This is part 1 of a series.
For the governor of the Central Bank of West African States (BCEAO), the fact that the common currency of the eight member countries of the West African Economic and Monetary Union (also known by its French acronym, UEMOA) has held up well explains the ability of the Union’s members to weather crises and has ultimately contributed to its positive economic performance. A pure product of the central bank he joined in 1975, Tiémoko Meyliet Koné has once again found himself on the front lines to help governments overcome the devastating financial impact the COVID-19 epidemic has had on countries.
“The BCEAO launched a three-month refinancing window which allows each UEMOA member country to issue limited amounts of special three-month ‘COVID-19 T-Bills’ that banks will be able to use as collateral to secure a three-month refinancing window from the BCEAO at a fixed rate of 2.5%,” says a West African economist. These COVID-19 treasury bills are issued at a 3.5% yield for all countries.
“Our governments need assistance to respond to COVID and the governor adjusted the monetary policy tools accordingly to give our countries a break,” our source says.
Serious and reserved
In the words of a certain individual with an encyclopaedic knowledge of the institution, Koné is a serious, reserved person who approaches his job as a calling and has always followed in the footsteps of his predecessors while adapting his policy choices in line with new developments. He is a dear friend of Abdellatif Jouahri, Morocco’s central bank governor, and both men regularly visit one another.
A banker who wished to remain anonymous said of Koné: “He isn’t as outspoken as previous governors, like Charles Konan Banny, and works for his employers (heads of state) with whom he is closest. Although he has decentralised decision-making authority, he is the institution’s last line of defence.”
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Former chief of staff to Guillaume Soro, who was prime minister of Côte d’Ivoire at the time, governor Koné also has a political past. After a stint as minister of construction, urban development and housing, he briefly served as President Alassane Ouattara’s special economic and financial adviser from December 2010 to May 2011 before taking the reins of the West African monetary institution.
“He’s a complete technocrat from the school of President Ouattara. His career at the central bank, where he has held positions as BCEAO auditor general, adviser to the governor, BCEAO country director in Côte d’Ivoire and asset director, among others, has allowed him to hone his expertise on economic and financial issues. I sensed his perfect command and up-to-date knowledge of these issues during meetings and in the reports he carefully pores over,” says a former central bank official who describes the governor as serious and generous.
He is also recognised for having discouraged over-reliance on the central bank’s capital, thereby preserving its foreign assets. According to a person with close ties to Koné: “He’s a governor who works for the interests of the Union.”
Naturally, in that respect, he does not hold back from highlighting the UEMOA’s current economic performance which, unlike that of its Central African sister region, the Central African Economic and Monetary Community (CEMAC), is rather good. The Union’s GDP increased by 7% in 2016, representing the strongest growth in all of Africa, after reporting an average growth rate of 6.5% between 2012 and 2015.
UMOA-Titres Agency: 12trn CFA francs raised for governments
The only hitch is that the governor raised the marginal lending rate by one point to 4.5% in November 2016. “He was trying to stimulate the interbank market but the move didn’t work well and up to 30% of the interbank system is currently going unused,” says a source specialising in the West African financial system.
However, the BCEAO governor points out that it is thanks to this very currency – denigrated today – that the region’s economies are posting such positive performances.
“My objective is to make a significant contribution to the ambitious policies undertaken by governments to accelerate growth and reach their economic development goals,” the Ivorian bank leader said during a rare interview.
In response to the often harsh criticism levied against the CFA franc, the currency used by the bank’s eight member countries, Koné has stayed the course, tirelessly reminding his sceptical colleagues that “the objective is to act in the interest of governments.”
Viewing criticism as perfectly normal, the governor – described by his close colleagues as a workaholic – is quick to innovate. As the Union was set to launch the Eco, the governor managed to lead the bank all the while adjusting course based on new developments and keeping his colleagues motivated. One of his biggest successes has been the creation of the BCEAO’s securities arm, the UMOA-Titres Agency, which has raised more than 12trn CFA francs to date for governments.
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