Reconciling perceived risk and vast opportunity in emerging markets is nothing new, especially in the Democratic Republic of the Congo (DRC). The sub-Saharan African country continues to struggle with reputational issues around instability and corruption, while being home to a largely unbanked population.
Banks have not been out of the spotlight either. In 2017, the DRC subsidiary of Gabon-based BGFIBank Group was ensnared in controversy following leaked internal documents linking it to former president Joseph Kabila’s family, as well as the financing of Hezbollah, the Lebanese political party which is on the EU’s list of terrorist organisations.
Since then, all senior staff at the bank’s DRC subsidiary have been replaced, with Marlene Ngoyi taking over as managing director in November 2018. In December 2020, BGFI became the first bank in the DRC — and one of a select few in sub-Saharan Africa — to obtain international certification for combating money laundering and terrorist financing.
After a long career, including at Merrill Lynch on Wall Street and as head of BGFI’s investment banking unit in Paris, Ms Ngoyi is leading the transformation of the DRC operations.
Q: How have you found your role at BGFI?
A: This is probably the most challenging post I’ve ever had, because we’re really looking at a turnaround situation. My mission is to transform the bank in the DRC, which is a country that obviously has a lot of challenges, while in the middle of a health crisis. In my first year there was political uncertainty, so all of those elements combined makes it very challenging.
Q: What do you see as the future of banking services in the DRC?
A: Penetration rates in the DRC are still very low, with essentially 90% of the population unbanked. The country’s banking industry will need to leapfrog the trends seen in Europe.
I would not be surprised if banks have fewer physical assets and focus more on digital banking in future. When you look at the penetration of cell phones, you realise that’s probably going to be the most likely banking platform for most customers.
Most of the African countries we operate within, including the DRC, have very ambitious plans on a 20-year horizon. This includes building out infrastructure and tackling serious problems, like healthcare, education and all those areas that are essential to becoming a developed economy.
Penetration rates in the DRC are still very low, with essentially 90% of the population unbanked
Bankers cannot afford to be ‘plain vanilla’. The skill set of investment banking will be very important, particularly in how to structure very large transactions. Historically, we have a lot of European bankers working on those deals, but I think that more and more there’s going to be a need to have that skill set on the ground, and at BGFI we’re quite well positioned for that.
Another trend is the use of trade finance instruments, such as bilateral credit. From a compliance perspective, we are a lot more comfortable with trade finance instruments as a way of supporting pan-African trade and commerce. I see that becoming a very big portion of the banking businesses.
Q: Do you see fintech playing a role?
A: Because of the regulation and the huge compliance challenge, fintech has not yet developed in the DRC; other countries in Africa are probably a bit more advanced. Telecom companies are offering more and more banking-like services, such as payments. There are still a lot of questions around compliance here in the DRC, because obviously you have to build a safe regulatory environment.
At BGFI, we are trying to develop applications that are integrated with our systems, which essentially allows us to be open 24/7. But we don’t want to do that to the detriment of what we view as our strength, which is being able to give tailor-made solutions to our customers. We are trying to reconcile these worlds and I hope that we’ll be successful.
Q: What is needed to de-risk the African banking sector?
A: De-risking is a big problem because of several reasons, including large informal sectors and difficulties in doing ‘know your customer’ checks, but especially for economies like the DRC that are dollarised.
A financial institution can respect the strictest standards, but the fact that it operates in an environment that has weaker regulation than elsewhere and a culture of cash-based transactions increases the perception of risk associated with the bank.
We think that when there is a lack of confidence, you need to build trust. We wanted to strengthen that by letting an independent external auditor look into these matters in a serious way – and we were very glad when we got a positive outcome.
More bankers in Africa have strong career backgrounds, which means that they understand all of those complex problems. I would love for people to really look at [Africa] objectively and be able to recognise that even if everything is not perfect, there’s a desire to do better.
Quotes have been edited for brevity and clarity.
