Created in 1975 and headquartered in Brazzaville, the capital of the Congo, the bank is owned mainly by the states of the central African sub-region: Cameroon, the Central African Republic, the Congo, Gabon, Equatorial Guinea and Chad.
A former finance minister and prime minister of the Central African Republic, Anicet Georges Dologuélé, was named president of the bank in August 2001 following a management shake-up and has since conducted a major overhaul of its practices, improving its financial health. In three years, the BDEAC has paid back all its debt, reinforced its shareholder equity and improved its solvency ratio from 109% in 2001 to 199% last year. Its operating loss was reduced from CFA Fr982m ($1.9m) in 2001 to CFA Fr50m last year.
The existence of a development bank is essential to the sub-regional economy, due to the inability of the local banking sector to finance large projects. “In the 1980s, banks proliferated and distributed loans very generously without reliable guarantees,” says Mr Dologuélé. “In the end, many banks had to close and monetary authorities decided to restructure the sector.”
The BDEAC suffered the same woes and had to cease its financing operations for more than a decade. Its situation was so dire that it was envisaged that it might have to be shut down. However, local states decided to give the bank one last chance.
A former central banker, Mr Dologuélé was put in charge of devising a new vision for the troubled institution. Two months after his appointment, he introduced a restructuring plan, which came with a number of conditions: a reduction of political influence in the bank, the recovery of 80% of outstanding repayments, which should be completed by year-end, and tougher sanctions for bad payers.
The political condition was met by changing the make-up of the bank’s board. Before the restructuring, it was run by government ministers, who were not necessarily versed in financial matters. “It was difficult to have technical discussions,” says Mr Dologuélé.
“The states have agreed to remove all ministers from the board and now send technical experts, who are specialists of the banking sector.” Decisions should now be based solely on technical criteria.
The bank also reduced the political influence of regional states by giving more weight to external stakeholders, such as France, Kuwait and the African Development Bank. The states’ stake has been reduced from 72% to 51% and the bank is looking for external partners to reinforce its credibility. The BDEAC is in contact with various countries and international institutions to try to bring them on board.
But Mr Dologuélé admits the bank is still “under observation” by potential partners. Besides the issue of the bank’s past practices, he admits that the central Africa region suffers from a lack of credibility, due to political and legal uncertainties. He says he hopes that the sub-regional business climate will eventually make it possible for other investment banks to become interested – but he warns that is a long-term goal.
“We are still looking to build up our own credibility,” he says. “It is therefore difficult to attract other banks to the region.
“We need to promote interest in the sub-region by our good functioning. This is why, for the moment, we invite potential partners to either take a stake in the bank’s capital or grant us lines of credit.”
Mr Dologuélé insists that his experience as a central banker was the main reason for his appointment, but admits that his past political responsibilities make his job easier.
“What helps me in the daily conduct of my mission is the authority I have been able to acquire on a political level,” he says. “When ministers pay back in three years what they had not paid in 12 years, it is also because they are people who I can call on the phone.”
The main concerns voiced by prospective partners, however, have been connected with Mr Dologuélé’s longevity at the helm of the bank: his five-year term will expire in 2006 and can be renewed once. He tries to reassure them by underlining the strong rules and procedures that he has put in place.
“Nothing is more dangerous than linking the fate of an institution to a particular person,” he says. “There has been a major evolution since my first meetings with them in 2001 and 2002, when I was sometimes asked if I was crazy to accept such a mission. I now feel some real, budding enthusiasm. A real partnership is beginning to take shape.”
The sub-region has enormous economic potential with considerable natural resources, such as gold,diamonds and wood and a small population (33 million).
More importantly, five out of the six member states are oil-producing countries.
Recent projects financed by the BDEAC include the construction of an oil yard in Cameroon and the revamping of the regional air traffic control infrastructure.
The bank is trying to focus its efforts on private enterprises and is increasingly targeting small and medium firms. It will directly finance projects of more than CFA Fr200m and grant local commercial banks lines of credit to fund smaller operations, with a tight control over the way the money is used. The bank intends total loans to amount to CFA Fr70bn by 2007.
The BDEAC could also expand its coverage to other countries in the region and include such giants as Angola and the Democratic Republic of Congo, as well as the islands of Sao Tomé and Principe, a potential oil producer.
“This would make us the development bank of what is potentially the wealthiest region in Africa,” says Mr Dologuélé. “So we need to prepare for tomorrow and we need to do it today.”