PSGRS -

PRUDENTIAL STANDARDS, GUIDELINES AND
RATING SYSTEM

The Association of African Development Finance Institutions (AADFI), in collaboration with the African Development Bank (ADB), is pleased to publish its Prudential Standards, Guidelines and Rating System (PSGRS) for African Development Banks and Finance Institutions.

In the year 2000, the AADFI requested the ADB to conduct a study on “Strengthening the African DFIs”. After the study, the ADB sponsored a consultative meeting of African DFIs, central banks, and commercial banks as well as multilateral finance institutions, including the World Bank Group and the International Monetary Fund on the study report. One of the conclusions of the Consultative Meeting, held in Abidjan, Côte d’Ivoire, from October 30 to November 1, 2001, was the preparation of suitable prudential standards and guidelines for African DFIs.

As with the development of other international banking and financial standards, the development of the DFIs Prudential Standards and Guidelines has been done in phases, and in a very participatory manner, involving all key stakeholders. The project went through three phases: establishment of the need for the guidelines; development of the draft guidelines; and pilot testing of the guidelines in selected volunteer institutions in six countries. Each phase was followed by a validation conference to review the draft guidelines and recommend further actions in their development. Three such conferences were organized: the AADFI General Assembly workshop in Ouagadougou, Burkina Faso, on 13th May 2006; the AADFI CEO Forum in Accra, in November 2007; and the AADFI CEO Forum in Sun City, South Africa, in November 2008. The validation conferences were also attended by central banks, Ministries of Finance, International, Sub-Regional and Multilateral Organizations, including the ADB, World Bank, United Nations, and some of the regional economic communities.

In addition to the review of the draft Prudential Standards, Guidelines and Rating System, the validation conferences also provided the opportunity to:

Incoming Programs on PSGRS

Address issues and options for practical implementation of the AADFI Standards and Guidelines by African national development banks, finance institutions and other DFIs in Africa;
Provide participants a clear understanding of the AADFI Prudential Standards and Guidelines for African DFIs through presentations by the study consultant and exchange of experiences; and
Prepare participants for the effective application of the Prudential Standards and Guidelines in their respective DFIs.

The highlight of the development of the PSGRS was the review of the results of the pilot tests in the six countries and final revision of the PSGRS document, which took place at the Sun City AADFI CEO Forum in November 2008. The CEO adopted the Prudential Standards, Guidelines and Rating System and determined to play their role in getting them implemented in their respective institutions. In adopting the PSGRS, AADFI CEOs are convinced that they will help meet two objectives in particular:

Assist DFIs and their owners in examining their own operations in terms of how well they comply with good corporate governance principles and in identifying weak areas which need to be addressed; and
Help central banks and/or other supervisory authorities to custom design supervisory procedures that better address some aspects of DFI operations that differ fundamentally from commercial bank operations.

PRUDENTIAL STANDARDS, GUIDELINES AND RATING SYSTEM​

Workshop on PSGRS Application and Methodology

Address issues and options for practical implementation of the AADFI Standards and Guidelines by African national development banks, finance institutions and other DFIs in Africa;

Provide participants a clear understanding of the AADFI Prudential Standards and Guidelines for African DFIs through presentations by the study consultant and exchange of experiences; and

Prepare participants for the effective application of the Prudential Standards and Guidelines in their respective DFIs.

Assist DFIs and their owners in examining their own operations in terms of how well they comply with good corporate governance principles and in identifying weak areas which need to be addressed; and

Help central banks and/or other supervisory authorities to custom design supervisory procedures that better address some aspects of DFI operations that differ fundamentally from commercial bank operations.

PRUDENTIAL STANDARDS, GUIDELINES AND
RATING SYSTEM

Workshop on
PSGRS
Application and Methodology