<div id="attachment_307159" style="width: 2058px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-307159" class="wp-image-307159 size-full" src="http://cnbc.africa/wp-content/uploads/2018/05/Senegal-Gettingfish_Wikimedia-commons.jpg" alt="" width="2048" height="1536" />Fish market in Senegal. Photo: Wikimedia Commons</div>
After spending 10 years working as a Private Equity investor in the United States at HarvourVest Partners and the Middle-East at the Islamic Development Bank (IsDB), Issam Cheuh is convinced that fintech is the next big thing in financial services in Francophone Africa.
In 2014, 2015 and 2016, Forbes Magazine listed Chleuh as one of Africa’s 30 most promising young entrepreneurs. After his intervention at the 2018 MIT Africa Innovate Conference 2018 “Digitization for Inclusive Growth”, Chleuh shared with us in an interview the reason his team is so bullish on fintech.
By Issam Chleuh
Small and medium-sized enterprises (SMEs) play a crucial role in Francophone Africa, accounting for around 50% of jobs created (source: <a href="http://www.worldbank.org/en/news/feature/2016/11/30/new-evidence-shows-way-forward-for-sme-growth-and-job-creation">World Bank</a>).
Francophone Africa is the youngest and fastest-growing sub-region in the world, with Mali and Senegal median age at 16 and 18, respectively. By 2030, there will be 375 million young people looking for jobs in Africa, exceeding the rest of the world combined. (source: <a href="https://www.bloomberg.com/news/articles/2015-04-28/africa-s-labor-force-newcomers-to-exceed-world-by-2035-imf-says">IMF</a>); Most of these job seekers will come from Francophone Africa.
A significant gap between the number of young people seeking work and the limited employment opportunities available to them means that they will face challenges finding formal employment and a pathway out of poverty. Boosting SME productivity and growth in the region could result automatically into more employment, higher earnings and a solution to the increasing concern about instability, population pressure, migration and chronic food insecurity in West Africa.
<h4>Numerous challenges for SMEs in Francophone Africa</h4>
Unfortunately, SMEs still face a number of challenges in Francophone Africa.  The biggest roadblock facing SMEs in the region is access to finance. Without capital, SMEs cannot grow. Without growth, SMEs cannot tackle unemployment properly.
The banking penetration rates in Francophone African countries are among the lowest in the world, particularly in the CFA franc monetary zone. According to the Bank of France, the proportion of adults that have a bank account with a formal institution is only 12.6%. This is considerably lower than the rest of Africa, where around 30% of adults have access to bank accounts (World Bank).
Francophone Africa is lagging behind Anglophone Africa. This is a fact. Francophone Africa accounts for only 19% of sub-Saharan Africa’s average GDP while Anglophone Africa (excluding <a href="https://www.howwemadeitinafrica.com/category/countries/south-africa/">South Africa</a>) accounts for 47%. When we look at the World Bank’s Doing Business report, the English countries always rank more favorably than the French ones: it is easier to start a business or obtain payment from debtors, for instance.
Moreover, Francophone African countries are lagging behind in terms of basic banking infrastructure and points of access to banking services (low density of ATMs, not enough branches).  The banking system in the region is made up of constrained banks that focus primarily on deposits. This can be explained by the small size of national markets, a lack of financial literacy, low-income levels, political instability and weak judicial systems.
