Interview: Tiémoko Meyliet Koné
What measures can be taken to increase the volume of credit and encourage long-term financing?
TIÉMOKO MEYLIET KONÉ: The BCEAO has implemented several mechanisms to consolidate the banking sector’s capacity and increase its ability to finance economic activity. These include assistance provided to small and medium-sized enterprises (SMEs) as part of a financial support scheme launched in 2018 designed to help such entities build bankable applications. Credit institutions have also been offered incentives such as the refinancing of loans granted to SMEs, as well as prudential relief of exposures to these companies.
We have also deployed factoring, a mechanism that aims to improve working capital financing and develop subcontracting. A bill was prepared by the BCEAO to this end and was adopted by the Council of Ministers in December 2020. As of mid-2022 it was being incorporated into the domestic legal order of the states. We have also introduced a leasing scheme that allows firms to access unsecured funds, as well as Islamic finance products adapted specially for SMEs.
The central bank monitors all these instruments and appropriate measures are taken regularly to facilitate their adoption by financial institutions to increase financing granted to SMEs. The BCEAO is also committed to preserving the solidity and solvency of banks while preventing systemic risk.
How does the central bank ensure that digital banking activities are appropriately regulated?
KONÉ: In UEMOA digital banking activities are regulated by community texts, particularly the law on banking regulation, instructions from the BCEAO’s governor, and laws drafted by the states regarding cybersecurity and personal data protection. Regulation No. 15 of 2015 governs the conditions and modalities for conducting the activities for electronic money issuance. It extends electronic payment services to non-banking actors and lays down provisions applicable to electronic currency activities, regardless of the status of issuers. It also sets out the minimum-security conditions to benefit from new technologies.
The provision of digital financial services in UEMOA is subject to vigilant monitoring by the central bank, combined with supervision by the General Secretariat of the Banking Commission of the UEMOA, the banking supervisory authority. There are no specific mechanisms in place to control the use of data by banks and financial actors. However, there has been some movement on addressing the challenges of open banking, with the creation of a dedicated committee to promote the harmonised development of financial technology.
Lastly, the Council of Ministers established the Credit Information Bureau to collect available data on the credit and payment history of consumers from financial institutions and major billers. Derived products, including credit reports and scoring, are commercialised so credit institutions can make informed decisions.
To what extent will the measures taken by the BCEAO contribute to the new development plan?
KONÉ: The National Development Plan aims to raise Côte d’Ivoire to the rank of upper-middle-income countries by 2030. The central bank’s actions generally differ from the specific development plans initiated by UEMOA members. Its activities mainly consist of maintaining macroeconomic stability, increasing financing opportunities and promoting digital payment methods. The stability of prices is reflected in the low-risk bonus on interest rates, which creates more favourable financing conditions for companies.
Several institutions have been launched by the central bank to help provide finance to regional economies. These include the West African Development Bank, the Regional Stock Exchange, the Regional Market for Public Securities and UEMOA-Securities. The BCEAO also implemented measures to allow the sector to pursue its financial intermediation activities more efficiently.