Interview: Edgar Théophile Anon
How will banking turnover evolve in 2015?
EDGAR THÉOPHILE ANON: The turnover of Gabon’s banking sector should not rise substantially in 2015. The sector as a whole has experienced a slight credit and deposit contraction in the first quarter due to the current financial crisis. Additionally, new legislation from January 2014 entered into force in 2015, obliging banks to increase their funding levels for all loans. Specifically, banks have to raise their provisioning by 0.5% each year for four years, reaching 2% by 2019. This will undoubtedly increase the cost of credit and hamper the profitability of Gabonese banks in the short term. Banks will need some time to digest this regulation and cushion these costs in their credit strategies. This regulation is part of the Economic and Monetary Community of Central Africa’s strategy to streamline credit policy with other regional blocs.
What can Gabon do to raise banking penetration?
ANON: The government enacted new legislation in 2014 requiring all Gabonese civil servants to have a formal bank account to receive their salaries. This decision has had a positive impact on the penetration rate and will help formalise Gabon’s economy.
This is also an opportunity for bankers to develop their retail activities and offer a wider range of services. In that respect, technology will serve as a catalyst for growth as digital services, including mobile banking and e-banking, as well as ATMs and agent banking enable banks to reach out to large, unserved segments of the population.
In Gabon, there is a higher concentration of economic development and banking activity in three major cities – Libreville and Port-Gentil in the west and Franceville in the east. Although Gabon has a population of 2m with a mobile penetration rate of about 200%, only 12% have a bank account. As such, mobile banking has a lot of scope for development, and there is a huge gap to fill in terms of attracting new customers. Telecoms operators were the first to develop e-wallet services under banking licences, but now bankers are trying to change the nature of their partnerships and develop their own mobile banking activities, including them within a comprehensive digital service development policy.
As for the development of new branches in remote areas, banks still have many challenges to face, including higher transfer costs, as banks have to store and transfer cash from central bank facilities. This is a difficult equation to solve, as banks have to charge more in fees in poorer areas to compensate for higher costs. The central bank must put additional strategies in place to support banks in this regard.
How have oil prices affected bank liquidity?
ANON: The decline in oil prices has triggered a sharp reduction in liquidity amongst Gabonese banks, as the level of credit and deposits has fallen substantially. The government implemented an Amending Finance Law in 2015 that aims to rectify budget discrepancies due to the decrease in oil revenues. Economic agents, including banks, will have to learn how to deal with economic cycles. One of the main difficulties today is access to foreign currencies for companies to finance their international trade operations.
What strategies could help boost the financing of small and medium-sized enterprises (SMEs)?
ANON: Banks will continue financing SMEs as long as they control their risk factors. As such, we have developed a series of factoring products based on the quality of the debtor. However, it is important to foster a more solid legal framework that offers more guarantees to banks in the event of insolvency. In that respect, an SME investment fund should be put in place to cover SME business risks. Additionally, the creation of a credit bureau that indexes indebted companies will also help boost the financing of SMEs.
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