Abstract

Insolvency and debt recovery procedures are as crucial to economic development as the provision of credit. They are more important in Africa, which is in need of rapid economic development. For financial systems to be credible, creditors need guarantees that lenders will meet their obligations, along with guaranteed mechanisms to ensure compliance. Increased access to finance around Africa and the general evolution of the African economies have increased the importance of designing modern and dynamic regimes for insolvency and bankruptcy. This chapter focuses on bankruptcy laws as they relate to natural persons, examining the effectiveness of the laws in dealing with complex problems and ramifications of personal over-indebtedness. The treatment of natural persons is at the core of many efforts directed against financial exclusion and poverty, yet in Africa, insolvency and bankruptcy laws are out of date and date back to the colonial period. The chapter discusses the evolution of insolvency law in Africa, with particular reference to West Africa. It further discusses the theory behind insolvency law in Africa, showing how various legal traditions and societal attitudes impact the tenor of insolvency legislation. It spotlights some of the flaws in the current laws and suggests avenues for reform.