A technocrat and politician of Beninese origin who held several ministerial portfolios (Justice, Youth and Women’s Employment, Microfinance, etc.) under President Boni Yayi before becoming special advisor to the Togolese President, Reckya Madougou is now one of the leading figures in the fight for financial inclusion on the continent. A position that would make her, according to the American magazine Forbes and the pan-African weekly Jeune Afrique, one of the most influential women in Africa. For Resources, Reckya Madougou has agreed to come back in detail to this major issue. Maintenance.
Resources: Through politics, you are now a recognized specialist in inclusive finance. What exactly is this about?
Reckya Madougou: Politics is not an open and closed parenthesis. It is a commitment, a willingness to serve the general interest, especially the most disadvantaged. In this sense, my fight for financial inclusion, which consists in supporting populations in situations of economic vulnerability by offering them better access to the means of production, extends my previous commitments. In short, it is about empowering people living in extreme poverty by directing them towards productive social work rather than assistance.
R.: Why are there still so many people in Africa who are financially excluded?
R. M.: First, because public policies do not take sufficient account of the need to empower the most disadvantaged and are limited to assistance or social programmes. In doing so, they reinforce the gap between a privileged minority and a large majority of the poor, on the margins of the traditional system. In the entrepreneurial sphere, for example, 90% of African companies are micro, small and medium-sized enterprises. But still, the majority are very small, very small structures often operating in the informal sector, which makes it very difficult to obtain bank loans. However, these are economic operators who, with the right support, could rapidly expand their income-generating activities and contribute to taxation.
R.: You have advised several African governments, particularly to help them set up programmes to promote financial inclusion. Where do we stand today?
R. M.: More and more States understand that development is only possible by putting all social strata to work. The real question is how to achieve this, and in this field as in many others, there is not one, but several approaches. Overall, however, the strengthening of public mechanisms for youth and women’s entrepreneurship is to be welcomed. At the same time, banks are increasingly involved in micro and mesofinance1, which opens up new horizons for SMEs and VSEs. A proactive approach that pays off: Togo is, for example, thanks to its efforts in this area, the second largest WAEMU country in terms of financial inclusion with 76 microfinance institutions, according to the Central Bank of West African States. At the continental level, however, there is still a long way to go before the full potential of human resources can be optimized.
1- A relatively recent concept, mesofinance is the missing link between traditional finance and microfinance and can be defined as the segment between the ceiling on microfinance loans and the floor on bank credit. It primarily concerns the needs of small and medium-sized enterprises.
R.: One of the sectors most affected by the lack of funding is agriculture. What innovative and pragmatic mechanisms exist to ensure the financing of this sector on the continent?
R. M.: This is one of Africa’s biggest paradoxes. Agriculture accounts for more than 60% of the active population and 23% of sub-Saharan Africa’s GDP; a share of wealth that sometimes even exceeds 40% in countries such as Benin and Togo. Yet, despite its decisive weight, it is the sector that receives the least financing, both from governments and banking institutions. In some African countries, the share of bank financing allocated to agricultural projects is less than 1%, while the sector employs nearly three-quarters of the working population. To address such aberrations and try to change the situation, innovative mechanisms have been developed and implemented, including NIRSAL (Nigeria Incentive-Based Risk Sharing System for Agricultural Lending) in Nigeria and the Risk-Sharing Agricultural Finance Facility (RSF) in Togo. With these models, we change the paradigm since agricultural financing is structured by value chains, which makes it possible to share risks with all the actors in the priority sectors. A good way to « de-risk » agriculture and, above all, from this perspective, it is market needs that guide production in terms of speculation, quality and quantity to be produced and not the other way around, i.e. producing before going to seek markets. This will reassure banks, insurers, guarantee funds, entrepreneurs and producers, including the most modest, who can now see their income increase… and ultimately revolutionize the sector.
R.: Beyond government action, can the private sector also play a role in making a lasting difference?
R. M.: Absolutely. Moreover, in such a dynamic of change, the involvement of the private sector is a necessity. The essential role of governments is to create the right framework to stimulate investment. It is then up to the private sector, which has greater financial power and given expertise, to take actions that ultimately benefit economic activity. For example, with regard to the two agricultural financing mechanisms mentioned above (the Nigerian NIRSAL and the MIFA in Togo, editor’s note), it should be noted that they are public limited companies with the private sector as a catalyst for these mechanisms and that they are very successful. Finally, the decisive role of technology in the battle for financial inclusion cannot be ignored. Mobile banking is a perfect illustration of this, and the rapid success of the M-Pesa system launched in 2007 in Kenya deserves to be replicated. These are all initiatives led primarily by private telecom operators and often through fruitful public-private partnerships. On a continent where the proportion of « financially excluded » remains high, but where the number of mobile phone holders continues to grow, we can only welcome this positive development.
R.: You are now one of the leading figures in the fight for Africa’s development. Do you think this objective will be fully achieved during your lifetime?
R. M.: Africa’s development is not a myth or a dream, and my great hope is that we will finally apply the ingenious instruments that our various regional and continental bodies have given us. In its roadmap called AGENDA 2063, the African Union is thus developing a master plan aimed at transforming the continent into a global power over the next century. The launch of the Continental Free Trade Area, with its promise of enhanced integration, is a key element of this ambition. Moreover, Africa has everything it needs to succeed: mining resources, a favourable geographical position, abundant human resources. These are the pillars of development. The rest is the implementation of appropriate policies so that people, regardless of their status, can also contribute. Because development is the accumulation of individual contributions stimulated by proactive leadership. And no citizen should be put aside. In the broadest sense of the term, and well beyond the essential tool of « inclusive » finance, Africa’s development will be achieved through inclusion.
R. : Finally, a final word to the younger generation. What message would you send him?
R. M.: I would give him two tips: first, entrepreneurship remains, despite its pitfalls, the best option for financial and social empowerment. And some market niches such as agro-business and digital are potential gold mines for me. Finally, I would urge young people to make bold choices and to take responsibility for them. A philosophy of life that requires vision, perseverance, determination, strong commitment and, often, sacrifice. But when it comes to the finish, it’s a fight worth fighting for. This is how the great causes are completed and qualitative changes can be made around you.