E Regulation Is The Biggest Concern For Financial Companies Moving Into Africa

There was a time when the whole continent of Africa was considered one of the best places for doing business. Investors and executives could go anywhere on the African continent and succeed but these days are long gone. Nowadays understanding the unique situation in each market is essential to make a profit. However, some African countries are still attractive for financial companies. For example, according to the 2019 World Bank Ease of Doing Business Rwanda, Kenya, Nigeria, Etiopia, South Africa, and several other African countries are interesting places for investors to start a business because of their economic growth. But making business isn’t only about the increase in GDP and stability of the employment sector. 

Having a strong regulatory system is something investors always look for. Because of the lack of regulations in Africa, financial companies are faced with a dilemma of whether to move into Africa or not. Since there are very few guidelines or possible strategies that regulators can take in case of a violation from a financial company, many legit companies feel that their brand is going to be tarnished by penetrating this market. This is why they are desperate for regulations. 

Financial fraud in Africa

Financial fraud (or scam as we can call it) is an illegal activity of trying to steal money or other assets from a person through deception or illegal practices. There are a variety of methods doing this, like identity theft or investment fraud. For example, Phishing is one of these illegal activities which means stealing somebody’s identity by making a website and encouraging people to input their credit card or other kinds of personal information. One of the most popular methods for financial fraud is called the Ponzi scheme which is frequently used in the forex trading industry. As the Financial Times report, African countries are at the top of the list of places where the forex trading market is full of scam brokers and financial fraud.

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