The determination of the interest rate deemed « high » is dictated at 95% by exogenous factors of Congolese banks, lenders of private sector companies in the DRC. This is reflected in the exchanges of the « Breakfast Connexion » special panel dedicated to the course of the Congolese investor organized on Saturday, July 13, 2019, by Top Congo FM, a radio broadcasting from Kinshasa, on the occasion of its 16 years of ‘existence.
The banker Hugues Bonshe proceeded by a clear schematization to explain this situation which starts from the report according to which the Congolese economy is dollarized at 90%. If the DRC dollar is imported with exorbitant import costs, the financing of medium and long-term projects requires refinancing by banks whose cost is determined by several factors abroad (high country risk is billed consequently increasing the nominal rate).
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In addition, he argues, the interest on which the tax authorities levies a 20% property tax to incorporate. There is also the inflation for which the banks have to protect themselves, even though it has stabilized for a year.
Moreover, the regulation of the Central Bank of Congo (BCC) requires that for any credit granted, commercial banks must set aside a provision to cover the risk of default. However, the tax authorities charge back to charge 30% of this provision. Finally, all the operating expenses to be covered by the bank are also to be included in the determination of the interest rate practiced in the DRC at around 16%.
« When you take these different elements, you will understand that 95% of elements are imposed by factors that do not depend on banks today. The administration is largely responsible for this situation. If we manage to facilitate these different points, it will be possible for banks to finance at a low rate », said Hugues Bonshe.
If the key rate of the Central Bank of Congo (BCC) is set at 9.0%, financial intermediaries who are banks are also required to integrate their profit margin.
According to this panellist, the Congolese banking sector therefore has a sufficient credit portfolio to support small and medium-sized enterprises (SMEs) in the DRC. Hence, the need for economic operators and entrepreneurs to improve the accounting management of their entities and set up bankable projects to take advantage of them.
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« Faced with SMEs looking for funding but do not meet these requirements, many Congolese banks are reluctant to take the risk of granting credit », said Hugues Bonshe answering a question asked him.
Taking the example of the bank where he is deputy general manager, this banker pleaded for support to inform the economic operator on the financing possibilities that exist, to form and formalize its activities. Equity Bank Congo, he revealed, is willing to finance an economic operator up to 200 million US dollars.
Olivier Kamo
