Daouda Coulibaly: Overview of Société Ivoirienne de Banque

Interview with Daouda Coulibaly, Managing Director of SIB (Société Ivoirienne de Banque)

How do you evaluate the banking sector in Côte d’Ivoire? What are the biggest challenges that the sector faces at the moment?

The Ivorian banking sector is dynamic and at the same time highly fragmented. Today, we have 25 banks operating in Côte d’Ivoire. We have a lot of small banks and this leads to increased competition. Competition is important to us; it helps us to improve and thus offer more innovative and convenient products and services to our customers.

So now the challenge for the entire banking sector in my opinion is to address the market that is remains untapped. The rate of banking services in Côte d’Ivoire is only around 15%. The main challenge is to pick people who are not yet benefitting from the banking services and to find the products and services tailored to their needs in order to convince them to open bank accounts.

The second challenge is to build banks strong enough to finance major projects in Côte d’Ivoire. A lot of increasingly important investment projects are carried out in Côte d’Ivoire and unfortunately not all banks have the capital required to carry very large projects.

So shall we witness new mergers or acquisitions within the banking market?

I think that it is unavoidable in the medium and long term. Authorities will take measures to strengthen capital, so there will probably be groupings of banks to form larger banks.

What about the SIB, how is it positioned? Since the arrival of your partner Attijari, you reached 50 branches. You used to have only 16 branches. Today, SIB is 5th in terms of deposits and 4th in terms of credits distribution. What is the current position of the bank? You were initially oriented towards the corporate market.

Indeed, the SIB has long been a bank focused on corporate business. Since the arrival of Attijari group, there has been a desire to make a universal banking model like what is done at the headquarters in Morocco. Strong guidelines were given by the president of the group to develop the SME sector as it is the engine of the growth of any country, and also to significantly expand the sector of professional individuals. Thus, we defined very quickly the structuring projects on which we will work for the development of our network. We actually went from 16 branches (June 2010) to 47 today. 3 new branches will in fact open in the few coming weeks, so we will reach the number of 50. There is a strong willingness to continue expanding this network.

You have funded large projects in Côte d’Ivoire. We spoke of the Port Autonome worth of 15 million euros. You also succeeded in your policy to take care of the SMEs, you have signed a credit agreement for road maintenance funds for 30 million euros, there is Ciprel – the thermal power – so these are the large projects. Let’s discuss the agreement with the IFC, the subsidiary, to secure a portfolio of around 40 million US dollars to finance the SMEs.

With the aim to support the SMEs, we looked at the available tools that could assist us in this policy and we then discussed with the IFC who gave us a portfolio guarantee, which is a possibility to finance up to 40 million US dollars, that means twice as it intervenes in fact only at 50%. And for us, it was a tool that complements our system to better address the SME segment. We share the risk 50-50 on the SMEs we fund. It will allow us to be more dynamic and enterprising in that sector. We were able to integrate with the IFC in this portfolio, one part reserved to start ups because there is an issue for people who have good projects but cannot gain the support of the banks.

We managed also to set one part for women entrepreneurs because it is important today to support them.

We also managed to allocate a portion to the food industry because in a country like Côte d’Ivoire, where the economy is largely based on agriculture, it is important to include this sector as a key sector to portfolio guarantee.

Beyond the IFC, we also signed an agreement with the African Guarantee Fund, which is based in Nairobi, for the equivalent of 5 million US dollars to complement the device with the IFC.

And we are in talks with the AFD, we already have an agreement on the ARIZ guarantee, but it is a guarantee made by file. So here, we will also enter into a guarantee portfolio. It gives us the means and tools to develop the SME and SMI segment.

Another very important project has been launched for the development of SMEs: the Phoenix project.

So we believe that these mechanisms and all these agreements will allow us to support this project. The large enterprises of tomorrow depend on the SMEs of today, so it is important that we support the SME today, we have to do it for a better tomorrow.

We spoke with the Minister Billon about the Phoenix project. It is really hard for an African business in general to have access to credit, banks are generally cautious, getting access to the financial market is impossible, foreign investors are not easy to find, etc., the development of the SMEs remains very complicated. You set up a lot of start-ups; have you fixed the problems?

We solved a lot of other problems. This will make us less nervous because we already share the risk with these guarantee institutions at 50-50, with the possibility sometimes to cumulate two guarantees to increase to 75%. So it can resolve the issue of guarantees that the SMEs are struggling to make or find. Regarding the financing of the SMEs in Africa and in the WAEMU area in general, I actually think the complexity of the environment has to be mentioned as well. Our role is to give loans, so the more we provide loans, the better we are. The environment sometimes prevents us from reaching our goals. It is extremely difficult to make guarantees, sometimes it’s difficult to find investors; there are land management issues, etc… The environment needs to be reviewed; we should not just blame the bankers because they don’t have a miracle solution.

