It is economic déjà vu for Zimbabwe as the central bank battles spiralling inflation. The Reserve Bank of Zimbabwe is attempting to introduce ever-higher denomination notes; but inflation still approaches 400%.
Nigeria’s Ade Ayeyemi is banking on change
The Ecobank CEO talks to The Africa Report about how the COVID-19 crisis is both driving developments and giving
pause for thought about business, health and governance.
Ade Ayeyemi is a good banker to know in a pandemic. For a start, with 31 years in the business, Ayeyemi has already navigated most of the economic and financial storms that markets and the wider world could throw at him. He also believes in preparation and research. He has spent the past four-and-a-half years as the captain of Ecobank Transnational Incorporated battening down the hatches.
So the good ship Ecobank looks rather more seaworthy than many other transnational financial institutions in the middle of the COVID-19 pandemic. Either Ayeyemi is an extraordinarily good diplomat or he genuinely enjoys the company of journalists. The last time we met was at a small club on London’s Park Lane where he was holding court to a dozen journalists fielding questions on geoeconomics, China’s lending, currency unions and what Brexit would mean for Africa.
On each, Ayeyemi has his own particular take – sometimes quirky but never a stock or confected opinion. This time it was different again. Ayeyemi was in his office in Lomé with his chief of staff Adenike Laoye, looking into the screen on a Microsoft Teams call to my apartment in the 11th arrondissement in Paris. But we were both drinking coffee, I can confirm.
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Surrounded by sheaves of forecasts from the UN, World Bank and IMF predicting that this was going to be the sharpest downturn for a century, does Ayeyemi subscribe to the fears of economic Armageddon triggered by the pandemic? “Anybody who says he knows […] doesn’t know what he’s talking about. That’s the first point,” he replies. On the role of history, there are some lessons and some things that will be done differently this time. “In 1929 [the Wall Street crash] the world was not as global.”
“Nobody has a template to deal with this because the last time this happened the world was not as connected as it is today.
Looking at Africa and its relations with the rest of the world, Ayeyemi says the worst outcomes being predicted in the wake of the pandemic could be avoided. “Nobody has a template to deal with this because the last time this happened the world was not as connected as it is today. Of course there will be some economic damage […] but there’s no inevitability in the depth or duration of the damage.” For Ayeyemi, we are in a public health crisis first and foremost, and there is no reason why it should morph into a financial crisis. Rather, governments should find ways of working with financial institutions to bring societies out of the crisis. It is also a matter of responding to the wake-up call. “Most of the elite in Africa believed that to get good health services all you needed was a passport and a ticket. And you can fly to anywhere in the world and get treated. […] Now they have discovered that it is not so easy, there is no country to fly to.”
The economic localisation that policymakers are talking about now requires us to rethink how we use skills and resources. Technology for production is easier to transfer than it used to be, says Ayeyemi. “In this day and age, you can do 3-D manufacturing. You can use artificial intelligence […]. You have telemedicine. Doctors can sit in Honolulu or Boston and conduct operations in Lagos or Timbuktu.” A long-time proponent of the digital revolution and fintech, Ayeyemi had the target of winning-over 100 million customers for Ecobank’s digital services.
“This pandemic is what I’ll call the great accelerator. There has been a lot of development in science and telecommunications […]. All of a sudden you need to use this technology.” There was no choice, he explains. Lagos, the biggest financial centre in the region, was locked down in March with just 24 hours’ notice. All the banks were closed but they kept open online financial services. “I was in Kenya in 2007 when we started M-Pesa. At that time, we had just a simple SMS.”
What M-Pesa taught us, he says, is that Africa can adopt technology fast, even to the point of becoming a world leader in mobile money. That should make Africa one of the more competitive arenas for fintech. Is Ayeyemi worried about an invasion of foreign fintech companies challenging traditional banking models in Africa? “We can hold our own and of course we can beat them. We have the customers, we know the terrain, we’ve retooled our own technology and we’ve refocused the business. In the US you have regional banks, community banks, national banks and you still have international banks. So everybody has a place to play.”
On the wider policy issues such as the launch of the African Continental Free Trade Area, Ayeyemi is more cautious. “I would support a deferral to make sure we don’t launch a new model into an already turbulent situation Countries should try to delay what can be delayed and concentrate on the immediate public health and economic restructuring tasks. Coordinating the tariff regimes across the continent and the transition to a single market would be launched under stronger economic conditions, he says.
You’re going to get a rocky ride, and let’s hope people fasten their seatbelts.
Similarly, Ayeyemi does not favour rapid moves to an independent common currency in West Africa, his bank’s operating base. “I’m not sure that our problem is the currency […].If you have a guarantor of your currency it’s a good thing to have and it’s led to low inflation over time in all these [CFA franc] countries.” If those countries in West Africa such as Senegal and Mali get their wish for a speedy divorce from the Banque de France, Ayeyemi expects a difficult transition: “You’re going to get a rocky ride, and let’s hope people fasten their seatbelts. But it’s possible this gets delayed because of the current situation.”
He argues that the issues to focus on now are the vaccine and better public health services. “I like the idea of what is being spearheaded by the European Union: […] to try to develop life-saving vaccines that can get distributed to almost everybody at the price point they can afford.” It may be, he says hesitantly, that the pandemic could be a portal to a better-connected and more interdependent world. But for now it has taught us a simple but powerful moral lesson: “It’s in all our best interests for everybody to be healthy.”