SOAS Research Online

Abstract

In this paper we assess the implications of the World Trade Organisation (WTO) and the General Agreement on Trade in Services (GATS) for the banking sector in African signatory countries. With emphasis on the free trade element, we first review the relevant provisions of the GATS for banking services and the main exemptions held by African countries. We then analyse the main efficiency indicators for a sample of the top banks in 18 African economies for the period 1997-1998. We also use univariate statistics to analyse the dispersion of the key bank pricing and liquidity indicators in these economies for the period 1994-1998. The main findings imply that although full liberalization, implicit in the WTO and GATS protocols, will lead to a substantial shake-up of the African banking industry. However, provided they have an appropriate regulatory framework and allow sufficient lead time, most African countries have little to fear from liberalization at least in terms of the continuing existence of a locally owned banking industry; and indeed, these countries could reasonably expect to be able to restructure and compete, at the very least in African-wide or regional markets.