Interview: Jean-Luc Konan
What role can meso-finance play in Côte d’Ivoire?
JEAN-LUC KONAN: Meso-finance is the branch specialised in financing small and medium-sized enterprises (SMEs). In Côte d’Ivoire SMEs account for 98% of the companies registered and contribute around 20% of GDP, 12% of national investment and represent 23% of the active population. SMEs respond to the growing demand for local services, allow for greater specialisation, support large companies through their goods and services, and are key to inclusive growth and sustainable development. However, their prevalence is not yet reflected in their weight in the economy.
One of the major obstacles to their development is access to credit. In 2016, according to a study led by ESP artners, the financing needs of SMEs in Côte d’Ivoire were estimated at CFA3.57trn ($6.1bn); yet the commitments of banks and microfinance institutions only amounted to CFA1.46trn ($2.5bn), or about 40% of their financing requirements. To improve this kind of financing, microfinance institutions should improve their offerings tailored to the SME segment. As for larger banks, they should downscale and offer more flexible products that meet the needs of SMEs.
How do you see the traditional banking sector evolving over the short to medium term?
KONAN: There is enormous potential for the growth financial institutions of all sizes in our area, and it is interesting to look at the whole picture of the continent. According to McKinsey, the number of Africans who own a bank account rose from 170m in 2012 to nearly 300m in 2017. Over the years to 2024, this figure is expected to reach 450m.
Meanwhile, on the continental level, the sector’s revenue is expected to increase from $86bn in 2017 to $129bn in 2022. Between 2012 and 2017, this revenue grew at an annual rate of 11% at constant prices. In line with forecasts, we now anticipate an 8.5% per annum growth rate over the years to 2024.
Where do you see new growth potential in the financial services sector?
KONAN: In Côte d’Ivoire the rate of access to banking services increased from 7% in 2007 to 25% in 2017. This progress was achieved thanks to an increase in the presence of agencies and better coverage of the territory by financial institutions. However, there is still much to do, since the overall rate of financial inclusion currently stands at 41%.
The increase in the rate of access was made possible by the telecoms operators, which paved the way for the democratisation of financial services, first by being more accessible, and second by simplifying the use of these services. There is an increasing number of partnerships between financial institutions and telecoms operators, with structured product offerings that meet the needs of the population. This should lead to higher penetration rates in Côte d’Ivoire.
Which steps should Africa take to solidify its advantage in the fields of micro- and meso-finance?
KONAN: The key to developing micro- and meso-finance in Africa will be stronger integration of digital solutions with entrepreneurial support offers. According to a 2018 study from Deloitte, the number of smartphone users will have almost doubled by 2020, from 336m Africans equipped with a smartphone in 2016 to 660m by then, which represents a penetration rate of nearly 55%. Digital technology makes it possible not only to access conventional services from anywhere, but also to develop new tools with financial technology and to simplify procedures at all levels, thanks to data analysis and digitisation processes. We need to invest in talent and start-ups to implement these new tools on a broader scale. Infrastructure capable of supporting the rapid increase in the number of users, and flexible legislation that frames these innovative types of financing and strategic partnerships will also be required.
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