The bankarisation of the Congo

Republic of Congo

TOGY talks to Mohamed Tahri, general manager of La Congolaise de Banque. The bank is a subsidiary of the Moroccan BMCE Bank that began operations in the Republic of Congo in 2004.

LCB Bank owns a network of 19 agencies in the Republic of Congo, and aims to be the premier bank in not only the Congo, but the whole region. The bank is targeting participation in what Tahri calls the ‘bankarisation’ of the region. In 2016, the bank reorganised its activities more towards developing its retail banking sector, and it plans to pursue a strategy of innovation and adaptation to the particular needs of the region.

• On regional bankarisation: “We are not here to manage a single bank, but to participate in the wider process of bankarisation in the region.”

• On Congo’s potential: “The country has a huge potential; it is a young country with a young population and many valuable resources.”

• On new organisation: “From a commercial perspective, we are adopting a much more aggressive strategy than the previous organisation did.”

• On cash-flow problems: “There is a need for a certain degree of flexibility from all stakeholders in the state and the industry in order to find solutions to this.”

Besides touching on these topics, TOGY talked at length to Mohamed Tahri about his company’s role in the financing of the country’s oil and gas industry, and the future outlook of both that industry and the Congolese economy as a whole. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Mohamed Tahri below.

What have been LCB Bank’s major activities in 2016?
In 2016, LCB Bank focused on the reorganisation of its activities. The company began with a concentration on corporate services, but we then decided to develop the retail banking sector, as we estimated the big potential for that market in Africa. LCB Bank has the biggest network of agencies in the Republic of the Congo with 19. With this model we hope to participate in the bankarisation process of the country.
Another one of our main objectives was the development of our services. To that end we have created new packages for private customers. On the other hand, we are also dedicated to the development of competencies. In November 2016, we launched a training programme dedicated to our employees aimed at developing the competencies of our management. It is based on acquainting the employees with one another, managing teams of employees and developing projects. This will last between 18 and 20 months.
We have confirmed that the most important difference among banks is based on human skills and competencies. We are thus investing in human capital and taking advantage of this challenging period in order to be prepared for when we get out of it.
We are also investing in the logistics sector. We launched a project, finished in late 2016, on the enhancement of our administration system and home banking. Finally, we have developed a back-up in Morocco to which we transmit all the data we received to prevent any problems.

What specific measures has the bank taken to shift its focus from corporate to retail customers? What have been the most important challenges?
The previous organisation was more marketing-oriented whereas the new business centre is much more commercial-oriented. There will be an operator dedicated to each client who is able to manage their business and accounts. The agency of Pointe-Noire, for example, will be divided into two branches, one dedicated to private customers and companies and the other dedicated to the business centre.
In Brazzaville we had two big agencies that were providing exactly the same services, so we decided to dedicate one of them to the business centre. We are now refurnishing it to make it more modern and nicer and we are creating an ad hoc team for it because we need personnel with certain juridical and international competencies in order to meet the needs of those clients.
We have also decided that when financing requests we will give attention not only to the requesting company, but also to the management of that company and its executive. There will also be attention given to the social aspects of the business. To sum up, from a commercial perspective, we are adopting a much more aggressive strategy than the previous organisation did.

What is the role played by LCB in the oil and gas industry in the Republic of the Congo?
LCB Bank is one of the banks that participates in the financing of the oil and gas industry. Until recently there was a monopolistic tendency, but we are now trying to propose innovative financing models and a very good service quality. Quality is very important for oil companies. For example, money transfers cannot take too much time.
We have worked very hard on these aspects of the industry and have taken measures to accommodate these concerns. For instance, we have decided to have a back office team dedicated only to specific tasks, which means that a person dedicated to money transfer will not do anything else. LCB Bank will also have an interlocutor for the company as well. He will manage 10 accounts and make sure that the timing for each service is respected.

How do you assess the financial situation of the industry?
If you analyse the evolution of credit you will notice that short-term credit is developing more quickly than long-term credit. This means that companies are trying to survive instead of investing in long-term projects. This reflects the situation we are currently in with the low price of oil.
Furthermore, we also see that deposits are decreasing while credits on deposits are growing. The oil industry once generated a large quantity of cash and currency and we have felt a certain decrease because there are fewer transfers taking place. Small subcontractor companies are the most affected. When there is no activity they find themselves with very expensive equipment in standby, coupled with significant debts.
This affects both companies and the banks who lend to them. Banks are obliged to respect certain rules and are obliged to write off assets that originate from doubtful debt, which has a direct impact on the banks. When consistent cash flows are scarce, companies are penalised and hence banks are, too.
There is a need for a certain degree of flexibility from all stakeholders in the state and the industry in order to find solutions to this. For example, the central bank could be helping banks to put credits of consolidation in place to help these companies partially reimburse credits or to grant them reasonable grace periods to resolve liquidity tensions. Discussions and agreements are needed and it is important that all major actors understand the importance of taking intelligent and effective action.

What is your view for the Congolese economy in 2017?
In the final months of 2016 I had the impression that there was some significantly increasing optimism. However, it is necessary for all the political issues that have been discussed to be implemented, especially as far as diversification is concerned. The country has a huge potential; it is a young country with a young population and many valuable resources.
We must learn to invest in refining products and go up the value chain, especially in the downstream sector. This would allow us to transmit competencies and train local employees. Though this would be a long-term investment, in 10-15 years you will see the results. A long-term strategy is required for our present situation.

What is LCB Bank’s future outlook?
Our objective is to become the premier bank for the whole region, not only for the Republic of the Congo. We are not here to manage a single bank but to participate in the wider process of bankarisation of the whole region. The group’s mission is to put in place an innovative business model in the Republic of the Congo and, starting from here, to try to export it to the region. This model already had success in Morocco and other countries of West Africa and now we are experimenting with it here.
We have a long-term vision that reflects innovation and adaptability to the specific needs of the region. For example, mobile banking is something that we definitely need to implement here and in the region, but the equipment, transition and support processes have to be adapted to the particularities of each population and society. We are a universal bank and we do not want to focus on a predetermined sector. We want to develop a business model that responds to society’s needs.

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