Tiémoko Meyliet Koné, Governor of the BCEAO - "Depending on the evolution of the situation, the BCEAO will take all appropriate measures to support the economies of the Union"

It is true that, from the start of the crisis, the BCEAO took support measures in favor of the banking and financial sector. This consisted in increasing by more than 1,500 billion FCFA the liquidity granted to this sector. These resources thus enabled the banks to maintain their financing activities and grant maturity extensions to companies affected by the crisis. Already at the end of May 2020, the banks had granted maturity extensions for an amount of 57.3 billion, in favor of more than 800 companies and 3,500 individuals. At the same time, outstanding loans to the economy increased by 1.8% between February and May 2020.

The Covid-19 vouchers, structured in favor of the States, have enabled them to mobilize on the regional financial market more than one trillion FCFA under very advantageous conditions, for rapid financing of their response and recovery plans, pending the mobilization of other resources and budget support by the end of 2020.

Finally, the measures in favor of the increased use of digital means of payment, intended to limit travel and contact between people, have had a very favorable effect on the use of electronic money and the use of digital financial services. .

In view of these initial results, we are rather satisfied with the results of these measures. We continue to encourage banks to take greater ownership of all the support measures put in place by the BCEAO so that they can achieve their full effect.

The most important thing is that we are monitoring the evolution of this crisis on a daily basis, the extent and definitive duration of which are not yet fully understood. Depending on the evolution of the situation, and in accordance with its mandate, the BCEAO will take all appropriate measures to support the economies of the Union.

At the start of the crisis, as you know, all the States of the Union implemented response plans to curb the spread of the disease, but also to reduce its negative effects on the economy. Now these countries, like those in other parts of the world, are moving towards easing restrictions while introducing economic stimulus packages. In order to support these stimulus plans and contribute to this momentum, the BCEAO Monetary Policy Committee recently decided to lower the Central Bank's key rates by 50 basis points. The minimum bid rate is now 2.0% instead of 2.5% previously.

Thanks to this decision, banks can now access financial resources from the Central Bank at the interest rate of 2.00%, one of the lowest in Africa. They were asked to pass on this drop in the cost of their resources to the interest rates for loans granted to customers, in particular SMEs/SMIs and economic operators affected by the health crisis.

First of all, it should be recalled that it is the statutory provisions of the BCEAO which prescribe that the main objective assigned to monetary policy be price stability. These same provisions specify that, without prejudice to this objective, the Central Bank provides support to member countries for healthy and sustainable growth.

In such a context, and in accordance with its mission of price stability, adjusting liquidity to the needs of the economies becomes essential for the Central Bank, as does ensuring that the necessary balances are maintained.

The health crisis we are experiencing, due to the economic disruption it causes, has an impact on inflation, given the gap between demand and supply of products in general. The inflation rate, which was -0.5% at the end of December 2019, stood at 1.3% in March 2020. This level is not worrying and all the assessments made by our services do not reveal any particular concern about the inflation. medium-term inflation.

Regarding the levers of the Central Bank to contain a possible rise in inflation, it must first be pointed out that monetary policy is by nature cyclical and is adjusted according to the evolution of the internal and external situation. The analysis of the constituent elements of an increase in inflation will therefore necessarily indicate the measures to be taken to check this process. The BCEAO, like any other central bank, has the instruments to do this.

Finally, I must tell you that the BCEAO's current reserves represent 6.3 months of imports. This is an appreciable level, never reached in the past and which is the result of several actions, which are based first on the economic performance of the countries, then on the reforms introduced by the Central Bank to achieve the effective repatriation of revenue from exports and, finally, on the strengthening of the gold stock of the BCEAO, due to new acquisitions from mining companies established in the WAMU zone.

First of all, I would like to point out that, based on assessments made by the BCEAO and international financial institutions, the cost of bank credit in our area is among the lowest in Africa. However, it is important to emphasize that the problems of banking and financial inclusion are not only linked to questions of the costs of financial services. They also depend on the availability of financial services which must be better adapted to the needs expressed by the economic actors in particular and by the populations.

Today, with the development of new technologies and, above all, financial digitization, the banking rate is no longer the only relevant indicator for assessing the level of financial inclusion of populations. Rather, it is the overall rate of use of financial services that best allows us to assess developments in this area.

The strict banking rate, taking into account the banks, is 17.7%. By adding the Decentralized Financial Services (SFD), this rate rises to 39.4% currently.

Decentralized Financial Services were set up to provide local financial services to low-income populations. This made it possible to obtain convincing results. In 2020, there are more than 500 Decentralized Financial Systems in WAMU, with approximately 15 million members.

