Crypto

BITCOIN IS NOT A CURRENCY

After several difficult years during which Ecobank had to put its portfolio and management in Nigeria in order, the pan-African group has regained its glory. For the first time in five years, it redistributes dividends for 2021 to its shareholders. The master of this recovery, Ade Ayemi, his general manager, has to pass. This change of leadership is one of the main cases of Alain Nkonchu this year, who was appointed head of Ecobank’s board of directors in 2020.

The banker, who is also the founder of Enko Capital, a pioneering African debt management investment firm that manages $900 million in assets, is the main guest of the Jeune Afrique Economy-RFI broadcast May 14 on RFI. At our microphone, he discusses the latest economic news, from the resolution of environmental issues for banks during COP15 in Abidjan, to the adoption of bitcoin as the official currency in the Central African Republic, including the return of inflation to Africa. Rarely, a financier points out the obligations of banks and encourages them to lend more to companies.

Jeune Afrique: COP15 on desertification takes place from 9 to 20 May in Abidjan and raises the issue of the impact of human activities on nature. Do banks realize their responsibility when they finance agro-industrial projects that, in fact, harm the environment?

Ade Ayemi: Absolutely. We have been able to put in place fairly detailed measures of the environmental protection needs and impacts of these projects. This is part of a set of elements of social and environmental responsibility that banks take into account when obtaining a loan.

Is it important to produce environmentally friendly financial products?

Banks, including Ecobank, are issuing green bonds. When distributing these funds, environmental criteria are taken into account. We must go further, it is true, but Africa needs capital first. This need is reinforced by the war in Ukraine and the resulting rise in food prices. It also seems necessary that the continent should enjoy, if not complete independence, then at least some form of autonomy in terms of production.

Inflation worries households, governments, and the financial sector as well. How do you analyze this phenomenon?

The surge in prices is visible: in sub-Saharan Africa it is about 12%. This situation requires a balanced response. Food prices will not fall due to higher central bank interest rates, but it is important to soften the blow to the currency and avoid the seepage effect of this inflation. We must slow the pressure on local currencies.

Is raising interest rates the only way to limit this inflationary surge?

In the short term, unfortunately, yes, even if it leads to a slowdown in the economy. At the same time, rising prices can have serious social consequences. Therefore, subsidies are also needed to help the poorest sections of the population. No government is empowered to let its people suffer, even if the states’ budgetary situation becomes even more difficult due to the Covid crisis.

In this context, can banks be tempted to lend less?

This is often their reaction in an uncertain environment… Their job is still to know how to take that risk.

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