On banks’ role in supporting industrial and infrastructure development in Africa

How was the Gabonese banking sector affected by the Covid-19 pandemic?

HENRI-CLAUDE OYIMA: The pandemic definitely forced banks to show agility, responsiveness, efficiency, speed and flexibility in their organisations and strategies for the future, aiming both to ensure the continuity of services and meet the needs of clients. There were two main risks with this pandemic: liquidity risk due to non-performing loans, and insolvency risk.

However, the sector quickly showed signs of resilience, especially in terms of liquidity, and the central bank was essential in supporting the economy on that issue. As the world recovers from the crisis, there have been positive signs of economic recovery, and it will be necessary to use this momentum to sustain growth. Moving forwards, banks will need to work with the government and support strategic projects that can boost job creation and add value to the economy.

What can be done to increase banking penetration in CEMAC?

OYIMA: Banking penetration is relatively low in Gabon and the wider CEMAC. As such, there is room for improvement, especially in terms of the digitalisation of payments and processes. If the right technology is combined with products and mechanisms that meet the needs of the region’s population – such as microfinance – penetration will rise. This in turn will boost financial inclusion, supported by a growing suite of banking products and financial services that cater to populations that have historically been excluded from the traditional banking system.

For these efforts to be successful, it will be necessary to change people’s mindsets and introduce an integrated digital strategy. This includes the government, which should further implement e-government initiatives and support digital payments across its agencies and institutions. Banks have been advocating for non-cash solutions for years, especially when it comes to the operations of small and medium-sized enterprises. Legislation needs to evolve and anticipate society’s changes to meet those needs.

In what ways can African banks support infrastructure development?

OYIMA: Infrastructure in Africa should be financed through local and pan-African financial groups, instead of always looking for external financing. There are more risks associated with foreign exchange and less favourable conditions when projects are financed abroad. Today the African banking sector is solid enough to support development projects on the continent. Both governments and the private sector can trust African banks, which have proven to be strong and resilient.

Regional central banks need to evolve and implement monetary policies that allow the financial sector to support local economies. The implementation of the African Continental Free Trade Area (AfCFTA) agreement is an opportunity for economic integration. As a unified market, Africa has massive potential – especially in terms of population and economic expansion – but there are many non-tariff barriers that need to be addressed for AfCFTA to be successful. In addition to these barriers, there are political constraints impeding full integration and intra-African trade.

By what means can African countries create greater value from their raw materials and export more processed products?

OYIMA: There is a clear will and consensus today that African countries cannot have economies that are solely based on the export of raw materials, especially as these are usually exported by foreign companies. African countries need to start generating added value through the local processing of raw products. This is particularly the case with commodities such as cotton and cocoa. Local banks are committed to supporting the industrialisation of the region, but this should be done in coordination with governments.

Which measures could further encourage the adoption of environmental, social and governance (ESG) principles in Africa?

OYIMA: Africa is a unique market, so ESG needs to be approached in a way that is applicable to the region. There are clear priorities such as creating jobs, building schools and developing motorways, and this is the way forwards: taking action to address the immediate needs of the population.

It is also important to increase transparency measures within African companies to guarantee a level of good governance that can help economies thrive. To this end, our subsidiary in the Republic of the Congo became the first African bank and one of the first companies in sub-Saharan Africa to obtain the Anti-Money Laundering 30000 certification, an international standard on combatting money laundering and terrorist financing. In 2021 BGFIBank Group will have been operational for 50 years, and we will continue to pursue certifications in order to adhere to good governance and compliance requirements on the continent.