Ecobank capitalises on regional growth in Francophone Africa

Ecobank has built a reputation as the pan-African bank by having one of the largest footprints on the continent. With a presence in 33 African countries it is also one of the continent’s largest banks in terms of assets ($26.8bn) and capital ($2bn).

Lesser documented is the performance of some of its regional franchises, notably those in Francophone West Africa.

At the time of writing, Ecobank Côte d’Ivoire had just released its half-year results. It is the third biggest bank by assets in the whole West African Economic and Monetary Union (UEMOA) and its net profits for the first  six months of this year were up 18% on the year before, reaching $27m (at a group level the Bank had profits of $210m in H1 2021. In 2020 FY was $88m in 2020, and in 2019 $276m). 

The UEMOA region comprises nine countries in West Africa – all the French-speaking ones bar Guinea, but including Portuguese-speaking Guinea-Bissau. In the way Ecobank breaks down its different business units, its UEMOA region is the largest in terms of assets ($9.7bn), equity and customer deposits ($7.1bn). 

We spoke to Ecobank’s head of UEMOA region and managing director of their Côte d’Ivoire business, Paul-Harry Aithnard.

African Business: To what do you attribute the success of the franchises in the UEOMA region?

Paul-Harry Aithnard: We have a clear roadmap and focus on executing the group sub-strategy around the region here. We continue to grow the balance sheet, making sure that we allocate capital optimally and also making sure that we are as efficient as we can. 

The success that we had is also due to the fact that the macro situation is improving significantly in the region. Measures taken by the Central Bank [the BCEAO, which serves all the UEMOA countries] have been extremely supportive, providing a lot of liquidity to the banks to make sure that we continue to finance both the public sector and the private sector. That was the basis of the good performance that we have seen in Côte d’Ivoire and in the Francophone region.

I have to highlight as well that we are lucky enough to be in a dominant position in the region. Therefore, we have that soft power, that influence that can help to increase significantly our market share. We want to pay attention going forward on areas such as trade finance, markets’ transactions and payments.

There has been much talk about the CFA franc, which is the currency in the markets you look after. Does it make it easier for your bank in Côte d’Ivoire and also the other banks in the UEMOA region to have a currency that’s pegged?

Yes it does because one of the important things that the bank needs to perform is to have visibility in terms of macro policy, and the macro-stability that we have in the region is extremely necessary to have that visibility. Once again, we need to praise the work that has been done by the regulators on that front.

The second element that is also positive for banks is that of low inflation. The region is therefore stable from a macroeconomic perspective and has been recording very low levels of inflation, below 2%, for a number of years. 

There seems to be indeed a lot of activity in a number of sectors in Côte d’Ivoire. But are the other markets in the region also encouraging?

I was referring earlier to the fact that one of the advantages that we have in this region is that local knowledge. We are able to have access to pockets of opportunities that you cannot see when you are sitting outside of the region. One of the structural trends that we are seeing in West Africa is indeed the infrastructure development both on the private side and on the public side as well. That infrastructure development means that there are opportunities along the value chain. When I say the value chain, it can be in the corporate space, in the SME space, as well as in the consumer space.

What we are trying to do is to mine those opportunities and the first one definitely is going to be trade financing, where we believe that the pandemic has changed the paradigm. More and more we are going to see a shift towards regional trade financing, and because of our presence in 33 countries in Africa and eight countries in the Francophone zone we are in a position today to be the bank of reference in terms of trade financing.

We are spending a lot of time to ensure that we can properly service our corporate clients, so a lot of work is going into seeing how we can support the local private sector companies and how we can help them to boost their market share in the neighbouring countries.

The second trend that I’m seeing, which is also a new market opportunity, is within the SME space. For a long time, there has been a lot of doubt from the banks in terms of the ability to invest and to finance the SMEs. We spent a lot of time working on that and the programme we are putting in place today to finance the SMEs is the right approach.

What sectors have been of interest in terms of growth? 

When you look at what’s driving the economic growth in the region but also how the pandemic has changed the paradigm, sectors such as energy, transport, mining and housing are becoming significant contributors to GDP growth in the region, and these are key sectors where we see a lot of potential going forward. 

In addition to that, agriculture financing is something that we need to pay attention to and we want to do more in that space. We are working together with some DFIs to put together a new proposition to the market that should help us to increase our market share in agriculture financing.

Cocoa, cashew nuts, cotton, coffee – those are some of the commodities where we believe Ecobank can become a dominant force. And that means presenting new, innovative solutions to our clients, things we are developing with our corporate finance and investment banking teams.

Within the corporate and investment banking space we have strengthened our capabilities to be able to provide long-term financing to the public sector, and long-term financing to the private sector for transactions around, for example, logistics and ports. 

Are you able to do that because you can now go and borrow on international capital markets?

It is a mix of different things. It is a mix of how you position your balance sheets to make sure that you can provide long-term financing without impairing it. It is a mix of having access to long-term financing coming from access to international capital markets and as you know, Ecobank was on the market lately to have access to some sustainable financing, and that is a development that we want to tap into. It is also a translation of the commitment that you are getting from shareholders in terms of providing you with long-term capital.

Are you ready to be optimistic in terms of growth trends given Covid and Africa’s slow vaccination rate?

We need to do everything that we can to make sure that the continent catches up in terms of the vaccination curve. We are trying to help in terms of working with countries such as Senegal that are trying to build up facilities to produce vaccines for example. We want to see as well how we can help in terms of financing the dispatch of vaccines across the continent. 

We are relatively optimistic in terms of the economic growth that we are going to see on the continent. The numbers we have today are between 3% and 5% for the continent in 2021.