<h4>Riskier and costlier to do business in the region</h4>
Since the business environment is less healthy, it becomes riskier and costlier to engage in business transactions in the region. This in turns will raise the cost of borrowing and less SMEs would be able to access financing. A cost of borrowing could impact considerably SMEs bottom lines and impair their growth. It is a vicious circle. We need to crack access to financing at the Missing Middle level.
Globally, the FinTech market is projected to grow at 25% from $3,300 billion to 5,082 billion in 2019 (Fintrek, 2017). This boom in fintech emerged from a significant gap globally in the traditional banking and financial services infrastructure.
Africa has shown numerous times it can leapfrog its way out of lack of infrastructure and pioneer disruptive innovations. One of the major challenges facing the entrepreneurs and SMEs in francophone Africa is lack of capital. Bank credit accounts for only 10% of total MSME financing in francophone Africa, with most of the financing coming from informal sources.
When we look at this low rate of financial inclusion in the region fintech emerges as the obvious solutions to this challenge. Prior to the infiltration, diffusion, and widespread adoption of ICT and mobile phone technology in Africa, the success of fintech was inconceivable due to the continent’s lack of communication infrastructure.
<h4>Africa jumped various steps in the development curve</h4>
The penetration of ICT, technology and mobile phones on the continent offered Africa’s countries opportunities to jump various steps in the development curve. Africa is already circumventing traditional means with technologies such as wireless and mobile technologies that require lower physical infrastructure and investments.
In the absence of landline-based infrastructure, Africa has leapfrogged what was considered the traditional standard evolutionary adoption path of telecommunication technology: the mobile phone. In the absence of enough bank branches and ATMs, Africa has leapfrogged traditional banking to pioneering mobile banking globally.
Additional infrastructure gaps in the Banking sector still persists and hinders the growth of the industry. These infrastructure gaps include the lack of credit history, weak legal system and low financial literacy, among others. Mobile money has been able to address the lack of banking branches and ATMs. Fintech solutions are cracking solutions to the other issues facing, including lack of collateral.
But much of the growth is being driven not by banks but by fintech firms. Old-fashioned “factoring” to turn invoices into cash was time-consuming, laden with paperwork and an expensive form of credit—the resort to which was sometimes seen as a sign of financial stress.
Fintech firms offer new technologies that make early payments possible at the click of a button. They can quickly set suppliers up on their platform. Banks’ early-payment programmes have also typically been reserved for the largest suppliers. But fintechs have made supply-chain finance available to the tiddlers, too.  The market was also ripe for innovation in other ways. Globalisation has made supply chains longer and more complex.
Issam Chleuh is the 31-year-old Malian cofounder and Managing Director of the Suguba, a West Africa-focused platform providing access to capacity building and access to financial services for entrepreneurs, start-ups and SMEs led by youth and women.

