Financial Sector Development Strategy (FSDS) in Republic of Congo
Project Development Objective (PDO)
The main objective of the project is to assist the national authorities in developing and adopting a coherent strategy to broaden and deepen the Republic of Congo’s financial sector. Such a strategy will help to accelerate development of the domestic private sector and diversification of the economy, which are key objectives of the government’s National Development Plan for 2012–16.
The Republic of Congo’s financial system contains a highly concentrated banking system, shallow financial markets, and a limited range of assets available for use as collateral. With respect to access to financial services, the Republic of Congo is one of the least inclusive countries in the Central African Economic and Monetary Community (CEMAC) and CFA Franc Zone. Financial services are out of reach for the majority of the population and practically nonexistent in rural areas.
In 2009, Congolese authorities prepared a strategy covering some of the constraints identified by the regional CEMAC Financial Sector Assessment Program, which was conducted in 2006. This first effort to take a structured approach to financial sector development was welcome; however, it did not cover all aspects of the Republic of Congo’s economic and financial environment, which have since dramatically changed. Additionally, all relevant stakeholders may not have been involved, and the strategy’s implementation has proved disappointing because of a lack of proactive monitoring.
The project aims to deliver a comprehensive FSDS involving a prioritized, time-bound sequence of actions and roadmaps for implementation. The FSDS will include cost estimates and identify responsible authorities. An assessment of existing and ongoing public interventions to improve financial intermediation will guide the strategy’s development. A framework will be put in place to monitor the implementation of the FSDS and evaluate its effects. Lastly, internal workshops, seminars, and dissemination activities will ensure that the action plan (a) is supported by relevant public and private sector stakeholders and (b) is shared with donors to mobilize support and financial resources for implementation.
In the short term, the expected outcome is the adoption of the Financial Sector Deepening and Intermediation Project by the Congolese authorities, including a clear roadmap with a time-bound sequenced and prioritized implementation plan to increase access to financial services in the Republic of Congo and improve the country’s financial depth, stability, and efficiency. The strategy will enable mobilization of financial resources to implement reforms in the longer-term.