Niamkey Isidore Tanoé, CEO, Atlantique Finance: Interview

Niamkey Isidore Tanoé, CEO, Atlantique Finance

Interview: Niamkey Isidore Tanoé

To what extent will eurobonds and other financial mechanisms help alleviate Ivorian debt?

NIAMKEY ISIDORE TANOÉ: The government has been allowed to borrow on international markets in either euros or dollars for some time now. The maximum amount allowed by the authorities is about $2bn. This was fundamental to reducing the Ivorian debt, as without this allowance, the country could not have raised that amount of money at a local level. In turn, this reduced the pressure that Côte d’Ivoire would have put on regional markets. The country raises around CFA1.3trn ($2.2bn) per year through financial markets, plus the CFA1trn ($1.7bn) raised in eurobonds, putting the total at close to CFA2.3trn ($4bn) per year. The fact that there are eurobonds allows us to reduce the portion of debt in local currency. Another mechanism to avoid over-indebtedness is public-private partnerships, which Côte d’Ivoire has started implementing in some areas, such as in infrastructure and energy projects.

How will the introduction of the new eco currency affect financial activity in Côte d’Ivoire?

TANOÉ: A new currency will undeniably affect financial activity in Côte d’Ivoire. Currently, we have a fixed exchange rate between the West African CFA franc and the euro. If the eco is introduced and this parity no longer exists, we would have a floating currency, like many African countries. This is nothing new and neighbouring countries such as Nigeria and Ghana have their own currency, which means that we can quickly get used to this kind of fluctuation between local and international currencies. Therefore, the introduction of this new currency will have an impact on our economy, but its extent remains to be seen.

Considering that Côte d’Ivoire is an exporting country of agricultural products, if the eco were undervalued compared to the West African CFA franc, it would be advantageous for the Ivorian economy. However, since the eco started being publicised, there has been a gradual capital outflow as people are starting to withdraw their money and position it abroad. All in all, if we manage to implement the eco the central bank will have to implement a more aggressive monetary policy to defend the new currency, in addition to developing economic tools to tackle inflation and interest rates.

What impact will the formalisation of the economy have on access to finance levels?

TANOÉ: Formalisation can have a real impact, as over 50% of the economies in the region rely on the informal sector. The banking sector does not know how to finance the informal economy, since the latter often does not have guarantees, turnover and balance sheets, while banks work in a very well-defined framework. Hence, the more companies are formalised, the wider the banking sector’s scope of action will be, which will translate into increased funding.

Illustrating this, our rates over the last few years have increased significantly as many companies have moved into the formal sector. This evolution has been particularly beneficial to SMEs, which now have greater access to bank funding.

Could you elaborate on the dynamism of the Ivorian economy and its effect on capital markets?

TANOÉ: In the capital markets sector, two angles should be considered: the debt market and the stock market. The dynamism of the Ivorian economy currently has no impact on shares. Companies do not come knocking on the door of the regional securities exchange seeking to raise capital in order to finance their projects. Most of these companies still prefer to stay on the debt path. Therefore, the economy’s dynamism is better reflected by the growth of the debt market. We would like to see that same dynamism at the level of shares, but debt remains a challenge for most of the companies we have worked with and supported with fundraising, making it the priority for right now.

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The Report: Cote d'Ivoire 2020

Capital Markets chapter from The Report: Cote d'Ivoire 2020

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