Op-Ed: Why Fintech is vital for SMEs in Francophone Africa

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While English-speaking Nigeria and South Africa are clearly the continent&#8217;s largest economy, Duncan Bonnet, a Partner at Africa House says there are lots of opportunities in Francophone Africa. He spoke to CNBC Africa&#8217;s Onyi Sunday.

Opportunities in francophone Africa

The 2017 French election was watched with great nervousness by millions across Francophone Africa. That’s because the French president remains a pivotal figure in about <a href="http://www.france24.com/en/20100214-1960-year-independence">20 former French colonies</a> on the continent.
Over the past 60 years France has maintained disproportionate influence over its former African colonies. This has included control over their <a href="http://www.e-ir.info/2011/06/11/the-ongoing-relationship-between-france-and-its-former-african-colonies/">military and currencies</a>.
Despite being led by different presidents over the past six decades, the French government’s policy on Africa has been faithful to its neo-colonial roots and grounded in a yearning for the lost <a href="http://www.newworldencyclopedia.org/entry/French_Empire">Empire</a>.
But will Emmanuel Macron’s presidency herald a significant change to France’s relationship with its ex-colonies?
Unlike any other French leader Macron has openly expressed remorse for aspects of France’s <a href="http://www.france24.com/en/20170219-french-presidential-hopeful-macron-apologises-controversial-comments-colonialism">colonial past</a>. His election rhetoric suggested that he viewed France’s neo-colonial dominance with some embarrassment, preferring to loosen France’s hold on its <a href="http://www.bbc.com/news/world-africa-39843396">former colonies</a>.
But it’s one thing to speak of France’s need to confront its colonial past. When it comes to restoring <a href="http://www.aljazeera.com/news/2017/05/macron-vows-restore-france-global-status-170514171704652.html">French “confidence”</a>, as Macron has promised, policy continuity, rather than change, will prevail.
<h2>A long legacy</h2>
In the aftermath of World War II, Charles De Gaulle formulated a strategy that was meant to define France’s relations with Africa in the post-imperial era.
The plan was to shore up France’s international standing by ensuring a continued <a href="https://www.worldpittsburgh.org/the-french-legacy-in-africa/">relationship with its colonies</a>. In fact, the short-lived Franco-African Union of the 1940s-50s was an attempt to establish a <a href="http://www.tandfonline.com/doi/abs/10.1080/00358536008452284?journalCode=ctrt20">form of federation</a> between France and its former colonies.
Instead, what sprung up across Francophone countries in West and Central Africa was <a href="https://thisisafrica.me/france-loots-former-colonies/">a network</a> of French commercial, military and political interests. These interests worked to maintain the <a href="http://www.huffingtonpost.com/mahamadou-lamine-sagna/franceafrique-breaking-th_b_3318530.html">status quo</a> of African economic and political elites.
Francafrique had strong <a href="https://thisisafrica.me/france-loots-former-colonies/">colonial underpinnings</a>. Former French colonies provided France with valuable raw material and minerals while opening their markets to French imports. In return, France <a href="https://www.theguardian.com/global-development/2015/apr/22/europes-former-imperial-powers-target-aid-ex-colonies">guaranteed</a> national security and a steady flow of aid.
France also propped up francophile leaders, in particular Senegal’s <a href="http://peterbaxterafrica.com/index.php/2012/11/19/leopold-sedar-senghor-the-life-of-a-french-african/">Leopold Sédar Senghor</a> and Cote d’Ivoire’s <a href="http://sites.psu.edu/afr110/2014/10/14/felix-houphouet-boigny/">Felix Houphouet-Boigny</a>. Both saw themselves as the guardians of a paternalistic order that kept Francophone Africa under French tutelage.
More than that, France retained control of the CFA – the basic monetary unit of Central and West Africa. To this day African countries such as Mali, Cote d&#8217;Ivoire, Cameroon and Gabon, are required <a href="https://thisisafrica.me/france-loots-former-colonies/">to deposit two-thirds</a> of their foreign exchange surpluses into a French operations account.
During Francois Mitterrand’s term in office (1981 &#8211; 1995) <a href="http://www.spiegel.de/international/world/eternal-plight-france-in-search-of-a-new-africa-policy-a-546796.html">60,000</a> French troops were stationed in Francophone Africa. They supported several unsavoury governments, including the Hutu regime presided over by Juvenal Habyarimana in Rwanda, which went on to <a href="http://survivors-fund.org.uk/resources/rwandan-history/statistics/">murder 800,000 Tutsis and some Hutus</a> in the 1994 genocide. French soldiers <a href="http://www.spiegel.de/international/world/eternal-plight-france-in-search-of-a-new-africa-policy-a-546796.html">did little</a> to stop the bloodbath.
However, relations between France and its former colonies entered a new phase in the post 9/11 era. The Islamic Sahel and Arab North Africa became a <a href="http://newafricanmagazine.com/terror-came-sahel/">new frontier</a> in the global fight against terror.