To go further, the BCEAO has set up with the States of the Union a regional strategy to increase the rate of financial inclusion to 75% within a period of 5 years.

The actions currently carried out in this context focus on strengthening the digitization of operations and the implementation of an adapted financial education program for the actors and beneficiaries of these services. Although all these actions have not yet been developed, the financial inclusion rate stands at 59.8% in 2019 against 37.2% in 2014. Finally, other reforms aimed at strengthening the financial ecosystem are also in progress. Classes. These are the interoperability of digital financial systems and the implementation of a FinTech incubation and development environment.

In WAEMU, financial services via telephony have also developed thanks to the adoption, since 2006, of regulatory texts which regulate the issuance of electronic money. These texts were revised in 2015 to strengthen the supervision of the activity and the protection of consumers. As such, at the end of December 2019, we counted around forty electronic money offer initiatives in WAEMU, which total more than 76 million accounts opened.

In terms of trade, the populations carried out, in 2019, transactions worth 29,414 billion FCFA, or 81.7 billion FCFA per day. Once used primarily for transfers between individuals, electronic money is now used in merchant payment transactions, payment of bills and utility costs. Credit offer services via mobile telephony are also registered thanks to partnerships between financial institutions.

It should also be noted that most States use mobile telephony for payments to recipients of public benefits (social assistance, grants, pensions, etc.).

Subscription to bond loans with electronic money is therefore possible in WAEMU with the regulations in force. It is a value-added service, which is already offered by certain Management and Intermediation Companies (SGI), thanks to partnerships with electronic money issuers. The actors of the regional financial market therefore benefit from an appropriate framework to popularize and develop this market segment if they so wish.

First of all, it should be recalled that, in WAEMU, foreign exchange transactions that residents of the Union can carry out are governed by specific regulatory provisions, which provide in particular that these transactions can only be carried out by through authorized intermediaries such as the Post Office, the primary banks, authorized foreign exchange agents and the BCEAO.

In this regard, for any transaction on the foreign exchange market, the public must use only authorized intermediaries, who are responsible for ensuring regulatory compliance of customer transactions. Naturally, any operation carried out outside this framework is considered to be an infraction, and exposes you to pecuniary and criminal penalties, in certain cases.

In any case, we do not have information showing that private individuals carry out this type of operation directly, without going through approved intermediaries.

However, this is the place to remind the public that foreign exchange transactions called Forex, which have no economic basis, are speculative transactions. These operations entail significant financial risks which call for great vigilance, unlike the advertisements made by their promoters who wrongly promise exceptional profits.

WAEMU is a territory of over 3.5 million square kilometers and has a total population of over 117 million. In this, it constitutes a vast market for economic operators and foreign investors.

With regard to the resilience capacity of our economies, it lies partly in the advantages it has been able to draw from economic and monetary integration to deal with various shocks. Indeed, with the exception of the year 2020 impacted by Covid-19, WAEMU is characterized by a stable macro-economic and monetary environment, which translates into growth rates among the highest on the continent (in more than 6%) and the lowest inflation levels (less than 2%) in recent years.

In addition, foreign exchange regulations guarantee the freedom of current transactions and most capital transactions, in particular the repatriation of profits made by non-residents. These are essential factors for any investor to assess the profitability and security of their investments.

This potential should not leave investors indifferent and, of course, we encourage them to take advantage of the opportunities that arise.

The States of the Union do indeed have these mechanisms to finance themselves. These are, on the one hand, the public securities market by syndication regulated by the Regional Council for Public Savings and Financial Markets (CREPMF) and, on the other hand, the market for Treasury bills and bonds by auction. , which is the responsibility of the Agence UMOA-Titres (AUT).

These two markets each have their Custodian, whose role is to ensure the custody of the securities and to manage the delivery settlement system. The Custodian therefore plays an essential role in the development of the market. In WAEMU, the BCEAO acts as depositary of Treasury bills and bonds issued by auction, with the assistance of the Agence UMOA-Titres, and the Central Depository/Bank of Settlement (DC/BR) the function of depositary of securities issued via the CREPMF.

At the request of the Council of Ministers of the Union, work was carried out by a Committee led by the Central Bank, with a view to imparting to our financial market the reforms necessary to strengthen its efficiency, and a report was drawn up for this purpose. This report indicates in particular that the existence of a plurality of custodians constitutes an obstacle to the emergence of the market and formulated recommendations which were adopted by the Council of Ministers. The implementation of the said recommendations is in progress and will make it possible to make the operation of the market more efficient, by resolving the difficulties to which you allude.