Reforms boost Gabon's banking sector

In recent years Gabon has witnessed rapid growth in banking assets, lending and deposits, as well as in penetration and financial inclusion indicators, albeit from a low base, though the fall in the price of oil is having an impact on the economy that banks say will slow down business in 2015. The sector has traditionally struggled to convert high levels of liquidity into lending; however, plans in place to launch a new credit bureau and payment incident registry are set to boost intermediation by improving banks’ access to customer information. Although Gabonese banks generally have to participate in syndicated loans for larger projects, demand for lending remains comparatively high for the modestly sized market, in large part thanks to the boost in infrastructure spending.

Assets & Liabilities

Total assets of deposit-taking banks stood at CFA2.44trn (€3.6bn) as of November 2014, according to the Bank of Central African State (Banque des États de l’Afrique Centrale, BEAC), the central bank for the CEMAC region. The figure was down slightly from CFA2.61trn (€3.9bn) at the start of the year, but up from CFA1.4trn (€2.1bn) at end-2008. The largest element of banking assets was lending to the economy, which stood at CFA1.31trn (€1.96bn), while lending to the state stood at CFA330.5bn (€495.75m). Regarding liabilities, banks held customer sight deposits of CFA1.03trn (€1.54bn), while the value of fixed-term deposits and savings stood at CFA698.7bn (€1.05bn), up from respective figures of CFA505.9bn (€758.85m) and CFA398.9bn (€598.35m) five years earlier. Total deposits by government and public organisations at the end of November 2014 were worth CFA242bn (€363m).

Banks’ return on assets stood at 1.6% in 2013, having recovered from a slump to 0.5% in 2010 and 0.6% in 2011. Return on equity stood at 14.7%, up from 5.1% in 2011. While figures for 2014 are not yet available, Christian Gondjout, director of strategy, development and projects at Banque Internationale du Commerce et de l’Industrie Gabon (BICIG), said it was a good year for the industry despite what he described as some “turbulence” in public finances, in reference to the government’s decision to suspend domestic debt payments during the first half of the 2014. However, he added that 2015 was proving a more challenging year. “The fall in international oil prices had a clear impact on business early in the year. Loans we made in 2014 are bearing fruit, but growth is likely to be subdued in 2015,” he told OBG, adding that all banks were facing a similar situation.

The effects of the government’s suspension of debt payments are also likely to have an impact on activity in 2015, although the government is working to put the issue behind it. “Banks are attentive to payment default risks on the part of their clients due to delays in payments by state, which are due to efforts to check that the debts in question are genuine,” said Pierre-Marie Ntoko, permanent secretary of the Professional Association of Credit Institutions (Association Professionnelle des Établissements de Crédits, APEC). “However the authorities are aware of these delays and are working to resolve the arrears, and the situation has improved significantly,” he said. He added that from a macroeconomic perspective banks remained concerned about the impact of falling oil prices on government finances.

Market Players

Banking activity in the 1.7m-person country is heavily concentrated, with almost 75% of assets in the hands of three banks. The market is made up of a dominant local institution, with most remaining market share taken by the local subsidiaries of foreign banking groups. Two state-backed banks and a postal bank are also active in the sector. BGFIBank Gabon is the largest bank with a lending market share of 46.84% as of the end of 2014, according to figures from APEC. The bank is a 100%-owned Gabonese unit of privately owned regional banking group BGFI Holding, which is itself headquartered in Gabon and is among the largest financial groups in CEMAC. The group has operations in 11 African countries, and it received permission to launch operations in Senegal in January 2015. Its largest individual shareholder is Gabon-headquartered holding firm Compagnie du Komo, with a 31% stake. At a group level, the bank registered assets of CFA3.08trn (€4.62bn) in 2014, up from CFA3.02trn (€4.53bn) in 2013, and a net income of CFA24.2bn (€36.3m), down from CFA32.2bn (€48.3m) a year earlier, for a return on assets of 1.09% and return on equity of 15%. BGFIB ank Gabon registered assets of CFA1.16bn (€1.74bn) in 2014, down from CFA1.37bn (€2.05bn) at the end of 2013, while net income stood at CFA11.8bn (€17.7m), having fallen from Dh18.7bn (€28.05m) a year earlier.

Other Players

The next largest bank by lending share is BICIG with 14.8% of the market as of December 2014. Its largest shareholder is France’s BNP Paribas with 47%. BICIG registered net income of around CFA4bn (€6m) in 2014. The bank, which claims to operate the largest banking network in the country with 19 branches and 45 ATMs, has ambitious expansion plans, and has set a goal of expanding its assets by 30% between 2013 and 2016.

