On Monday, over 800 continental finance leaders, bankers, insurers, regulators, central bank governors, public policymakers, innovators, fintech leaders and journalists converged in Lome, Togo, for the African Financial Industry Summit. The goal was to discuss and develop solutions to expedite the continent’s economic recovery in the face of the ongoing global economic crises through the development of a competitive, innovative, inclusive, and sustainable financial industry. The two days event was held at the Hôtel 2-Février and sponsored by Jeune Afrique Media Group and the International Finance Corporation.
In 2020, the world was hit by an unprecedented pandemic, and Africa was one of the most affected continents. This is because, unlike wealthier nations, the continent had no wherewithal to curtail the economic shock. The novel Coronavirus pushed about 30 million people in Sub-Saharan Africa into extreme poverty, stalling the progress made towards poverty reduction on the continent in the last five years. Interestingly, following a 2.1% Covid-19-induced economic shrink in 2020, the African economy showed its resilience in 2021. However, there came another economically disruptive event – the Russian-Ukraine war. There is no other time than now for the continent to realise its true potential and ply the pathway to growth inclusively and sustainably. Hence the need for the summit.
The summit started with a welcome address from the Managing Director of Jeune Afrique Media Group, Amir Ben Yahmed. “The first physical edition of AFIS comes eight months after the inaugural edition organised online… it is above all, a platform for public-private dialogue in favour of a sovereign Africa capable of financing its infrastructure and major transformation projects,” he said.
The Togolese president, Faure Gnassingbè, described the summit as “a first-rate opportunity to work on the future of African finance.” He emphasised the need for a collaboration between the public and private financial authorities to effectively transform the African financial landscape amid economic turmoil like insecurity, climate change, financial instability, and ballooning inflation. He noted that Togo has been exemplary in this collaboration citing its status as a hub for many African financial institutions, including Ecobank, BOAD, Oragroup, EBID and Cica-Re.
Sergio Pimenta, Vice-President Africa of the International Finance Corporation (IFC) and co-organizer of AFIS, noted that everyone understands Africa’s potential, and it is time to bring it to reality. He further noted that financial institutions could be drivers of resilience and catalysts for solutions in the face of crises by using the IFC’s support for micro, small and medium-sized enterprises (MSMEs), trade financing, and climate transition as an example. According to him, IFC has supported more than 600 loans to SMEs in Togo for a total value of 2 billion XOF (USD 3.5 million) over the last five years. The institution, which has allocated 9.7 billion dollars to trade financing worldwide, has granted a line of $24 million to Vista Group, a bank operational in Burkina Faso, Guinea, Sierra Leone and Gambia.
It is always important to discuss innovation – Ade Adeyemi, GCEO of Ecobank Group.
As the global economy is presently struggling with divergent crises, the value of the US Dollar has continued to increase, and the reason is not far-fetched. A significant percentage of global international trade is invoiced in dollars. Consequently, countries that use dollars for import trade bear the brunt as their currencies experience a decline in value. Many African countries belong here, and currencies like the CFA franc, Naira, and Cedi are in turbulent times. The Naira, for instance, was sold at a parallel market rate of N800+/1$ (parallel market) at some point this year, representing the greatest decline ever.
Commenting on the African foreign exchange problem, Ade Adeyemi, GCEO of Ecobank Group explained that what divides us is not FX but the African mindset. “The issue of payments and currency comes after that. Our biggest constraint is creating a trust that when the rice I buy from Kenya is better than the one I am getting from the rice I am getting from Thailand. Buying rice from Kenya helps create wealth opportunities for people involved in its production. We need to find a way to enable our people to trade with each other. We need to improve logistics and infrastructure to support trade amongst ourselves.”
He added that “Trade requires information and logistics. Africa needs to figure out how to connect its countries and build infrastructures. But more importantly, the mindset must change. As Africans, we need to start figuring out what connects us instead of what divides us.”
On cryptocurrencies, Adeyemi argues about the need to understand the risk and operations involved. Cryptocurrency has become popular in emerging markets like Africa, thanks to the youth demographic who finds not just the wealth creation opportunities in the system but also the technology that birthed it appealing – largely because of its decentralised nature. However, cryptocurrencies have faced resistance from political, financial, and recently, religious elites. Despite the restrictions in key markets like Nigeria and Kenya Africa had the fastest cryptocurrency adoption rate globally last year.
For Adeyemi, the technology – Blockchain, used for crypto is a very sophisticated technology that allows trust to be built across multiple junctions. “I do not support the clamour to stop Central Banks because of this technology. Rather, we should continue to develop that technology until we get to the point where we can find the best use. I think it is important for the regulators to bring all the players into the room when we discuss so that we would understand where the regulators are coming from regarding the mandate of financial stability and where the fintech and other players are coming from because of their need for innovation. We need to understand the basis of competition and collaboration.
Unlocking Women’s financial inclusion in Africa.
Gender inequality remains one of the greatest threats to Africa’s future. Women on the continent do not have equal social and economic opportunities compared to their male counterparts. Numerous hurdles including poverty, discrimination and lack of institutional support, continue to fuel the gender disparity in access to finance and venture capital for African women. The International Monetary Fund revealed that in sub-Saharan Africa, only 37 per cent of women have a bank account, compared with 48 per cent of men, a gap that has only widened over the past several years. Similarly, women entrepreneurs confront a $42 billion gender funding gap, and in 2021 alone, women-only founders received less than 1% of the nearly $5 billion raised by African startups.
For VCs and investors to better address the gender funding gap, Olasubmi Osibodu, senior management risk advisory at Deloitte Nigeria, said there needs to be a radical shift from money orientation to value orientation. “Venture Capitalist needs to look beyond profit and look into offering value. The non-financial impact should be equally as important as the financial profitability. Supporting the female financial inclusion gap will require corporate to move out of their comfort zone to seek their target participant,” she noted.
Exploring financial inclusion is indeed an enabler of empowering the African woman to achieve her potential. Increasing women’s access to and use of financial service have economic and societal benefits as it can be transformative for any economy that prioritizes it.
Commenting on the problem of financial inclusion, Korede Kodjo-Bella, Head of Consumer Banking, Ecobank Côte d’Ivoire said that if Africa wants to grow sustainably, there must be a focus on women. “The most important is to make women have financial education because without it, you cannot grow sustainably. You have to know how to plan, save, and invest your money for a project you want to embark on. Then comes financial inclusion, which enables women to have access to financial services, including insurance, credit, and payments,” she stated.
She further explains that the continent needs women-focused programmes like the Ellevate programme, designed for women-owned businesses with a high percentage of female board members or employees and companies manufacturing products for women. “Ellevate helps women have access to capacity building, training for business, and finance at specific prices. We have a network in more than 30 countries that women can rely on. As a member, you can enter any Wema bank Ellevate office and enjoy the women’s network there.
In a few years, Kodjo-Bella hopes to see an average African woman have access to resources, financial services and products that are easily accessible so that she does not have to struggle in her country or anywhere in Africa.
Advancing women’s equality is paramount globally, and that is why it holds a spot on the United Nation’s Sustainable Development Goals for 2030. Advancing women’s equality could help the African economy by adding 10 per cent to its GDP, or US$316 billion by 2025.