Paul-Harry Aithnard, Managing Director Ecobank Côte d'Ivoire & UEMOA Regional Director, returns in this interview in particular to the role of banks in the West African sub-region in times of crisis and their importance in ensuring the economic recovery of countries. of the WAEMU zone.

La Tribune Afrique - After a first half disrupted by the Covid-19 pandemic, the second part of the year that is beginning is marked by some strategic changes at the level of the Ecobank group with the arrival of a new president, Alain Nkontchou. How do you envision the economic recovery?

Paul-Harry Aithnard - It is true that any new leadership expresses a new vision and I would say that we have had the chance for more than four years to reformulate our strategy, of which digital is the driving force. Additionally, we will do two important things during the relaunch: reassess our business model to make it much more efficient and much more in line with what I call the next world; provide innovative solutions including collaboration with non-banks, in order to provide credible solutions in terms of permanent capital for companies, working capital requirements for SMEs. Beyond that, the entire financial ecosystem will have to participate in the recovery in order to provide answers to the problems that have emerged with the crisis.

According to some analysts, the crisis has highlighted the fact that banks finance the economy little. Do you share this opinion?

I do not share this opinion. The 2008 crisis showed that the problem could come from the banks, because they had launched much more sophisticated products than what the customer was looking for. But in 2020, the crisis has shown that its resolution depends on the banks, because they are the transmission belts that channel the funds raised to the beneficiaries.

When doing the analysis, the level of financial intermediation within African economies as a percentage of GDP fluctuates between 20 and 30%. It is double in Asian countries and almost triple in highly developed countries. Thus, in relation to our level of development and in relation to their skills, risk mapping, the regulatory environment, the banks are already doing a lot.

On the other hand, this crisis is forcing banks to innovate more and no longer be content with traditional products. I insist a lot on this point. It's about changing the way we design banking products.
The crisis is forcing us to reach a stage where the customer must be able, from his home, to open an account, deposit savings or take out a loan without having to go to a branch. It is also about changing the way we distribute these products. We also have to think about the distribution channels, the different points of contact with the customers that we can create. In my opinion, this is what this crisis teaches us.

Several sectors have been shut down in recent months. While banks are the main providers of cash to companies, because they finance working capital needs, how to support companies in difficulty?

We can support companies in difficulty with several solutions. Some of them already exist and should be offered to our companies. These are precisely working capital financing solutions, investment financing solutions... In addition, we (banks) can use the various advantages made available to us by the regulator to try to bring a little more liquidity to businesses. The central bank has done something very good by deciding on loan moratoriums, which allows companies to breathe in a difficult economic environment.

The third thing that we can do and which interests me much more is to see how we can practically address the problem of SMEs. Because this crisis has shown that their need for financing - already significant long before, some estimate it at around 50 billion dollars on the African continent - is critical. There are now several elements to put on the table. Consideration should be given to potential financial solutions dedicated to affected sectors such as the hotel industry. Consideration should also be given to non-financial solutions.
At Ecobank, for example, we have partnered with Google to create non-financial solutions to advise businesses on how to weather the crisis and prepare for economic recovery. I think it is important to consider financial solutions and at the same time offer non-financial solutions.

What is the concrete interest of the partnership with Google in this sense?

The crisis has shown us that a fabric seller based in Lomé no longer necessarily needs to have a place in the city market to sell. He can be at home, publish images of his fabrics on a website and market them around the world.

Google being the most used search engine in the world, it now offers a platform that can become a powerful e-commerce platform. On this basis, Ecobank and Google are working together to support the bank's corporate clients to enable them to take advantage of the expertise of the multinational Tech on the Internet, in order to access partners abroad, sell their products at internationally, implement international development plans. It is also for us to see how to support these companies to strengthen their ability to be better managers. These are all elements that allow us to offer a fairly new solution that could really make a difference.

While the banks, which have already been considerably stretched during the pandemic, will still be strained for the recovery. What are their expectations vis-à-vis the State and central banks?

I think they are already doing a lot. In the WAEMU zone, we must salute the mobilizing role of governments, the pioneering role of certain central banks in taking the right decisions to ensure liquidity. It is now necessary to push a little more on certain regulatory environments, for example those linked to the financing of SMEs, to the way in which banks can create points of sale across their countries of establishment, those linked to cooperation between banks and telephone operators for the provision of services.
In my opinion, we should continue the discussion around all these elements both with governments and with central banks to have a certain number of regulatory changes.

What treatment for the informal sector which represents on average 40% of GDP in Africa? Are there any discussions on how to approach this part of the economy and what the banks are planning?

There are indeed discussions and they revolve around a few points in particular. First, the need to support the informal sector a little more is obvious. But we have to make sure beforehand that there are a number of guarantees to mitigate the structural risks, because the default rate in the informal sector is much higher than in the formal sector.

The other ongoing conversation, which for me is the most interesting, is that the crisis provides an opportunity to study the possibility of formalizing certain parts of the informal sector, bringing them back into the banking sector, because in this context, we could offer them new products. We are working with central banks, development banks and several micro and mesofinance players.

Digital finance has emerged as "the" solution during the pandemic, at the heart of containment measures. You said above that digital is at the heart of Ecobank's strategy. The group has also established partnerships with leading Fintechs. Will the Finance of tomorrow in Africa necessarily be digital?

It is unavoidable because the analysis of what has happened over the past three months highlights elements that can allow us to draw what the world could look like next. At Ecobank, for example, we have seen the volume of transactions on our digital platforms multiplied by at least three. The second part of the answer that I can share is that, in the past, the vast majority of transactions went through physical channels, that is to say that people went to branches, as much for three months, we observes a total changeover where the majority of transactions increasingly go through digital platforms. Some countries are very advanced, such as Kenya where only 10% of financial transactions go through physical channels such as bank branches.

For all these reasons, I think we are opening a new chapter where digital will gradually take precedence. This is why I spoke of the need to rethink the design and distribution of banking products, because change will accelerate in the next world. Banks must work with Fintechs for their expertise, microfinance establishments to provide them with their own liquidity mechanisms, telephone operators because they have telephones, this channel which allows us today to sell financial products. As an example, today we have the Ecobank app, which is widely used across the continent. In Côte d'Ivoire alone, we have almost a million users. This is to say the scope of digital.