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50 years at the heart of Africa’s development

For two decades, at Natixis, you were one of the most powerful and successful executives in a global financial institution, then you left it all to return to Africa as head of BOAD. Why? 

I had never forgotten where I was from and kept abreast of everything that was going on back on the mother continent. I was aware that my stint at Natixis and my education had provided me with a unique insight into the mechanics of the global economy.

I wanted to bring this experience and see how it could be applied to development situations in Africa. I was excited by the continent’s incredibly huge diversity, its human and natural resources and its capacity to evolve and change. I wanted to be part of this historical curve and use my talents and experience to help foster this very promising future.

Also, working from my offices in Cannon Street, which as you know is at the heart of the City of London – one of the globe’s most important financial centres – was satisfying in itself, but you could not see the effect your daily activities had on the lives of people. I wanted to become engaged in tangible finance – where you see the need, you set out to solve it and you see the effects on people’s everyday lives. What we do here in Lomé has an impact on people that is clear and visible and that is very satisfying. 

Also, it was important for my children to know that the pull of our dear continent is very powerful and that we cannot forget we are African, first and last.

I was also very concerned at the long list of constraints that our region was facing, for example our lack of power
autonomy, insufficient access to education, housing shortages, dire unemployment, poor empowerment of women, and the pressing need to lay the foundation for our youth to be able to build and prosper. Many countries around the world have faced and overcome these same issues
and I felt confident that we can do the same. I wanted to be part of that historic effort.

As the bank celebrates its 50th anniversary, can you summarise its achievements in the region?

There is much the bank can be justifiably proud of. We have invested billions of dollars in the region’s economies. 

The projects have ranged from increasing access to electricity, building roads and other infrastructure, which have all improved social services like health, education and access to potable water. All this has had a beneficial impact on people’s lives. 

The world is undergoing what is now termed  a polycrisis – a series of contiguous crises – that has driven up the cost of living and raised interest rates across the board. In this situation, how do you see the role of development institutions like BOAD? 

As you saw during the pandemic-induced lockdowns, it was the development institutions that sprang into action and supported countries to weather the storm. It is worth noting that what African countries spent, while effective in keeping economies afloat, is a drop in the ocean compared to what the developed countries spent. Nevertheless, the cost of borrowing for Africa is far higher than that of developed nations and in many cases, the doors have been shut for African countries.

Africa’s Development Finance Institutions (DFIs) stepped into the breach and provided timely support. As aid is becoming increasingly constrained, we realise that we need to rely on our own resources, our innovative approaches and our mutual cooperation with Multinational Financial Institutions (MFIs) to raise the sort of finance that we absolutely require to carry out our most critical programmes.   

Capital is key to sustaining development, and financial resource mobilisation is a constant challenge. Since taking charge of BOAD, it became clear to me that we needed to raise affordable capital if we are to properly finance our most essential projects.

This involves a multi-pronged approach. We are in constant negotiation with our foreign partners, regional and international capital markets and investors in an effort to diversify our sources and secure more favourable funding. We are also working to promote economic and political stability in the West African region, not only to give investors confidence but also because stability is essential for growth. 

The ideal situation is when African DFIs, with their intimate knowledge of the local terrain, and MFIs with their greater capacity to raise and disburse capital, work closely together to finance projects most efficiently. Institutions like ours have the capacity to originate – we know our region and we know what we have to do. So I
believe that institutions with better ratings will have to work with us to, in a sense, help de-risk our portfolios because we are the natural risk-takers in our regions.

A global approach

Congratulations on being elected as the Co-President of the influential International Development Finance Club (IDFC), becoming the first African to attain this position. Will this give you greater muscle to help raise funds and otherwise support Africa’s development?

First, a little explanation of what the International Development Finance Club (IDFC) is all about. It was created in 2011 and is the leading international grouping of 26 national and regional development banks, most of which operate in emerging markets. 

It is the world’s largest provider of public development and climate finance, with combined assets of $4trn, and annual commitments in excess of $800bn, including $170bn a year for climate finance. 

Our main function as IDFC members, is to support national policies, while transferring international priorities to our own constituencies. Through IDFC, and in close partnership with other development bank networks, we join forces as a platform to promote and leverage sustainable development investments worldwide.

My co-president is Javier Diaz Fajardo, chairman of Bancóldex, Colombia’s bank of foreign trade, a state-owned development and export-import bank that provides long and short-term financing and support.

You can immediately see the synergies and areas of commonality between our two institutions. We have a number of challenges that we share. Indeed, announcing the election, the IDFC said: ‘The Club will benefit from the complementary mandates, geographical positioning and shareholding structures of the two institutions…’

The idea is to share best practices, share data and join forces to promote our various regional banks so that they are once again seen as relevant when it comes to enhancing development. 

