Africa’s New Regulatory Horizon

In this session, Isabela Campo walks us through Africa’s new regulatory landscape and what financial institutions need to know.

The Philosophical Shift

Risk is no longer an administrative exercise. It is becoming the organising principle for sustainable institutions.

The "Old" Reality: Reactive, fragmented, and box-ticking 

The "New" Reality: Integrated, proactive, and outcome-based

Pillar 1: Prudential Regulation

African supervisors are aligning with global standards (Basel III) to ensure banks can survive financial shocks.

Key Metrics:

LCR (Liquidity Coverage Ratio): Do you have enough cash to survive a 30-day run?

NSFR (Net Stable Funding Ratio): Are you funded by stable, long-term deposits?

Impact: Higher capital requirements and stricter liquidity buffers. It's not just about profit; it's about solvency.

Basel III

Is a global regulatory standard designed to make banking safer after the 2008 financial crisis. It requires banks to hold more capital and keep enough liquid cash on hand to survive financial shocks without needing a government bailout.

Pillar 2 – AML/CFT (The Financial Integrity Imperative)

Driven by the Financial Action Task Force (FATF) evaluations and the push to exit (or stay off) the Grey List.

The Core Law (South Africa Example): Financial Institutions Conduct Authority (FICA).

The "Accountable Institution": Financial institutions are the gatekeepers.

Mandatory Actions:

• RBA: Risk-Based Approach (not just rules).
• UBO: Ultimate Beneficial Ownership verification (General Laws Amendment Act).
• Reporting: Strict timelines (48h for Cash/Funds).

Pillar 3 – Cyber & Operational Resilience

• The Shift: Cybersecurity is now treated as a "Systemic Risk," not just an IT problem.
• New Standards: Joint Standards on Cyber Resilience (e.g., JS 1 & 2 in SA).

Requirement:

Material Incident Reporting: Financial institutions must report "material" cyber incidents immediately.

Recoverability: Systems must demonstrate the ability to recover critical operations within hours, not days.

Pillar 4 – Conduct & Consumer Protection

The Shift: From "Caveat Emptor" (Buyer Beware) to "Treating Customers Fairly" (TCF).

Regulation: The COFI Bill (Conduct of Financial Institutions) and new COMESA regulations.

Focus Areas:

• Transparency: No hidden fees or complex jargon.
• Suitability: Selling products that actually fit the customer's needs.
• Data Privacy: Protection of personal financial data (POPIA/GDPR alignment).

Pillar 5: Climate & ESG (The New Frontier)

The Driver: Climate change poses a threat to financial stability (Physical & Transition Risks).

Key Standards: IFRS S1 & S2 (Sustainability Disclosure Standards) replacing voluntary TCFD.

Mandatory Actions:

• Integrate into Credit Risk: Assessing if a borrower can repay a loan during a drought or flood.
• Disclosure: Publishing "Scope 3" emissions (the carbon footprint of the people you lend to).
• Stress Testing: Simulating a "Climate Shock" to see if the bank survives.

Integrating the 5 Pillars

These 5 areas often sit in silos (Compliance, IT, Legal, Risk, ESG).

The Solution: Integrated Risk Management (IRM).

Strategy: Data shared across these pillars allows for a proactive view.

• Example: A cyber breach (Pillar 3) often leads to a data privacy violation (Pillar 4) and fraud loss (Pillar 2).

The Consequence of Non-Compliance

• Financial: Heavy fines (Administrative Sanctions).
• Operational: Remediation costs are 10x higher than prevention costs.
• Reputational: Loss of license or banking relationships (De-risking).
• Systemic: Being the weak link that causes a greylisting event.

Strategic Roadmap for Financial Institutions

1. Gap Analysis: Assess current status against all 5 pillars.
2. Tech Investment: Automate reporting (RegTech) for AML and Cyber.
3. Culture Change: Move from "Compliance Officer's Job" to "Everyone's Job."
4. Data Integration: Build a "Single View of Risk" dashboard.

Conclusion – The Proactive Future

Africa is moving towards a financial system that is not just compliant, but robust, fair, and sustainable." Don't wait for the regulator to knock. Build the pillars now.