The Covid Vouchers set up within the West African Economic and Monetary Union (UEMOA) zone the day after the outbreak of the pandemic to support States in their urgent needs were subscribed mainly by the native banks of the sub-region.

Thus, in the first phase, Coris Bank International ranked first in the Union, subscribing for 320 billion FCFA, or 27.35% of total subscriptions which amounted to 1,172 billion FCFA. Behind the banking group of Burkinabe origin, the Development Bank of Mali (BDM) follows for subscriptions estimated at 205 billion FCFA, or 17.48% of the total outstanding amount. The pan-African Ecobank is in third position with 140 billion FCFA, i.e. a share of 11.95%, ahead of Orabank (128 billion FCFA; 1.89%), the BNI (105 billion FCFA; 8.95%) , UBA (59 billion FCFA; 5.05%), BDK (38.57 billion FCFA; 3.29 billion FCFA) and BGFI (24 billion FCFA; 2.06%).

Notably, the first bank with dominant foreign capital only comes in tenth position. This is the BNP for 21 billion FCFA. Chiche for a mastodon present for more than a century in the sub-region. Just as cautious as BNP, Banque Atlantique, majority-owned by Morocco's BCP, shows little appetite for guaranteed and virtually risk-free sovereign risks by subscribing for only 15.5 billion FCFA or 1.32% of the total outstanding. The South African Stanbic is in twelfth position for 12 billion FCFA representing 1.02%, ahead of the BSCI (11.5 billion FCFA; 0.98% of the shares). The Moroccan Attijariwafa Bank, often presented as the leading banking group in the CFA zone, is also on the margin for only 9 billion FCFA, or 0.77% of all subscriptions. NSIA Bank and Citibank close the list of subscribers with respectively 2 billion and 1 billion, or 0.17% and 0.09% of all contributions.

If this first phase has shown what we have known for a long time, namely that native banks and foreign banks do not have the same appetite for local risk nor the same objectives in terms of dividend distribution, what then of the second phase?

In this phase 2, the States raised 831 billion CFA francs, 53.26% of which comes from Coris Bank International. The Banking Group chaired by Mr. Idrissa Nassa raised 442.643 billion FCFA. The BMS comes in second position with 149 billion FCFA subscribed or 17.93% of the outstanding. Then come in order Orabank (68.7 billion FCFA; 8.28%), BDM (62 billion FCFA; 7.48%), BDK (37 billion FCFA; 4.45%); Stanbic (30 billion FCFA; 3.61%); UBA (23.24 billion FCFA; 2.8%); BGFI (9.8 billion FCFA; 1.18%); Banque Atlantique (5.5 billion FCFA; 0.66%) and BNP (3 billion FCFA; 0.36%).

In this second phase, there is also a strong presence of native banks while French and Moroccan banks are marking time. The following table, which summarizes phases I and II, should encourage the Central Bank of West African States (BCEAO) and the Banking Commission to learn all the lessons from the local banking system and to reflect on the importance for the region to have strong local banks capable of accompanying the development policy of the States and supporting integration efforts. In all, the banks served 2003.76 billion FCFA to the 8 WAEMU States in what constitutes an innovative instrument, which undoubtedly shows the capacity of the BCEAO, the Agence UMOA-Titres and the regulatory bodies of the financial market to cope with exogenous shocks.

Table of the breakdown of bank holdings in cumulative phases 1 and 2 of the Covid-Bonds program

Sources: BCEAO data compilation and market intermediaries

What about support for SMEs and large companies?

This is the big question that is shaking the financial and banking market at the moment. “The financial market would benefit from being unified for better coordination,” recalls an expert, comparing the dynamism of the UMOA-Titres agency compared to the discretion of the syndication market of the BRVM bond compartment dedicated to long-term financing. In the eyes of the players, the current competition between the market by auction and the market by syndication should evolve towards a unified bond compartment ranging from bonds to bonds, from short-term to long-term maturities with a greater range of products for customers. corporate. In this configuration, the BRVM would see its role strengthened in the equity compartment, which could not develop with a real commitment from the States to channel all privatization operations there and to take the tax and incentive measures necessary for the development of the third compartment.

From the banking point of view, the governor of the BCEAO recalled in his joint interview with Pierre Legland granted to Financial Afrik , the central bank has put in place a system to provide the necessary liquidity to the banking sector. “Thus, since the end of March 2020, the Central Bank has conducted liquidity auctions on its fixed-rate refinancing windows. In this configuration, all the requests presented to its counters are generally satisfied. This measure made it possible to considerably reduce the risks of shortage of liquidity on the money market, but also to move towards a severe contraction in the distribution of bank credit”.

In addition, the BCEAO says it has taken measures for businesses. “Already towards the end of May 2020, nearly 800 companies and 3,500 individuals were affected by these deadline extensions”, recalls the governor. Added to this is the SME financing support scheme put in place since 2018, with a specific framework to facilitate the refinancing of bills that will be drawn from SMEs, in order to provide liquidity to banks that agree to commit to this mechanism. Yet despite this mechanism, SMEs are still by far the poor relation of bank financing.