(Ecofin Agency) - On the sidelines of the Kinshasa French Week, Ecofin Agency interviewed Louis Odilon-Alaguillaume, Deputy Managing Director of Sofibanque.

Agence Ecofin: What is Sofibanque's position in the DRC banking sector and what new growth opportunities are you targeting?

Louis Odilon-Alaguillaume: With a balance sheet of over $1.1 billion, Sofibanque has become the 4th largest bank in the country. While the bank's core clientele was mainly institutional (large companies, state, and parastatal institutions), it is gradually diversifying towards the subcontractors of its traditional clientele (SMEs with annual sales between $200,000 and 5 million) and towards individuals (mainly employees and civil servants).

We have three strategies for growth. The first is a geographic move with the opening of our branch network in the East. The second is to make a comprehensive offer in the individual market with the digitalization of our offers. The third strategy is to deepen relationships with our existing institutional clients through better commercial follow-up.

AE: As a financial institution, you are well-positioned to have an informed opinion on the country’s business climate. How would you describe it and how is it evolving?

LOA: We can’t say the business climate is favorable because of overlapping regulations and supervisory bodies. The trickiest aspect is the quality of judicial decisions, which remains an important risk factor for economic actors.

That said, there have been some favorable developments in the banking sector in recent years, such as the tax deductibility of provisions for bad debts or the establishment of the mandatory foreign currency reserve. So [This means that authorities] are willing to listen and change the climate. One of the main positive changes is the existence of a regime aimed at simplifying procedures for foreign investors and improving the country's overall investment climate. This regime includes tax incentives and other benefits for investors who invest in priority sectors. 

Although the business climate in the DRC has improved, the country still faces significant challenges. Continued efforts to fight corruption, improve governance, and strengthen the legal system will be essential to attracting more investment and fostering sustainable economic growth. 

AE: What are the most promising economic opportunities for investors in the DRC currently? 

LOA: Presently, it is the mining sector, which consumes a lot of ancillary products and services. With the enormous hydroelectricity potential in the DRC, the energy industry offers very interesting prospects, whether for national projects or more localized infrastructure.

Population growth and the emergence of a middle class in the cities require the development of processing industries and the provision of health and education services.

And of course, there is the agricultural sector because, with its vast fertile lands, the DRC offers very promising opportunities, which are utterly under-exploited for the time being. 

AE: During the visit of French President Emmanuel Macron, there were talks of an economic rapprochement between France and the DRC. How do you think local companies should position themselves vis-a-vis French or European companies that wish to invest in the country?

LOA: Local companies are key to helping foreign investors understand the market and the economic context. They must be able to present market analyses and customer acquisition strategies, classifying immediate gains and longer-term opportunities. Local companies should also be able to present the networks that help address local challenges.  

Thanks to their [market] foothold, local firms can devise strategies to cooperate with international firms and complete the products and services those firms want to offer in the DRC market. 

AE: As a financial firm based in the DRC, what are the main challenges you face in working with the joint ventures of local and foreign firms? 

LOA: The most challenging part is managing the sometimes conflicting expectations between a local partner, who wants a strong commitment to capture the market and have a large inventory, and a cautious foreign partner who wants to "feel" the market first. The other difficulty is establishing real trust: the foreign partner wants factual and tangible elements before committing, while the local partner is often more pragmatic and wants to quickly move forward.

AE: From a strictly financial point of view, what can be the most difficult thing for foreign companies arriving for the first time in the DRC to understand and what solutions can you offer them?

LOA: I think the two most surprising elements are the undifferentiated use of two currencies in the country, the Congolese Franc and the US Dollar, and the difficulty in having a clear and unquestionable overview of the standards, whether it be taxation, labor law, legal procedures...

Thus, even if there are numerous challenges, the main one remains the complexity of an administrative system that can lead to lengthy procedures that are difficult to complete for foreign companies that have no reliable local contacts.

Generally, the investing company is already aware of these aspects. We as a bank mostly insist on providing support for foreign exchange regulations and the management of imports-exports operations.  

AE: What was Sofibanque's overall performance in 2022 and what is the outlook for 2023?

LOA: In 2022, the bank almost doubled the size of its balance sheet and achieved an after-tax profit of $20.8 million. The outlook for 2023 is encouraging. We will continue to expand our branch network and offer new digital services. But we will also work in-depth on our organization and procedures to adapt internally to this very strong growth.