We have to think beyond the bottom line.
MANUEL OSA NSUE NSUA -- GENERAL DIRECTOR, BANCO NACIONAL DE GUINEA ECUATORIAL
Equatorial Guinea has gone through an economic downturn. How did the crisis affect you and how is the country faring today?
Indeed, the country was affected by the fall in the price of oil in 2014, especially given that 80-90% of state revenues are derived from the oil and gas sector. Having said that, I wouldn't call it a crisis as such, although some projects were delayed and there was a slowdown in activity.
We experienced this slowdown, from our perspective as bankers, in the construction sector especially, which was one of fastest growing and most active sectors [in the years leading up to 2014].
The oil price fall was a stark reminder that we should no longer depend exclusively on the oil and gas sector and that economic diversification was even more urgent.
Is the oil and gas sector important in terms of your business as a bank?
Taking into consideration that the oil and gas sector contributes 80% or more of Equatorial Guinea's GDP, the banking sector obviously benefits.
Nevertheless, the oil and gas sector is important for another reason, as many of the local companies that we deal with have been dependent on public projects and investments. So there is inevitably a knock-on effect. We are financing small and medium-sized businesses and also some bigger companies, and a slowdown in activity will ultimately impact their businesses.
Is there a pick-up in activity in the construction and other sectors following the downturn?
In terms of our risk appetite, we are not currently increasing our exposure to the construction sector except in very specific cases. From a strategic perspective, we, as a bank, are focusing on SMEs and also the agriculture sector, across the value chain. We see big growth in this area, as well as a need to support this sector.
What is your experience of working with the agriculture sector as well as with smallholder farmers?
It's actually been very positive. We were the first bank in Equatorial Guinea to expand into rural communities and it has been successful because of the financing mechanisms we have put in place. We have financed over 350 associations.
To access financing, the farmers need to pool together and create a collective. This makes the guarantee a collective responsibility, and it encourages good behaviour as you put at risk the whole association if you default on your loan.
Interestingly, when the farmers pooled together, we saw a considerable increase in productivity. This was not only due to the farmers being able to purchase more inputs [fertilisers; seeds, etc.] but it encouraged the farmers to work in a more productive and professional way. Following this successful experience, our board has approved another $5m to finance agriculture.
What other areas of activity is your bank involved in?
We're a universal commercial bank, so we finance all types of projects, including large infrastructure projects. Not to mention your daily banking activity, foreign exchange, credit cards, international transfers.
For a country of one million people you have quite a lot of banks, including international ones. Is there a need to consolidate the banking sector?*
I don't think so. When we say one million, that refers to nationals of Equatorial Guinea. You should add to these the ex-pats -- from the sub-region and also outside Africa -- and that would add another million.
Every bank operating in the country has managed to find its area of activity in which it specialises.
BANGE is the only bank which has its headquarters here, and our vision is focused on providing services throughout the country and increasing easy access to banking facilities.
The Equatorial Guinean economy has room for more banks, especially as investments increase. The country will need strong banks to support investment and development.
Are there plans to expand the bank beyond Equatorial Guinea?
We're a young bank. We are barely 13 years old but have big ambitions. Our first objective was to significantly increase financial inclusion and to ensure that the whole population had access to financial services. Which is not necessarily the primary objective of a foreign-owned bank constrained by profitability and ROI demands [imposed] by their HQs.
We are judged not only on profitability but also on impact. We now cover the whole country and all its regions. Now, yes, we want to expand internationally. We opened a Representative Office in Madrid, Spain which will soon become a fully-fledged branch.
We are currently working to open branches in Cameroon, in Dubai and a Representative Office in China. These are the immediate plans and all the administrative procedures have been completed. We hope to have the official go-ahead from the authorities before the end of the year.
There is a lot of trade activity between these countries and Equatorial Guinea and many of our SMEs and traders source goods from Dubai and China, but our growth will be in Africa, which is where we see the biggest opportunities.
How far have you developed new technologies like mobile money?
Mobile money, which has revolutionised payments in East Africa, has been adopted even if it's still in [the] early stages. The regulatory framework has been updated in the whole CEMAC sub-region and in August we'll be rolling out a whole new range of products around this. Internet banking and mobile alerts, etc., are all available to our clients.
How important is it to have a locally owned bank in term of national development?
It's very important to have a national bank, not a state-owned bank necessarily, but a locally owned bank, because it will be more sensitive to the needs of the country. Our internal decision-making policies are in some way aligned to the country's long- term vision.
For example, the whole issue of diversification obliges us to incorporate it in the bank's strategic plan. And this encourages us to create the banking products that will drive this diversification and make it a reality. All this whilst respecting our risk criteria.
What is the bank's financial performance?
We have capital of $700m. In terms of assets, our loan portfolio is around $300m, making us one of the most liquid banks -- out of 52 banks in the sub-region -- operating in central Africa. We made net profits of around $10m last year. ua
* (Other banks operating in the country include Ecobank, Societe Generale, Gabon's BGFI and Cameroon's Afriland First Bank operating under the CCEI brand)
For Equatorial Guinea, the fall in the price of oil in 2014 was a stark reminder that we should no longer depend exclusively on the oil and gas sector and that economic diversification was even more urgent.
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