Tuesday, October 19, 2021

Côte d’Ivoire partners with IFC to improve access to finance for SMEs through leasing

(Ecofin Agency) – The International Finance Corporation ranks Côte d’Ivoire among the top 10 African countries with high economic potential in leasing markets. The Ivorian government signed a deal with the institution to tap into this potential to improve access to finance for SMEs.

Côte d’Ivoire has just signed an agreement with the International Finance Corporation (IFC) to improve financing for SMEs. The announcement was made by the Ivorian authorities in a press release last October 8.

The deal is part of the IFC-led Afrileasing program, which seeks to foster the development of a viable leasing market in Africa. Particular focus is on strengthening the legal and regulatory instruments that govern the market while introducing the tools and best practices necessary to better develop the sector.

The Ivorian authorities hope to offer financing solutions to economic agents with low financial capacity, by allowing financing without initial contribution. Subsequently, the bank account penetration rate in the country should improve and the unemployment rate should decline. “This ceremony…reflects the government’s strong commitment to accelerate the economic and financial development of Côte d’Ivoire, in line with the vision of the Head of State. The new partnership agreement […] is part of the contribution to the implementation of the Financial Sector Development Strategy,” said Adama Coulibaly, Ivorian Minister of Economy and Finance.

“I urge the private sector, especially SMEs, to utilize this means of financing, to find an answer to the financing challenges that companies are often faced with,” he added. Leasing is a financial contract whereby a financial company (the lessor) makes a good available to a beneficiary company for a specific period, in exchange for a fee paid periodically and initial rent, often increased. When the contract expires, the beneficiary can decide to definitively acquire the asset for an agreed amount, to return it, or renew the contract. This approach has the advantage of reducing the need for the beneficiary to provide collateral, as the leased asset itself serves as security or collateral.

In 2015, the Ivorian government had signed a first agreement with the IFC to set up a similar project called “Africa Leasing Facility II” -ALF II. This has enabled the number of companies offering leasing contracts to increase from 3 in 2014 to 9 currently, including 7 banks and 2 financial institutions. According to authorities, as of December 31, 2020, outstanding leases in Côte d’Ivoire amounted to CFA178.37 billion, compared to CFA130.93 billion at the end of December 2019.

Moutiou Adjibi Nourou

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