Bank­ing in Ivory Coast

Banking Frontiers - - Highlights - Mo­han@bank­ingfron­

Ivo­rians de­pend more on mo­bile money than on banks as there is lit­tle in­cen­tive for ap­proach­ing a bank

West African coun­try Ivory Coast, of­fi­cially called the Repub­lic of Cote d’Ivoire, has a pe­cu­liar prob­lem. Of­fi­cial es­ti­mates main­tain that only 1 in 8 peo­ple who save money chooses a bank or fi­nan­cial in­sti­tu­tion to do so. This is al­most two times lower than those ob­served in any other African coun­try. Most of the coun­try­men pre­fer to keep their money at home or those who are rich and af­flu­ent chose to buy real es­tate as­sets or send it abroad for safe­keep­ing. This is an un­for­tu­nate sit­u­a­tion for a coun­try that is try­ing to find a place among the emerg­ing economies.


A World Bank Eco­nomic Up­date ti­tled ‘The Race to Emer­gence: Why Cote d’Ivoire Must Ad­just its Fi­nan­cial Sys­tem’, says: “The re­luc­tance of Ivo­rians can be ex­plained in part by the po­lit­i­cal cri­sis, which weak­ened the trust be­tween banks and their clients. It can also be at­trib­uted to the his­toric fail­ures of sev­eral pub­lic banks that are likely to be closed, re­struc­tured, or pri­va­tized.” There is ab­so­lutely no in­cen­tive for an Ivo­rian to open a bank ac­count and keep his hard­earned money there. The trans­port sys­tem is abysmal and costly in the coun­try, there is al­ways high bank trans­ac­tion charges and there is no guar­an­tee that the cus­tomer can have ac­cess to credit from the bank. The banks find it more ex­pe­di­ent to have cor­po­rate clients than re­tail cus­tomers. They also pre­fer to in­vest in safe gov­ern­ment se­cu­ri­ties, or just cre­ate re­serves. There are in­stances where banks ask a cus­tomer to in­vest an equiv­a­lent amount in the bank as guar­an­tee for a loan.


Such a sit­u­a­tion has its ad­van­tages too. The coun­try to­day has a flour­ish­ing mo­bile money busi­ness. There are more mo­bile money ac­counts (24.3%) than bank and mi­cro­fi­nance ac­counts com­bined, and it is be­com­ing very com­mon for Ivoiri­ans to use mo­bile money to make pay­ments. The coun­try has the 5th high­est rate of mo­bile money ac­counts in the world be­hind Kenya (58%), So­ma­lia (37%), Uganda (35%), and Tan­za­nia (32%). Th­ese mo­bile ac­counts fa­cil­i­tate pay­ments and trans­fers of funds, but they do not give cred­its. It is com­mon for Ivo­rians to pay school fees and util­ity bills us­ing mo­bile money.

The World Bank has sug­gested that Cote d’Ivoire take steps to re­verse this trend to strengthen its fi­nan­cial sys­tem, es­pe­cially its bank­ing sys­tem. It wants banks and mi­cro­cre­dit in­sti­tu­tions to de­velop closer ties with their cus­tomers through in­no­va­tions and part­ner­ships, with the aim of re­duc­ing their trans­ac­tion fees. Like­wise, the bank has pro­posed creation of fi­nan­cial in­sti­tu­tions other than com­mer­cial banks like mo­bile phone com­pa­nies that could grant loans, as they do in Kenya. The World Bank has also sug­gested that the coun­try should be able to cre­ate a fi­nan­cial mar­ket reg­u­la­tory frame­work that can adapt to fu­ture in­no­va­tions.

Cote d’Ivoire is a mem­ber of the Com­mu­naute Fi­nanciere Africaine (CFA), a fi­nan­cial group­ing of fran­co­phone African coun­tries, which be­longs to the West African Eco­nomic and Mon­e­tary Union. The coun­try’s cen­tral bank is the Banque Cen­trale des Etats de l’Afrique de l’Ouest, lo­cated in Dakar, which is also the cen­tral bank for WAEMU mem­bers. There are 26 com­mer­cial banks, a re­gional stock ex­change and 30 in­sur­ance com­pa­nies op­er­ate in the coun­try. Five of the banks are do­mes­tic-owned, th­ese ac­count­ing for 21% of to­tal as­sets. The gov­ern­ment is heav­ily in­volved in the sec­tor, in an ef­fort to prop up th­ese in­sti­tu­tions since the be­gin­ning of the con­flict that rocked the coun­try in 2002.


The bank­ing sec­tor in the coun­try is less so­phis­ti­cated than those is some of the other African coun­tries or in Europe. There are sev­eral fi­nan­cial in­sti­tu­tions, in­clud­ing re­tail and whole­sale banks, spe­cial­ized banks, in­sur­ance com­pa­nies, fi­nance com­pa­nies, in­vest­ment ad­vi­sors, money chang­ers, in­sur­ance bro­kers and se­cu­ri­ties bro­kers. The banks have a great po­ten­tial for growth as the bank­ing ser­vices pen­e­tra­tion rate is just about 8%. The mar­ket is still dom­i­nated by cash trans­ac­tions, but the fu­ture trend is lean­ing to­wards dig­i­ti­za­tion and elec­tronic mode.

The top banks in the coun­try are So­ci­ete Gen­erale de Ban­ques en Coe d’Ivoire, Banque At­lan­tique Cote d’Ivoire, Ecobank Cote d’Ivoire, Banque In­ter­na­tionale pour l’Afrique Oc­ci­den­tale, Banque Na­tionale d’In­vestisse­ment, So­ci­ete Ivoiri­enne de Banque, Bank of Africa, Citibank Côte d’Ivoire, Stan­dard Char­tered Bank Cote d’Ivoire, Banque pour le Fi­nance­ment de l’Agri­cul­ture and Ver­sus Bank.

Cote d’Ivoire con­tin­ued to wit­ness a sta­ble econ­omy since 2012 af­ter the coun­try gained some equi­lib­rium af­ter the 2002-03 civil war and the fol­low­ing years of un­cer­tainty. How­ever, set­ting up of new re­gional banks, mi­cro­fi­nance in­sti­tu­tions, and the mo­bile money spread helped to cre­ate a some­what sem­blance of bank­ing ser­vices. In the re­cent years, the bank­ing sec­tor has also seen some re­struc­tur­ing. Two of the five do­mes­tic banks, which had neg­a­tive net worth at the end of June 2008, for­mu­lated recapitalization plans ap­proved by the Bank­ing Com­mis­sion.

Ivo­rian co­coa farm­ers trans­act money through mo­biles

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