The governor of the Central Bank of West African States (BCEAO) focuses his efforts on “serving the region’s economies” and is unmoved by controversy. In the first part of our series on the governors running the Central Banks of Africa during a time of crisis, we take a look at Tiémoko Meyliet Koné.
BCAS’s Tolli: Can he help stop a CFA franc devaluation?
Facing off against oil lobbies and unhappy finance ministers, this central banker for a group of countries in Central Africa has many challenges ahead. In the third part of our series on the governors running central banks, we take a look at Abbas Mahamat Tolli, the governor of the Bank of Central African States (BCAS).
This is part 3 of a series.
Despite being slow to react at the outset, the governor of the Bank of Central African States (BCAS) has expanded initiatives to address the economic fallout of Covid-19.
The BCAS would have preferred to avoid yet another controversy involving the CFA franc’s devaluation risk. Except, this time around the gaffe was an internal one, putting the region’s media outlets into overdrive.
Expressing alarm over the “rapid and large-scale spread of the Covid-19 crisis”, the central bank’s latest monetary policy report clearly states – in a section that escaped the notice of proofreaders – that “in the absence of budgetary adjustment [by its member countries] and consequent mobilisation of external financing, the BCAS would again be subject to the same risks on the parity of its currency as at the end of 2016.”
Abbas Mahamat Tolli attempted to put out the fire on 12 May, insisting on the robustness of foreign exchange reserves, which represented five months of imports. But what the statement revealed above all is his conception of the profession. “A central banker in a fixed exchange rate regime must, in his view, first and foremost ensure the currency’s external stability. Accordingly, the level of reserves and the currency’s external coverage ratio are the indicators that he monitors on an almost daily basis, to the point that it’s become an obsession,” a source from his entourage says.
Although he was criticised for a certain delay in responding to the Covid-19 catastrophe, which gave the impression that his priority was fiscal policy, the Chadian national has since showed his willingness to tackle the crisis. On 27 March, the central bank policy rate was lowered and it was decided that the volume of liquidity injected in the banking system would be doubled to 500bn CFA francs ($895.2m), with the option of revising it upwards to 1trn CFA francs. On top of that, the BCAS indicated that it would take “additional measures” if needed.
“Awash in a relative amount of excess liquidity, banks requested a mere 75bn CFA francs through 8 May, which raises the question of the effectiveness of certain measures. What’s more, robust measures are not being taken swiftly enough to come to the aid of the most severely impacted SMEs,” an analyst says.
The BCAS has also made 90bn CFA francs available to the Development Bank of Central African States (DBCAS). Initially scheduled for the end of 2021, the repayment of consolidated credits in the amount of 2.77trn CFA francs granted to governments by the central bank has been postponed a year.
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To make this move possible, the former economy minister made a point to consult with banking associations in countries such as the Republic of Congo, Gabon, the Central African Republic, Equatorial Guinea, Cameroon and Chad, some of which took the initiative to suggest potential solutions.
As Rigobert Roger Andély, Congo’s former economy minister who previously was the BCAS’s second top-ranking official, put it, such an undertaking illustrates “his intelligence and collaborative management style”. Although he hosts a number of “evening visitors” from a wide range of backgrounds to form an opinion, he “makes decisions on his own”, according to a close associate.
Taciturn and “authoritarian”
The 47-year-old graduate of the University of Quebec has held high-ranking positions throughout his career. Tolli served as chief of staff to his uncle, Idriss Déby Itno, and later was appointed finance minister and eventually infrastructure minister. Before he took the helm of the central bank in 2017, he had already served as the bank’s secretary general from 2008 to 2010 and successively led the Central African Banking Commission and the DBCAS.
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This taciturn polygamist, father of ten and fan of the history of religion, is perceived by a group of the bank’s staff, who have not forgiven him for dialling down on staff perks, as “authoritarian”.
“The BCAS shouldn’t appear as an island of prosperity and opulence in a sub-region in crisis,” he was already saying when he took office in February 2017. Some instead praise his policy independence, as demonstrated when he confirmed the end of statutory advances to governments in the bank’s statutes, and his determination to be a reformer.
“He brought bankers and employers into line regarding the implementation of the new foreign exchange regulations and continues to stand up to the oil lobby on this matter, despite the fact that he doesn’t have the backing of many finance ministers. In addition, the interbank and government securities markets have really taken off under his leadership,” a BCAS official who requests anonymity says.
Nevertheless, he can always count on the regional heads of state he forged ties with during his time as a regional institution leader. He also has the support of Cameroon’s economy minister Alamine Ousmane Mey and Equatorial Guinea’s finance minister César Mba Abogo. Cameroon’s President Paul Biya is perhaps the only exception to the rule since he has never granted Tolli an audience. His predecessor had just one meet-up.