On June 28, 2014, the Council of Ministers of the West African Economic and Monetary Union (also known by its French acronym, UEMOA) renewed Christian Adovelande’s tenure as President of the West African Development Bank (also known by its French acronym, BOAD), for a period of six years. From Togo, where the bank’s headquarters are situated, the President reflects on the achievements and the recent initiatives of this longstanding African institution.
Leaders League. Although public aid remains one of the main sources of external financing of African countries, it is rather sluggish at the moment. What is the BOAD’s policy to mobilize long-term savings?
Christian Adovelande. The regional capital market is a key area for the BOAD to mobilize resources. In late December 2014, the total borrowing collected on the market of the West African Economic and Monetary Union (UEMOA) since its first issuance in 1993 could amount to 841 billion CFA Francs (around 1.3 billion Euros). Our institution ranks amongst the top of non-sovereign issuers in the region.
In addition, the BOAD is set to strengthen its regional presence over the coming years. This will be reflected in particular in a greater frequency of issuances of debt securities. To increase the base of purchasers of these securities, we intend to expand on our current financial products. But the risk of saturation of the regional financial market leads us to consider resorting to the resources of the international financial market as a supplement.
We are also looking to diversify our refinancing options, taking an interest in products such as project bonds.
Leaders League. The BOAD has made regional integration through infrastructure funding one of its priorities. Can you tell us more about this initiative?
C. A. The BOAD invests significant resources in order to support integration projects aimed particularly at strengthening the complementarity of the economies of the UEMOA Member States and at improving their competitiveness.
To give you an idea, by the end of 2014, the BOAD had supported the implementation of 305 projects in the infrastructure sector, out of a total of 728 projects financed since the beginning of its operations in 1976. This corresponds to 2,063 billion CFA Francs (around 3.14 billion Euros) out of total commitments amounting to 3,184 billion CFA Francs (around 4.8 billion Euros). Our investments help develop, rehabilitate and modernize infrastructure in various areas: road, maritime, air and railway transports, energy and telecommunications. For example, the BOAD supported the construction of about 13,000 km of inter-State roads, over 1,400 km of electrical interconnection lines, and more than 5,500 km of optic fiber cables. It is important to note that in most of its Member States, the BOAD ranks first among the funders with regard to the financing of transport and energy infrastructure.
The BOAD is actively involved in the implementation of community investment programs of the UEMOA, such as the second phase of the Regional Economic Program (in French, PER II), the Regional Initiative for Sustainable Energy (Ired), the Program of Community Action of Infrastructure and Road Transports (PACITR), essential to strengthen the integration in West Africa.
And for the next five years, the BOAD envisages increasing the share of the integration infrastructure projects financing to 50% of the medium- and long-term commitments, compared to an average of 31% over the last five years and 37.4% accumulated since the beginning of its activities.
Leaders League. The access to capital is the first obstacle for the development of the businesses in Africa, notably for SMEs. What is the BOAD doing to solve this challenge?
C. A. The interventions of the BOAD are concentrated on large enterprises through medium- and long-term financing. It isn’t directly involved in a project until from a certain level of amount, in accordance to the principle of subsidiarity with the local banking sector. This means that a significant number of SMEs cannot apply for direct funding from the bank. However, depending on their specific needs, the BOAD supports SMEs that are in the growth phase.
In particular, the organization supports the creation or development of SMEs by granting refinancing lines to national financial institutions and by taking stakes in these institutions. And the BOAD promotes the use of new financing tools to help SMEs overcome the difficulties they often face in accruing an adequate level of equity capital and gathering sufficient guarantees.
Therefore, the BOAD has taken a very active part alongside partners such as the AFD, DEG, BEI, SFI and BAD in the implementation of several tools, including: the GARI Fund, Cauris Investment, the West African Asset Management Organization (Soaga), the Regional Mortgage Refinancing Bank of the UEMOA, as well as the BOAD’s Securitization, launched in 2012.
Interview in French: André-Franck Ahoyo & Elodie Sigaux
Translation: Flora McFarlane & Jeanne Yizhen Yin