional objective to non-harmonization of legal and regulatory frameworks; non-existence of a single licensing regime; non-mutual recognition among regulators; inadequate regionally compatible financial infrastructure; non-existence of cross-border supervisory practices; weak data gathering mechanism, among others.
To overcome these challenges, he called for speedier integration in WAMZ, including the harmonization of legal and regulatory framework governing the sector, reduction in costs of transactions as well as the insolvency regime.