French investment and commitment to development faded, paving the way for <a href="http://www.diplomatie.gouv.fr/en/french-foreign-policy/development-assistance/french-assistance-institutional/french-assistance-delivery/article/french-bilateral-aid">bilateral funding</a>. Policy moved from guarding strategic assets to securing economic assets by any means necessary.
Under President Jacques Chirac (1995-2007), French policy was <a href="http://www.spiegel.de/international/world/eternal-plight-france-in-search-of-a-new-africa-policy-a-546796.html">distinctly interventionist</a>. In 2002, France extended <a href="http://www.spiegel.de/international/world/eternal-plight-france-in-search-of-a-new-africa-policy-a-546796.html">military support</a> to Laurent Gbagbo of Cote d’Ivoire when his regime was threatened by a rebel insurgency. It remained heavily involved in Cote d&#8217;Ivoire until 2011 when <a href="http://www.responsibilitytoprotect.org/index.php/crises/crisis-in-ivory-coast">Gbagbo was dislodged</a> after a bitterly contested election.
<h2>The post-Chirac era</h2>
Chirac was the last of the paternalistic, Gaullist French leaders. After his presidency, France became unapologetically mercantilist: it remains in Francophone Africa to protect its nationals, to guard its assets and <a href="https://www.theguardian.com/world/2007/feb/23/outlook.development">to counter Chinese competition</a> for natural resources and markets.
After Chirac, came President Nicolas Sarkozy who had little empathy for Africa. Sarkozy’s policy was centred on immigration, an issue that was at the top of his government’s agenda. As a way to deter immigration he adopted a “co-development” strategy, which saw France invest in <a href="https://www.csis.org/analysis/sarkozy-and-africa-misunderstanding-or-change">education</a> in Francophone Africa.
Socialist president Francois Hollande (2012 &#8211; 2017) became more involved in Africa than any other president, contradicting his apparently <a href="http://www.bbc.com/news/world-europe-20795750">progressive rhetoric</a>, which suggested a rethink of France’s neo-colonial relationship with the continent.
During Hollande’s term security issues that threatened French interests led to a series of military interventions. These included Operation Serval and <a href="http://www.thebrokeronline.eu/Blogs/Sahel-Watch-a-living-analysis-of-the-conflict-in-Mali/Five-strategic-failures-of-the-French-intervention-in-Mali">Operation Barkhane</a> in Mali.
There were also military interventions in <a href="https://www.theguardian.com/world/2011/apr/11/sarkozy-ivory-coast-vote-winner">Cote d’Ivoire</a>, and the <a href="http://gulfnews.com/news/africa/operation-sangaris-france-s-military-mission-in-car-1.1920968">Central African Republic</a>.
What started out as an ideological policy to maintain soft power through cultural and economic ties between France and francophone Africa had gradually become a coercive, militarised relationship.
<h2>The age of Macron</h2>
During the election campaign Emmanuel Macron told Le Figaro that France’s colonial occupation of Algeria was mired by “<a href="https://www.ft.com/content/87d6f430-f521-11e6-95ee-f14e55513608">crimes against humanity</a>” and <a href="https://www.ft.com/content/87d6f430-f521-11e6-95ee-f14e55513608">“acts of barbarism”</a>.
Macron is the first self-styled apologist to take office in France. He is calling for the severing of France’s relationship with Francophone Africa, but on African terms. Macron argues that a <a href="http://www.bbc.com/news/world-africa-39843396">gradual phasing out</a> of the CFA franc and withdrawal of French troops should be implemented if that’s what Africans want.
But, nearly 60 years after African independence, France and Francophone Africa remain entangled beyond separation. French companies still have a <a href="http://www.aljazeera.com/programmes/specialseries/2013/08/201387113131914906.html">quasi-monopoly</a> over the most strategic areas in Francophone economies. Examples include electricity, telecommunications, infrastructure, airports and harbours. France’s continued influence on Francophone African foreign policy is apparent in Africa’s policy alignments.
Macron is a neo-liberal and former investment banker determined to open Africa up for greater trade even amid security concerns. His <a href="http://www.bbc.com/news/world-europe-39968319">first visit</a> outside Europe was to French military forces in Mali. Some see this as a sign that his presidency may have an increasingly <a href="https://guardian.ng/politics/what-macrons-election-means-for-africa/">militaristic impact</a> on Africa.
Macron’s sober view of colonial history therefore should be taken with a pinch of salt, as he’s unlikely to loosen France’s grip over Africa.

Francophone Africa

Op-Ed: Why Fintech is vital for SMEs in Francophone Africa

Opportunities in francophone Africa

France and Africa: Macron’s rhetoric shouldn’t be confused with reality

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Francophone Africa

Op-Ed: Why Fintech is vital for SMEs in Francophone Africa

Opportunities in francophone Africa

France and Africa: Macron’s rhetoric shouldn’t be confused with reality

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