In an interview with Ecofin Agency at the end of Forum Afrique 2019, the forum dedicated to investors in Africa, hosted in Paris on February 8, 2019, Francesco De Musso (photo), managing director of BGFIBank Europe, expressed his views on the priorities of this forum and the ongoing changes in the African banking sector. 

Ecofin Agency (E.A) : M. Francesco De Musso, what were the key priorities of the Forum Afrique 2019, recently organized in Paris, by “Le Moci” in partnership with the council of French investors in Africa and Paris chamber of industry and commerce ?

M.Francesco De Musso (F.M) : The goal of the last Forum Afrique was to better assess the ongoing changes in Africa apart from cyclical development, be them economic or political. The 1,000 participants had the opportunity to debate on the new economic models and funding solutions in Africa.

E.A : What are the key developments of the African banking sector currently ?

F.M : After a period of emergence and strong growth of actors in the Pan African banking sector, there is now a period of stabilization mainly related to regulatory changes. The implementation of Basel II and Basel III dictates this transition phase for the various actors since these regulations require equity consolidation, implementation or risk management policies appropriate to the business model and the strengthening of provisioning policies.

E.A : How can the banking sector effectively contribute to the development of Africa ?

F.M : The sector is the main tool for the financing of African economies. Transformation is the DNA of a bank that collects deposits and lends them to economic players who need them. To effectively support economies, banks must extend their reach and be closer to their clients to notably get future champions from the informal sector. Proximity with our clients is a critical issue. This is the reason initiatives like those in digital banking matter the most as they allow the funding of a larger client base at a lower cost.

E.A : There is an increasing number of African banking groups in the sector against a progressive withdrawal of large European banks. Why that ?

F.M : The development of African banks is directly related to the limitations of European banks that were not always able to adjust to the specificities of local economies. There is a fact now : you can’t lend to everybody, everywhere and even less to the same clients. Most African banks emerged thanks to their understanding of their markets.

E.A : You claim that the continent’s development mainly depends on the financings the banking sector is able to provide. Yet, banks are said to be unable to support long-term financings. Is it not contradictory?

F.M : These two ideas are clearly related because they both discuss banks’ abilities to finance economies. All the measures that could strengthen banks’ solidity and their capacity to finance individuals and firms, at the best of their abilities, are to be encouraged.

Our economies are penalized as far as Long-term financing is concerned because of the low depth of our financial markets.

For long-term financing, long-term financing needs to be raised. For instance, our financial markets can offer lucrative prospects to investors and consequently allow the banking sector to collect long-term deposits able to sustainably change the continent.

E.A : Is BGFIBank Group experiencing the same thing ?

F.M : BGFIBank group is a financial player created in Africa to serve economic actors operating in the continent. The group is aimed at financing African economies and our approach can only be viable with the implementation of international standards. Our strength is in the consideration of the local economic specificities of each of our subsidiaries in our business model. Our ambition is to be an African banking group available for everyone.

E.A : Would the arrival of new instruments like mobile banking affect the performances of the African banking sector ?

F.M : Mobile banking is a key tool to boost financial inclusion. It is a complement, not a caveat, for the banking sector because it helps reach another customer base and meet new needs. Every bank nowadays has mobile banking solutions adapted to their clients. BGFIBank’s solution BGFIMobile helped us boost our customer base and serve them quickly and at a lower cost. It enhanced our existing offers.

Mobile banking is an example of technology innovation adapted to financial services, hence its success.

E.A : What is your take on crowdfunding ? Is it an alternative to finance the development of Africa?

F.M : Crowdfunding is already an alternative to the traditional financing of our economies. It has been around as long as tontines or community funding. The impact of crowdfunding are outstanding in the fight against poverty and social exclusion. Nevertheless, it is still limited in terms of volume : it amounts to less than $150 million yearly, a volume, which is low compared with the funds provided by banks.

E.A : Can you provide a brief overview of the 2018 and Q1, 2019 performances of your subsidiaries ?

F.M : BGFIBank Europe is a Paris-based specialized credit institution. We are the group’s hub for its international operations. For two years now, our subsidiary has been undergoing transformation at every level ; commercial, human, organizational and the projection.  

2018 was a year for record performances for the subsidiary, be it in terms of operations or profitability, since its creation in 2009. Our net banking product grew by 26%. We also extended our geographic reach and emphasized on the diversification of the actors we are supporting.

As far as Q1, 2019 is concerned, it is a continuation of the 2018 year that ended with a profitability expected to be over 50%. We are confident of the future.

Interview by Stéphane Billé