Africa’s New Regulatory Horizon: Risk Management in 2025

Africa is entering one of the most significant regulatory transformation cycles in its modern financial history. After years marked by fragmented supervision and uneven regulatory capacity, 2025 is pushing the region toward a more integrated, standards-aligned and proactive regulatory architecture—one that mirrors global expectations while responding to uniquely African realities.

Regulators across the continent are accelerating the adoption of Basel III, ISSB sustainability standards, and mandatory cybersecurity frameworks, moving decisively away from reactive, crisis-driven oversight. This evolution is setting new expectations for banks, insurers, fintechs and large corporates, and it is redefining how risk teams must structure their day-to-day work.

A more demanding prudential environment

Financial systems across Africa are undergoing a strengthening of prudential regulation. Countries such as Morocco, Egypt, South Africa, and Mauritius have advanced significantly in implementing Basel III capital, liquidity, and leverage requirements, supported by technical guidance from international institutions like the IMF and the World Bank.

The European Investment Bank highlights in its report Finance in Africa 2024 that the region faces persistent inflation, elevated policy rates, and widening disparities in access to credit—conditions that increase pressure on banks’ liquidity and solvency management.

For risk teams, this means enhanced expectations around internal capital planning, liquidity stress testing, governance, and timely supervisory reporting.

Continental integration is reshaping financial risk

Two continental initiatives—AfCFTA and PAPSS—are transforming Africa’s risk landscape and accelerating the need for regulatory harmonisation.

AfCFTA: unified rules, higher compliance expectations

The African Continental Free Trade Area (AfCFTA) has now been ratified by 47+ countries, with trade under AfCFTA rules already underway. The agreement includes commitments to liberalise financial services and align regulatory standards across borders.

Harmonisation reduces regulatory arbitrage but raises the bar for risk management, documentation, and internal controls, especially for cross-border financial institutions.

PAPSS: new opportunities, new operational risks

Launched by Afreximbank and the African Union, the Pan-African Payment and Settlement System (PAPSS) enables real-time cross-border payments in local currencies. According to Afreximbank, PAPSS could eliminate over USD 5 billion in annual settlement inefficiencies linked to Africa’s reliance on USD and EUR for intra-African transactions.

But PAPSS also introduces new risks—real-time liquidity, settlement failure, interoperability, cyber threats and resilience of critical financial infrastructure—now central to supervisory agendas.

Sustainability and climate risk enter the regulatory mainstream

Climate and sustainability regulation is advancing rapidly across the continent. Several countries—including South Africa, Kenya, Nigeria, and Egypt—have introduced national green taxonomies aligned with the EU Taxonomy and international best practices.

In 2023–2025, Nigeria, Ghana, and Kenya announced pathways to adopt the ISSB IFRS S1 and S2 disclosure standards, making climate-related financial reporting mandatory for listed and systemically important institutions.

This shift places climate and ESG risks directly within the scope of prudential supervision—requiring organisations to model climate scenarios, assess exposures, and disclose transition risks.

Cybersecurity shifts from IT concern to supervisory requirement

Cybersecurity has become a regulatory priority across Africa due to rising digitalisation. Regulators in South Africa, Kenya, Nigeria, and Ghana have issued mandatory cybersecurity and cyber-resilience directives, targeting governance, incident response, and operational continuity.

South Africa’s Joint Standard on Cybersecurity and Cyber Resilience, issued by the Prudential Authority and the FSCA, represents one of the most robust frameworks on the continent.

These developments demand that risk teams adopt integrated approaches to technology risk, operational resilience, and data protection—far beyond traditional IT controls.

What this means for African risk teams

The new regulatory horizon is not simply an exercise in compliance—it is a transformation of how risk must be managed. Organisations across Africa will need to:

• Consolidate fragmented risk information
• Reduce reliance on spreadsheets
• Strengthen governance and documentation
• Ensure traceability of controls and decisions,
• Integrate climate, cyber, liquidity, and financial crime risks
• Improve board-level oversight
• And accelerate digitalisation of risk processes.

Africa is building a more resilient, interoperable, and strategically aligned financial system. The risk teams that adapt early—by upgrading their frameworks, strengthening risk culture, and embracing technology—will not only meet the new regulatory expectations but also position themselves as leaders in a rapidly evolving market.

This new era rewards institutions that are agile, data-driven, and proactive. The transformation has begun—and risk managers will be at the center of it.

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