The Phoenix project could perhaps help; all these aspects were taken into account in the Phoenix project, which in fact could be a plus.

What are the major challenges of the bank today?

The major challenge today is to continue our development. There is a clear and precise development plan 2011-2015 that has been adopted. Very strong guidelines have been given by the Board of Directors to reach at the end of 2015-early 2016 the top 3, which is actually the historic rank of SIB. When Attijari group took over, SIB was 6th in lending and 7th in deposits. Today, we are 4th in terms of lending and 5th in terms of raising resources. However, SIB is well positioned in certain criteria, the criterion of profitability for example; SIB is the most profitable bank in the Ivorian market place. Even though there is a willingness to develop, we intend of course to keep profitability for shareholders, employees and all our partners.

The challenge is also to continue to be a leading and innovative bank with the support of the parent company that has expertise on which we rely.

Another key challenge is to develop products that do not yet exist in Côte d’Ivoire or innovative products that already exist and showed good results in Morocco. These products are for example in the real estate; we have a subsidiary at group level, which is a leader in Morocco. The second product is factoring; we have also a subsidiary, which is leading in Morocco with 40% market share. Other products to mention: the confirming and the insurance business. We have actually several products that are related to our activity. We try to benefit from the experience of the group to develop this platform for the Côte d’Ivoire and even the sub-region.

Can you give more details about these four products: real estate, factoring, confirming and insurance?

These activities exist at our Group level and are either subsidiaries or inside the bank. We try to rely on the group to develop these activities in Côte d’Ivoire. We already launched the leasing activity early this year and today it behaves extremely well.

We are currently carrying out studies on the confirming to see whether to develop this activity in Côte d’Ivoire. The confirming is somewhat the reverse of factoring. We propose to big companies to replace them and pay their suppliers who are mainly the SMEs. So we can solve them and at the same time it gives us the possibility to finance them. It solves the issue of funding the SMEs that work for large groups. We will have a bill to be paid after 30 days, 60 days or 90 days, and we replace these large companies to pay the bill. As we will pay the SMEs at a given date, we can also offer them the funding they need, pending the payment of their invoices. So this is a very innovative system, which both solves the problem of large companies because it allows them to get rid of an activity that does not create value for them (payment and invoice processing ) and also allows solving the problem of financing SMEs. Indeed, SMEs sometimes deliver the work and wait 60 days because they don’t have the power and negotiating capacity towards these large companies. Sometimes they have to wait even 90 or 120 days. So thanks to this solution which provides them with financing in advance, they can continue working while waiting for their invoices maturity.

At the real estate level, we have WAFA Estate that is actually the market leader. We are relying on the know-how of this subsidiary to develop the real estate activity in Côte d’Ivoire. Actually, the need in housing is very strong in Côte d’Ivoire and we believe that in the coming years, once the land issue which is being addressed will be fully resolved, there will be a boom in housing, so we are preparing to be ready to support these activities.

Among all these activities which one will be the most profitable in your opinion?

They are all profitable. We talked earlier about the growing need in terms of real estate.

We also implemented the consumer credit service. We have at the group level a subsidiary called WAFASALAF, which is actually in joint-venture with SOFENCO and which is able to treat consumer loans in few hours, an hour or two. So here also we are trying to learn from the platform of this structure to develop consumer credit in Côte d’Ivoire. In fact, we are witnessing the creation of a middle class in Africa and Côte d’Ivoire is also concerned. This middle class has consumption requirements as in Europe. So there are a lot of opportunities at this level.

What is your vision for the development of the banking sector in general? What would be your role in two or three years? We spoke about your positioning, we spoke about the services and offers you want to provide, but what is your dream?

The dream is to be a development vector for Côte d’Ivoire. That means of course to gain money for our shareholders, but also to play a greater role in the development of Côte d’Ivoire. We would like to fund more projects for the development of Côte d’Ivoire. That also requires a stronger banking system: we actually work on the branch network extension with the aim to reach 40,000 or 50,000 new costumers per year; today we manage to acquire 20,000 new clients per year. We also aim to have the needed size to fund important projects in Côte d’Ivoire, as it is the case in Morocco, and develop all value-added products that we can develop in Côte d’Ivoire. We need also to be an investment bank to support the state and the companies in their needs of structuring, sourcing, etc. So the dream is to make the SIB a great bank with a universal banking model.

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