In third place is Union Gabonaise de Banque (UGB) with a lending share of 14.75%. The bank is a unit of Morocco’s largest bank Attijariwafa Bank, which has a controlling stake of nearly 59%. UGB bank registered net income of CFA8.66bn (€12.9m) in 2014.

Orabank Gabon, the Gabonese unit of West and Central African banking group Orabank, was the fourth-largest bank by lending share, at 6.41%, followed by Banque Gabonaise de Développement (BGD), with 5.64% and in which the Gabonese government has a stake of 69%. Pan-African banking group Ecobank’s Gabonese subsidiary held 5.61% of the lending market. The Gabonese unit of US bank Citibank held a 3.41% share of the lending market, while the local subsidiary of Nigeria’s United Bank for Africa had a 2.34% share. The smallest bank by lending share was the majority state-owned Banque de l’Habitat de Gabon (BHG), with 0.07% of lending. BHG, which is operated by the country’s postal service operator, Poste Bank, was not included in the 2014 statistics. However, as of February 2015 it had a share of 1.76%.

Gondjout told OBG that competition between banks operating in the sector has been intensifying. “UGB and the recently arrived African banking groups have expanded their market share in recent years, especially in the corporate segment,” he said. “Some banks, especially those heavily exposed to the government, have limited cash flow, which has put those with less constrained resources in a more favourable position,” he explained. In light of such growing competition, the prospects for further new entrants to the market in the near future appear limited. “The current banking network is already quite large and there have been no announcements regarding new players opening shop here,” said Ntoko.

Lending & Access to Finance

Respondents to the World Economic Forum’s “Global Competitiveness Report 2014-15” ranked access to finance as the most problematic factor for businesses in Gabon. “There is no policy for a long-term financing and no long-term financial resources,” Yvon Tchicot, deputy managing director at Banque de l’Habitat, told OBG. “The role of the government is to implement mechanisms and schemes that ensure the availability of these resources.” Gabon’s financial market development was ranked 105th out of 144 countries covered by the report, based on a score of 3.6 out of seven (seven representing the best possible score). It scored comparatively strongly in terms of the soundness of its banking sub-category, at 70th, but was held back in the ease of access to loans sub-category, at 83rd.

Banking intermediation rates are low, and domestic credit to the private sector was an average 11.2% of GDP in 2011-13 (though this rose to 15.3% in 2014), compared to 57.5% for emerging countries with similar per capita income levels. For every 1000 adults 37.7 took out bank loans over the period, one-tenth the rate of peer countries – though again the figure rose substantially in 2013 to 110.9. Gaëlle Biteghe, managing director of Ecobank, told OBG, “There was a slowdown in bank lending and banks are more selective now when it comes to lending money, because of the strain on liquidity in the CEMAC market.”

Among the reasons banks give for the low levels of intermediation and high interest rates are a lack of data on which to base lending decisions, including the lack of a credit bureau and a shortage of information regarding companies, as well as a shortage of guarantees and collateral. Small and medium-sized enterprises (SMEs) in particular present a high level of lending risk to banks, so in the absence of detailed credit histories many banks are reluctant to grant loans. Nevertheless, the situation is improving rapidly. Lending by banks to the economy has more than doubled over the past five years, from CFA580.4bn (€870.6m) at the end of 2009 to CFA1.31trn (€1.9bn) as of November 2014, according to BEAC figures.

Boosting Lending

Furthermore, the banking authorities are currently working on two projects aimed at improving financial institutions’ access to information in order to further boost intermediation levels, namely the establishment of both a credit bureau, which is due to be completed in 2016, and a CEMAC-wide payment incidents registry, covering incidents such as failure to repay loans and bounced cheques. The registry, which is currently undergoing a pilot phase in Cameroon and Chad, will also be linked to a biometric database to identify clients.

Some banks, including BICIG, will start registering biometric data for new clients in October 2015 before eventually expanding the system to existent customers. Lenders are strongly supportive of the moves. “The projects will have a major impact and will boost lending as they will provide banks with access to much more information on clients,” said Faissal Chahrour, CEO of Alios Finance Gabon.


As in many emerging markets, SMEs face difficulties in accessing finance. Roger Owono Mba, managing director of Banque Gabonaise de Dè veloppement, told OBG, “The banking sector has been experiencing a slowdown since 2013, after a strong performance in 2012, in part because SMEs are struggling to pay back their debts due to the liquidity shortage.” Efforts are under way to address the problem. For example, the African Guarantee Fund, established by the African Development Bank and the Danish and Spanish governments, provides banks with technical assistance to improve their capacities for lending to the segment. Nevertheless, working with such firms is still problematic. Loans to SMEs remain very risky, with default rates running at around 35%, meaning such loans have high provisioning requirements. One of the main constraints to lending is the low capitalisation levels of many SMEs, a situation which the government’s debt repayment suspension in 2014 only exacerbated. Many SMEs are government contractors and therefore suffered from delays in payment by the state in 2014, particularly in sectors such as construction.

