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Webinar Report: 2021 Outlook -- The new normal and how financial institutions can continue to offer responsible financial services

Jan 21, 2021 | Global, Virtual

The EIB West and Central Africa SME Banking and Microfinance Academy 2020-2021

Webinar series

The second in a series of four webinars organised by the European Investment Bank (EIB) Academy dedicated to SME banking and microfinance in West and Central Africa, in partnership with Making Finance Work for Africa (MFW4A), was held on 21 January 2021. It was held on the theme: " Prospects for 2021: what will the new norm look like and how can financial institutions continue to offer responsible financial services?"

The event was attended by more than 300 participants, proof of the relevance of the subject to banks and microfinance institutions seeking new ways to return to growth, while remaining attentive to the consequences and risks generated by the Covid-19 crisis, whose impact is still very much present, though the situation in Africa is better than that in some parts of the world.      

Mr. Ruben Dieudonné, Regional Director Baobab WAEMU and Managing Director Baobab Côte D'Ivoire, was invited to speak on how financial institutions can support Micro, Small and Medium Enterprises (MSMEs) in 2021, given that moratoria and grace periods will soon come to an end, increasing pressure on portfolio quality, while at the same time, financial institutions play a significant role in the revival of MSMEs.    

The panelist described how, after adopting an emergency exit strategy, Baobab quickly realised that the crisis would last and that a longer-term plan was needed to restart operations while controlling risks. By maintaining communication with clients (even remotely), an analysis of their individual situations made it possible to classify the loan portfolio according to the level of impact of the crisis on the activities concerned, and thus to offer a range of customised solutions that are regularly re-evaluated. Thanks to this approach, Baobab has managed to curb the effects of the crisis and even to resume active financing of MSMEs in the third quarter of 2020. In this context, Ruben is resolutely optimistic about the prospects for recovery in 2021.

The second speaker, Nana Araba Abban, Director of Retail Banking at Ecobank Transnational Incorporated, presented her vision of the role played by digitisation in the adaptation to the crisis, taking into consideration not only the need to reduce customer flows in branches as a precautionary measure against Covid-19, but also the importance of developing a comprehensive digital strategy in collaboration or competition with Fintechs. 

She highlighted the opportunity that digital financial services offer to diversify revenue streams and improve the customer experience, especially in the context of the pandemic. According to Ms. Nana, this is a necessary evolution to ensure an inclusive offer of financial services to individuals and SMEs. These digital financial services need to be developed in collaboration with strategic partners, such as cell phone operators. Ecobank has thus created a digital ecosystem based on these partnerships and the use of various technological innovations (chatbot, applications, etc.).

Lastly, Olivier Edelman, Director of the EIB's Microfinance Unit, made a presentation on how the needs of financial institutions had been affected by the crisis and the role of Development Finance Institutions (DFIs) in helping them overcome the crisis and ensure the continuity of their activities in 2021, while continuing to provide responsible financial services.

The presenter said that the crisis had had a variety of impacts on financial institutions, including on cash requirements (which have been relatively well managed to date). An increase in SME delinquencies and increased capital needs of financial institutions could however occur in the coming months.

To support financial institutions, DFIs can provide portfolio guarantees, facilitate access to capital and subordinated debt, and play a counter-cyclical role by providing financing in difficult times. The EIB in particular tries to meet the needs of its financial partners and has thus adapted its offer, especially by speeding up disbursement procedures for existing loans, by offering portfolio guarantees, or by continuing its loan operations as well as participating in investment funds.

After an information-sharing session with the participants, the panelists shared some concluding remarks, highlighting Africa's resilience and the opportunity offered by the crisis, through this accelerated digitisation, to reinvent itself in order to adapt to a changing world.

The webinar ended on an optimistic note.

For more information on the EIB's technical assistance programme for West and Central Africa, visit our website: www.msmefinanceta.eu and subscribe to our page linked in https://www.linkedin.com/company/eib-technical-assistance-programme-west-and-central-africa.

The recording and the slides of this webinar is available on the French page. The answers to the participants' questions can be downloaded here.