Low rate of banking for an informal economy: when will the situation turn around?

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By analyzing the figures we have at our disposal, we realize that more than 90% of Guineans are excluded from the banking network. However, we agree with you that the Guinean banking system should contribute, if necessary, less than the Microfinance Institutions (MFIs) to the emergence of micro-entrepreneurs because the latter are considered to be community finance. that is to say, accessible to those who do not have the possibility of fulfilling the criteria for obtaining a bank account.

And yet, by examining the BCRG annual report for the year 2020, we see that despite their presence in the last village of Guinea, the services offered by MFIs only cover a small portion of the financing needs of the economy. By way of illustration, the outstanding loans of MFIs stood at GNF 698.5 billion at the end of 2020 against GNF 706.4 billion at the end of 2019, down by one percentage point. On the other hand, the credits that the banking system granted to the economy at the end of 2020 reached GNF 13,886.5 billion against GNF 8,220.17 at the end of December 2017. In addition, like the Guinean banking system , short-term loans are more important in the overall outstanding balance of loans distributed by MFIs and this is due to the lack of medium- and long-term resources. In addition, 54.2% of these credits from the banking network were directed towards the trade sector against only 12.6% for the agricultural sector (see BCRG annual report, 2020). This is, in our opinion, very deplorable.

If nowadays the banks established in Guinea manage to make better use of the scarce financial resources at their disposal to distribute loans, most of them of very short duration, it is largely thanks to their knowledge of risk taking. However, since our country does not have a financial market like some West African countries, the money market we have should be able to meet the pressing needs of the authorities in terms of using collective savings for profitable public investment purposes, particularly with regard to Economic and Social Infrastructure (IES).

But, with this banking rate which turns out to be very low, it goes without saying that most of the customers concerned do not hold savings accounts, although we do not have the number of customers with this type of account for the justify because of the difficulties encountered during this research. It is not for nothing that our country’s ability to finance a greater part of its development needs from domestic resources is doomed to failure. This is why, as usual, we have recourse to external financing, as our various budgets demonstrate.

From our point of view, there would be many causes for this low banking in Guinea, in particular the low incomes in accordance with the Keynesian theory. To this factor, we can add other elements, in particular, the culture of cash, inadequate financial services, lack of confidence in the banking system, the low density of the banking network or even the remoteness of the branches from the populations (case of certain customers who travel miles to get to the nearest bank branch), high deposit and minimum balance requirements for some citizens etc.

In addition, in Guinea, many banks also require extensive documentation to open an account in addition to the standard ones. This situation would find its explanation in their desire to better know the prospect or the customer as indicated by their jargon the KYC (Know Your Customer or in French customer knowledge). This is why even if certain economic agents have a little money in this country, there may be little incentive to save, whatever the interest rate offered.

In Guinea, most economic activities take place in the informal sector. Many households have savings but are not domiciled in banks. Some Guineans who have the means still keep most of their savings in the form of real estate despite all the risk that this implies in our country.

Many small traders prefer to entrust their money to a tax collector susu. As a result, these tax collectors go to the stall to collect their daily, weekly or monthly contribution, according to the conditions defined in advance and without any written formality. Their business is simply based on personal relationships and trust. However, many traders in the small markets of Conakry have paid the price with the disappearance of these young people who, after having amassed a large sum from the hands of customers, subject to the condition that they would have had working capital for the start-up of their activity or to take the path of adventure.

On the other hand, some large traders hold cellars similar to those of banks in their place of marketing under the pretext that banks make them waste a lot of time when they go there to carry out transactions. Others feel that they cannot close their store or leave their goods unattended in the market while they go to the bank to spend a good part of the day. How can we hope to grow in this situation?

We believe, in order not to abuse the reader’s time, that in order to increase the banking rate as well as savings, the Central Bank must work on this issue in order to adapt banking regulations to the realities of our country in order to further encourage banks and MFIs that have the capacity to legally mobilize the savings of their clients or the general public and to use them optimally for the well-being of Guinea and Guineans.

Safayiou DIALLO


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