Henri-Claude Oyima, CEO of BGFIBank Group, is well acquainted with the banking sector in Africa and detailed for Oxford Business Group the situation of banks in the aftermath of the difficult situation faced in the wake of the EVD-19 health crisis. He discussed the role of banks in supporting industrial and infrastructure development in Africa and Gabon in particular.
How was Gabon's banking sector affected by the COVID-19 pandemic?
The pandemic definitely forced banks to show agility, responsiveness, efficiency, speed and flexibility in their organisations and future strategies, with the objective of both ensuring continuity of services and meeting customer needs. There were two main risks with this pandemic: liquidity risk due to non-performing loans and insolvency risk.
However, the sector quickly showed signs of resilience, especially in terms of liquidity, and the Central Bank was instrumental in supporting the economy on that issue. As the world recovers from the crisis, there have been positive signs of economic recovery and it will be necessary to build on this momentum to sustain growth. Going forward, banks will need to work with the government and support strategic projects that can drive job creation and add value to the economy.
What can be done to increase banking penetration in CEMAC?
Banking penetration is relatively low in Gabon and in CEMAC in general. As such, there is room for improvement, especially in terms of digitisation of payments and processes. Combining the right technology with products and mechanisms that meet the needs of the region's population, such as microfinance, will increase penetration. This, in turn, will drive financial inclusion, supported by a growing set of banking products and financial services that serve populations that have historically been excluded from the traditional banking system.
For these efforts to succeed, it will be necessary to change people's mindsets and introduce an integrated digital strategy. This includes the government, which should implement more e-government initiatives and support digital payments in its agencies and institutions. Banks have been advocating non-cash solutions for years, especially when it comes to small and medium-sized business operations. Legislation must evolve and anticipate societal changes to meet these needs.
How can African banks support infrastructure development?
Infrastructure in Africa should be financed through local and pan-African financial groups, rather than always looking for external financing. There are more exchange rate risks and less favourable conditions when projects are financed abroad. Today, the African banking sector is strong enough to support development projects on the continent. Both governments and the private sector can rely on African banks, which have proven to be strong and resilient.
Regional Central Banks need to evolve and implement monetary policies that allow the financial sector to support local economies. The implementation of the African Continental Free Trade Area (AfCFTA) agreement is an opportunity for economic integration. As a unified market, Africa has enormous potential, especially in terms of population and economic expansion, but there are many non-tariff barriers that need to be addressed for the AfCFTA to succeed. In addition to these barriers, there are political constraints that impede full intra-African integration and trade.
How can African countries create more value from their raw materials and export more processed products?
There is now a clear will and consensus that African countries cannot have economies that are based solely on the export of raw materials, especially as these are often exported by foreign companies. African countries must start generating value added through local processing of raw products. This is particularly the case for commodities such as cotton and cocoa. Local banks are committed to supporting industrialisation in the region, but this must be done in coordination with governments.
What measures could further encourage the adoption of environmental, social and governance (ESG) principles in Africa?
Africa is a single market, so ESG must be addressed in a way that is applicable to the region. There are clear priorities such as job creation, school construction and highway development, and this is the way forward: acting to address the immediate needs of the population.
It is also important to increase transparency measures within African companies to ensure a level of good governance that can help economies prosper. To this end, our subsidiary in the Republic of Congo became the first African bank and one of the first companies in sub-Saharan Africa to obtain Anti-Money Laundering 30000 certification, an international standard for combating money laundering and terrorist financing. By 2021, BGFIBank Group will have been operational for 50 years and we will continue to pursue certifications to meet good governance and compliance requirements on the continent.