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Paper short abstract

AI governance frameworks transplanted from Global North create dependencies for African financial institutions. This paper discusses that an organisation’s Institutional DNA: values, purpose, and risk governance norms, enable culturally practical and sustainable capability building over dependency.

Paper long abstract

While AI promises to democratize access to financial services and accelerate inclusive growth, it simultaneously risks rooting new forms of exclusion, opacity, and technological dependency. AI systems depend on the availability of reliable, representative data and robust governance frameworks. In many African countries, such preconditions remain uneven.

African financial institutions face a governance paradox: AI regulatory frameworks designed by the AI Core to mitigate risk in Global North markets systematically undermine local capability development in African contexts. The AI Core representing the US and China where over 80 percent of AI models are derived (Farhad, 2025). These transplanted frameworks impose compliance assumptions about data infrastructure, market structure, and organizational capacity that misalign with local contexts, constraining African national financial sectors regardless of institutional size or type. Through comparative analysis of national AI strategies and financial sector regulations across Ghana, Kenya, Nigeria, and South Africa (in the Global South), I show that AI Core governance frameworks (e.g. EU AI Act and OCED AI Principles) fail to accommodate the institutional realities of African financial systems, creating four gaps: regulatory, systematic, epistemic, and operational.

I propose contextualized governance as an alternative approach, arguing that effective AI regulation must center on locally adapted risk models rather than impose universal standards from regions with distinctively different operational norms. This reframing shifts the policy focus from transplantation to adaptation, enabling governance frameworks that build absorptive capacity while addressing legitimate risk concerns.