Interview : Aymeric Villebrun
How can the financing of small and medium-sized enterprises (SMEs) be improved?
AYMERIC VILLEBRUN: We face a pair of issues in Côte d’Ivoire when it comes to providing finance to SMEs. First, though progress has been made, the informal sector is still large, which means that a fair number of companies are unprepared to file a loan request, owing to a lack of financial strength or clear structures of governance. Second, several banking entities have been focused on developing the corporate segment, which has mostly helped larger firms to thrive. That said, the situation is improving: the number of SMEs that are able to find adequate financing is growing strongly, and banks are moving quickly to offer tailored products to smaller companies.
Another problem we face in this regard is the low degree of awareness about what is available. The point of emphasis is usually the difficulty of meeting a bank’s conditions. However, as banking institutions, we are realising how little information these entrepreneurs actually have about our products, as well as the processes undertaken to obtain them.
The financial structure of these companies is persistently a major issue. Ideally, the country would move towards more equity financing, which remains marginal today. Initiatives have sprouted up to provide funding through equity rather than loans.
Historically, Côte d’Ivoire has been very reliant on bank financing, but we are currently seeing more and more investment funds come into the country, and some of them are specialised in the lower part of the spectrum of corporations.
The government has identified SME development as a key to national economic growth and is in the process of putting certain regulations in place that will boost this segment. The banking sector is also taking part in this dynamic by reviewing SMEs funding condition, while the country as a whole is taking concrete steps to make progress in the ease of doing business.
How do private banks support the farming sector?
VILLEBRUN: The banking sector has financed and will always finance agriculture in Côte d’Ivoire, as it is the main driver of revenue and business for the country. Some factors such as international goods prices are out of reach, but efficient banking mechanisms become even more crucial when farmers are faced with a dip like that which the cocoa segment experienced in 2017. The main issue when talking about funding agriculture is reaching informal businesses. It is important to understand that there is a structured value chain that runs from the individual, inland farmer all the way to the multinational exporter. Although the start of the chain is highly informal, it gets increasingly structured as you move towards its end. Banks traditionally provide funding to more financially sound companies that are situated at the end of the value chain. Funding then moves up the chain through payment facilities, dealer loans and other mechanisms.
What is the growth potential of Côte d’Ivoire’s digital financial services sector?
VILLEBRUN: Given the high level of mobile penetration, digital banking has significant growth potential. There are several sides to digital banking. First of all, the availability of regular banking services via digital platforms is increasing across financial institutions. These services target previously banked customers who are looking to speed up processes remotely with products, such as smartphone or tablet apps, which have multiple services available. The higher potential resides in the large number of Ivorians who remain unbanked. Several products have emerged that are designed specifically to allow that population to withdraw funds, make transactions and exchange money without a proper account. Given its sizable, tech-savvy population and the dynamism of its technology development, Côte d’Ivoire has the potential to make a leap forward in terms of mobile money and mobile banking.
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