Interview : Tiémoko Meyliet Koné
What has been done to support the financing of small and medium-sized enterprises (SMEs)?
TIÉMOKO MEYLIET KONÉ: The Central Bank of West African States ( Banque Centrale des Etats de l’Afrique de l’Ouest, BCEAO) has initiated several projects to help finance SMEs, which account for around 80-95% of all companies in UEMOA. For example, the BCEAO created the Credit Information Bureau, which is tasked with collecting credit information to be compiled into solvency reports, to then be made accessible to credit institutions and social funds for development.
The bank is also undertaking structural reforms to promote credit leasing, Islamic finance and factoring, in the hope this will diversify financing tools and bolster the banking sector’s activity. Eventually, these reforms should facilitate the financing of UEMOA’s economies. In the case of credit leasing, a tool for companies with a small amount of equity, UEMOA’s Council of Ministers adopted a law in 2016 that would eliminate barriers to credit leasing, reinforce the legal framework and regulate the contractual clauses between involved parties. Moreover, cooperation between the Islamic Development Bank and the BCEAO has led to the drafting of a regulatory framework targeted at SMEs with insufficient guarantees that encourages the sharing of profits and losses by backing the exchanges with real goods. Lastly, the central bank is looking forward to promoting factoring in UEMOA. This tool will enable SMEs to rapidly access treasury, improve their account management and securely evaluate their client’s solvability. A community text is currently being drafted to develop such a financing instrument.
What effect might technological innovation have on the regional banking system’s development?
KONÉ: Technological innovation such as artificial intelligence, biometry and blockchain technology applied to finance could have a transformative effect on the economy, specifically on banking and financial services. They contribute to the development of innovative products and services that are more cost effective and relevant to the needs of an increasingly connected client base, requiring access to financial services at any moment. These technologies allow banking institutions to offer flexible, adjustable and personalised services in specific domains such as online payment and mobile transfer. In turn, these services strengthen financial inclusion. Some banking organisations in UEMOA already allow their clients to remotely access services such as money transfer, bank statements, saving products and credit insurances In the long term regulatory innovations could allow banks to answer compliance requirements, and combat money laundering, terrorist financing and data privacy infringements. Meanwhile, supervisory technologies could contribute to strengthening the ability of control authorities to exploit the ever-increasing and more intricate reporting data sets that banks require in the context of reporting, with the objective being to increase the relevance and efficiency of control measures implemented by central banks and supervisors.
How could the financing of the Ivorian economy be further strengthened?
KONÉ: In UEMOA, and particularly in Côte d’Ivoire, credit institutions face difficulties in the long-term financing of bank loans. Between 2010 and 2017 only 3.8% of global loans and 2.6% of bank loans were long term. The presence of institutions in the capital market is necessary in order to overcome the lack of financing, by promoting the mobilisation of resources in the long run. In this context, the World Bank launched the Joint Capital Markets Programme in June 2017. This initiative aims to increase the role of local capital markets in the financing of real economic assets through long-term local currency resources. This programme would compensate the private sector’s insufficient funding and the banks’ difficulties in providing long-term financing.
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