Javier Diaz Fajardo pointed this out when he said that sharing common challenges, ambitions and goals enables us to address global issues with local solutions, from a development banking perspective. By bringing new perspectives to the IDFC co-presidency, he argued, ‘we will make it more relevant for future generations and for meeting international development commitments’.

If you don’t mind, I will repeat what I said in response: ‘Sustainable development and the fight against climate change can only be achieved by the financial players that we are. Our mission is to build on the achievements of the IDFC and the commitments of its members to further support the economic frameworks of the countries with which we are engaged, while reducing inequalities and promoting environmental sustainability.” 

That in a nutshell is what the Club is all about and pursuing common goals, such as fighting climate change together, makes us stronger and far more likely to succeed as the solutions will be wide and diverse.

For an African to be sitting at the head of the table of such an organisation is not only a timely acknowledgement of the growing importance of our continent in global affairs, but will allow me the worldwide platform to put forward Africa’s case on many fronts, promote public development banks, align these institutions to the 2030 climate goals, and, very crucially, promote a new, more equitable global financial architecture that responds to our needs and is not as badly skewed against the continent as now. (See Essay, page 24 – Editor.)

The Djoliba Plan

It is clear that your seat at the head of the IDFC could well set in motion an era-defining period for our development institutions. Returning to more organisational issues, can you outline your current five-year plan?

Thank you, yes, I’m very enthusiastic about the 2021-25 Djoliba Plan. We have named it after the magnificent River Niger which flows through many of the lands of the West African Monetary Union. The river links the people in a whole variety of different ways and also provides a direct link to the Atlantic Ocean and what lies beyond.

In essence, the plan is to raise economic performance and output by deepening investment in vital sectors such as transport, electrification, affordable housing and digitalisation. The idea is to create value chains throughout the sub-region and thus accelerate the pace of economic development, and raise output and trade.

These are the stepping stones to wealth creation and ultimately a more prosperous region. 

We are allocating an additional €5bn over the period of the plan, or an additional €1.2bn per year

In terms of our disbursement, may I add that as of June 2023, the bank had disbursed about CFA1.5trn ($2.45bn) of the CFA3.3trn ($5.4bn) we had targeted to raise and spend on projects in member states’ economies under the plan.  

However, the figure will go up in line with the bank’s own capitalisation drive, and maintain its debt and capital adequacy ratios at comfortable levels. 

But the Plan goes further than the financing framework. We are implementing organisational restructuring and changing the composition of the
bank to make it more flexible, efficient and able to adapt quickly and more decisively in our interventions and disbursements.

In terms of activities around the plan, we hold thematic workshops on our priority areas and meetings with the private sector and investors. We are planning a summit where we will present our plan to national decision-makers and Heads of State for their approval and buy-in.

That all said, in the years to come, BOAD, like other development financing institutions, will continue to play its counter-cyclical role to support the development efforts of its member states, which are increasingly faced with challenges such as budgetary difficulties. 

A critical function of the bank is to provide capital and we have plans to boost our capital by $1.5bn over two phases. 

The first phase, accounting for around $900m, will come from contributions by category A and category B shareholders through very simple instruments. In addition, we are working on hybrid structures with the highest possible equity content of about $600m.

That should achieve our $1.5bn target. We must have our own funds and an excellent financial structure that allows it to increase its resources.

Flexibility and pragmatism 

While the aims and goals of your organisation continue on the same course as from inception, have you had to adapt your operational approach to deal with the vastly different conditions that now prevail?

There is no doubt that the series of crises that have hit the world and Africa in such quick succession or simultaneously have meant that we cannot continue to operate as usual. What is clearly needed is innovation and adaptation. Fortunately, I was raised in investment banking – the industry of innovation. I am very familiar with the tools and thought-processes that lead to such innovation – they come naturally to me.

You could, perhaps, say that given my background, I happen to be the right person in the right job at the right time! 

But, on a more serious note – our function, boiled down, is to find ways and means to execute transactions at the cheapest possible funding, originate the best possible assets and shape them so that they can be used for the maximum benefit of the people in the region.

This means the operative word is: pragmatism. I want us to be seen and known as the real solution-house. That means that we do whatever it takes to bring the best solutions to the table. The focus is purely on how to find solutions for our clients and solutions for our shareholders. 

It’s a different mind-set. Instead of being stuck with processes and procedures inherited from the past, we do what is needed to achieve the desired results. The end is much more important than the means. But for this approach to work, you need a buy-in from all your staff and here, I must say, I was pleasantly surprised by the calibre of the team I found at the organisation.

They’ve been agile, reactive and open to new ideas. Ultimately, it is they who will execute the projects on the ground – and given what I have learnt about them, I can see plenty of success in the wake of our efforts.

This post first appeared on African Business

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