Interview: Michaël Adande
What role do syndicated loans play in terms of overall credit activity?
MICHAEL ADANDE: Practically all the infrastructural and real estate investment projects are carried out through co-financing with other banks. This is particularly the case with energy infrastructure, notably hydroelectric dams and transport lines, which need significant levels of financing. The same is true for other investments, in ports and airports, as well as for integrating projects of the Regional Economic Programme ( Programme Economique Régional, PER), whether for trans-border roads or railway lines, supported by the Central African Economic and Monetary Community. PER seeks to turn the sub-region into an integrated, emerging and well-governed area.
The potential for co-financing is also high in the real estate sector. Real estate projects, whether residential or commercial, require significant capital. In this sector, it is rare for a commercial bank to cover the entire financial risk on its own. Banking syndication remains the appropriate way to allow real estate developers to raise enough capital for their investments, and for the banks to share the financial risk.
Are you seeing an increase in lending activity to downstream processors in both the agricultural and commodity sectors?
ADANDE: For a long time, the countries of our sub-region have promoted agriculture in order to ensure self-sufficiency and food security. Similarly, they fostered the development and export of products in a raw state. Today, this development model is evolving towards local processing of a significant part of our agricultural production and raw materials. Promoting agro-industry helps add value to our agricultural output. Gabon has understood this by re-orienting and reinforcing its policy on this matter.
The sub-region is endowed with natural resources that can be processed locally. Products coming from this processing should be competitive and correspond to specific needs. Central African countries have a comparative advantage in this process because their natural resources are numerous, varied and untapped. In addition, these countries have easy access to the sea, helping them export finished products. The investments needed to make natural resource processing competitive are going to be high. BDEAC’s activity can be beneficial to companies expanding their natural resource processing industries because the institution lends at affordable rates.
Beyond these processing industries, financing projects in the education and health sector are of the utmost importance. These sectors contribute to reinforcing the growth potential of our countries through training and improved quality of health care. Yet, the profitability of private projects in these sectors and the guarantee of satisfactory reimbursement of funds loaned are not always ensured, despite the existence of real needs in these areas. In order to increase their reimbursement capacity, promoters could merge their establishments, which would allow for them to benefit from economies of scale.
What specific measures can be put in place to avoid payment delays and defaults on loans?
ADANDE: Granting loans has to be justified by a certain level of cash-flow and the financial solidity of the promoter. Furthermore, financial resources generated by the project are required to be part of a payment security mechanism, which will have its operations under the banks’ control.
How can the successful emergence of more small and medium-sized enterprises (SMEs) be encouraged through development projects?
ADANDE: The emergence of SMEs depends on the development of basic infrastructure, of the health and education system, and also of information technology, as well as the prudent extraction of natural resources. These projects must remain key priorities.
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