Ntoko said that banks’ reticence to finance SMEs was due to the scale of defaults in the segment and financial information asymmetries. However, he said that banks are keen to works with SMEs. “There is a need for good quality loans to finance, and banks aren’t going to lend to firms that haven’t paid back old debt; however, if SMEs have put forward interesting projects and all their financial information has been verified, there is no reason banks won’t lend to them.” Indeed, there are signs of growing interest on the part of banks in the segment. For example, BGFIB ank Gabon stepped up its focus on SMEs in 2014, opening two new branches and a business centre for the purpose. In its 2014 annual report the bank said it aims to further boost its activity with SMEs by expanding its network and boosting its proximity to clients.

Non-Banking Lending

The non-bank lending market, which comprises leasing and consumer lending activities, is dominated by three firms, namely the local subsidiary of pan-African finance company Alios, BGFIB ank’s leasing unit Finatra and BICIG’s leasing unit BICI-Bail. The segment faced a slowdown in 2014. Chahrour told OBG that turnover at Alios had fallen by around 20% in 2014 and that he expected a further fall of the same magnitude in 2015, leading the firm to put plans to open two new agencies in the interior on hold. “The problem is related to delays in government debt payments, which caused cash-flow problems for many firms; as a result, the construction sector, which is the main driver of the leasing market, has been delaying spending and investment,” he said.

Despite the downturn, industry figures showed prospects for the leasing market remain strong. Leasing represents 1-2% of lending in Gabon, compared to 20% in many other countries, leaving room for market growth over the next 5-10 years. Specialised leasing firms currently dominate this segment of the market, with low levels of competition for the available business. Some banks have begun increasing their focus on writing leasing contracts, though they do not yet represent a major source of competition.

The consumer credit segment is facing greater difficulties, however. In its 2014 annual report, Finatra’s parent company BGFIB ank noted that recent government moves to pay civil servants through bank accounts would, by entering them into the formal banking system, make them more likely to turn to banks than non-bank lenders for loans. In September 2014 the government also suspended a scheme under which it took repayments for consumer and personal loans directly from civil servants’ salaries.

Financial Inclusion

Financial inclusion levels, though still low even compared to Gabon’s peers, are improving rapidly. The proportion of adults with an account at a formal financial institution stood at 33% in 2014, according to the World Bank, up from 18.9% in 2011, and 18% of adults saved at a financial institution, more than double the figure of 8.7% in 2011. The number of bank branches per 100,000 adults is also rising rapidly, from 4.1 per 100,000 in 2008 to 10.7 in 2013, according to data from the World Bank.

Further economic growth will be an important component of improvements in financial inclusion indicators, as the most common reason cited by Gabonese for not having a bank account is that they do not have enough money to require one, as will the expansion of mobile banking infrastructure (see analysis). However, the authorities are also working to boost levels through a number of initiatives. Banking penetration levels are growing both through branch expansion and the “bancarisation” of civil servants, a phenomenon whereby since 2013 the authorities have worked to pay government employees via bank accounts. Since October 2014, all such payments have been made by bank transfer, with only employees living in very remote areas of the interior of the country that are not serviced by bank branches being exempted from the requirement.

In May 2014, to further boost banking penetration, the social security fund, Caisse National de Sécurité Sociale (CNSS), began paying retirees who receive quarterly pension payments via bank transfers, having signed an agreement the previous month with Poste Bank. As of May 2015, 17,689 retirees, or roughly half of the total eligible, were paid via bank transfer, and the CNSS stated that it aimed to raise the figure to 100% by year-end. In May 2015 the authorities also began paying student stipends via bank transfer.


The negative impact of the fall in the price of oil on Gabon’s economy is likely to have repercussions on banking activity. However, over the longer term the banking authorities’ plans to establish a credit bureau and payment incidents registry are set to give lending levels a significant boost. Banking penetration and financial inclusion indicators are also set to continue to grow rapidly as banks’ branch networks expand, the government widens its programme of payments via banks and new modes of access such as mobile banking begin to take off – though corporate and government business are expected to remain the mainstays of the industry for the coming years.


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The Report: Gabon 2015

Banking & Financial Services chapter from The Report: Gabon 2015

Cover of The Report: Gabon 2015

The Report

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