Nigerian Banks will have no difficulty in capturing the Francophone market – Georges Foaleng

Only three Nigerian banks have any presence in Francophone West and Central Africa, despite Nigeria’s borders with these countries. UBA which is the most widely spread of any Nigerian bank has subsidiaries in Gabon, Chad, DR Congo, Cameroon, Guinea Conakry, Ivory Coast, Burkina Faso, and Senegal.

Access Bank had a subsidiary in DR Congo. Through its acquisition of Standard Chartered Cameroon, the company has also recently entered into the Cameroonian market. GT Bank has a subsidiary in Ivory Coast.

Georges Foaleng, a Cameroonian banking expert believes that Nigerian banks can easily capture the banking market in Francophone Africa. Foaleng who previously worked with the Bank of Central African States (BEAC) noted that with the performance-driven culture of Nigerian companies, they would have no difficulty in capturing the Francophone market.

In an interview with BusinessDay, he highlighted some of the competitive advantages Nigerian banks bring into the Francophone market, particularly the Economic and Monetary Community of Central Africa (CEMAC).

What competitive advantages do Nigerian Banks bring into the CEMAC market? How can they navigate the regulatory environment?

Nigerian banks bring their robust financial strength and strong capitalization as competitive advantages. Some of the Nigerian banks have capital adequacy ratios as high as 45 percent. When compared to CEMAC’s 10 percent minimum requirement, these banks would be able to offer larger credit facilities and expand aggressively.

The Nigerian regulatory environment is much stiffer and has higher standards than what’s obtainable in CEMAC. Their digital banking expertise is another area of strength. They can leverage fintech solutions to penetrate the 90+percent informal economy in WAEMU and CEMAC. I heard that UBA’s mobile banking platform processes over $1.6 billion in transactions annually.

However, they face regulatory hurdles, such as stringent capital repatriation laws and minimum capital requirements of CFA 10 billion ($16 million) for foreign banks in CEMAC.

Compared to South African banks, how will they fare?

There’s the place of financial environment, regulation, and culture in our consideration. Whilst Nigerian banks can more easily navigate through regulation and the environment, they may face problems with the culture. South African banks are better trained to deploy in the Francophone environment. For the Nigerian banks, one shock for them would be the culture.

The first attempts of Nigerian banks to come into Francophone Africa were met with culture shocks by these banks. I can tell a story about a friend whose wife worked with Access Bank in Cote d’Ivoire. His wife kept coming home daily at 8 pm and my friend became angry. In the Nigerian system, that’s normal, however, in that culture, that was strange.

When my friend met his wife’s boss, the boss who was Nigerian told him that it’s the Nigerian way of working, and the system can’t be changed. 12 months later, Access Bank shut down in Cote d’Ivoire.

Given recent licensing reforms in CEMAC, what opportunities exist for Nigerian banks?

In the past, to operate a bank in any country in the CEMAC region, you would have to get the nod of the regulatory body, Commission Bancaire De l’Afrique Centrale (COBAC). Then you would have to get the nod of the local authorities. For context, to operate a bank in Cameroon, you would have to get approval from COBAC in Libreville, Gabon, and then you would get approval from the Cameroonian Finance Ministry.

However, with the licensing reforms, you now need only the COBAC approval, to operate in any of the six countries. The six countries are Cameroon, Chad, Gabon, Equatorial Guinea, and the Central African Republic.

That reform has helped to simplify regulatory compliance and reduce costs. Nigerian banks can seamlessly expand to the six member states of COBAC. They can leverage their expertise in digital payment platforms and fintech solutions to facilitate trade finance, particularly in intra-African transactions.

What lessons can Nigeria’s regulatory approach to digital banking (e.g., fintech licensing) offer to CEMAC countries amid rising tech adoption in Francophone Africa?

Nigeria’s regulatory framework for digital banking offers key lessons for CEMAC countries, particularly in fintech licensing, financial inclusion, and risk management. The Central Bank of Nigeria (CBN) has established a tiered licensing system, including Payment Service Banks (PSBs) and Mobile Money Operators (MMOs), which has helped increase financial inclusion to 64 percent in 2023, compared to CEMAC’s 25 percent.

Nigerian fintech startups like Flutterwave and Opay, which processed over $3 billion in transactions in 2023, benefited from clear licensing rules, allowing them to scale rapidly across Africa. In contrast, CEMAC’s regulatory environment remains restrictive, with Fintech obliged to work with commercial banks. They cannot work, as competitions with commercial banks. It has a negative impact on innovation. For instance, in Nigeria, you have the interoperability of the financial system, such that from your phone, you can transfer cash with any bank, with anyone, and anywhere.

How do stress testing frameworks in CEMAC compare to Nigeria’s, and what risks do Nigerian banks face in adapting to these models?

Stress testing frameworks in CEMAC and Nigeria differ significantly, with Nigeria’s Central Bank (CBN) implementing stringent macroprudential stress tests covering credit, liquidity, market, and operational risks, while COBAC has historically focused on capital adequacy and liquidity stress tests with less advanced scenario modelling.

In Nigeria, banks conduct quarterly stress tests under CBN guidelines, assessing their resilience to Naira devaluation and systemic liquidity shocks, whereas CEMAC has a weaker stress testing infrastructure. Nigerian banks expanding into CEMAC face adaptation challenges due to COBAC’s more conservative supervision, including higher liquidity ratio requirements (100% for short-term assets) and strict foreign exchange exposure limits. Additionally, CEMAC’s restrictive monetary policies—such as foreign exchange controls—pose liquidity management risks for Nigerian banks accustomed to CBN’s more flexible forex regime.

To succeed, Nigerian banks must enhance risk assessment models, ensure compliance with CEMAC’s stress test parameters, and adjust capital buffers to navigate cross-border operational risks.

With growing public debt in CEMAC, what risks and opportunities exist for Nigerian banks or investors looking to engage in Francophone debt markets?

If the investors are looking for stability, the bond market presents an opportunity. The first reason is the stability of the Franc CFA which is pegged to the Euro. The second reason is the low risk of devaluation. The third reason is that real yields are more interesting with strong currencies than with volatile currencies like the Naira. Also, through the Franc CFA, they easily enter the European market.

However, credit risk remains a concern, as seen with Congo’s 2024 default on regional market debt, highlighting the need for careful sovereign risk assessment before investment.

Could the CFA-based economies serve as an indirect route for Nigerian businesses to access euro-denominated funding? What challenges might they face in doing so?

CFA-based economies could serve as an indirect route for Nigerian businesses to access euro-denominated funding, given the CFA franc’s peg to the euro. Nigerian firms could raise capital through CEMAC’s regional bond market, where government bonds yield 6-7%, making it an attractive alternative to Nigeria’s higher-cost naira debt markets.

However, challenges include strict capital controls in CEMAC, where repatriation of profits requires central bank approval, and the preference for local issuers, limiting Nigerian companies’ direct participation.

Are there key fiscal incentives or tax advantages that Nigerian FMCGs can enjoy when expanding into the CFA zone (WAEMU and CEMAC)?

In Cameroon, we have a corporate tax holiday of up to five years for foreign investors. We also have the ECOWAS common external tariff, which averages 5 to 20 percent and provides predictability in trade costs. While regional trade agreements like AfCFTA allow Nigerian firms to benefit from reduced customs duties on qualifying products.

Companies investing in agriculture and manufacturing can access VAT exemptions and import duty waivers, as seen in Senegal’s Special Economic Zones (SEZs), where businesses enjoy a 15% tax rate instead of 30%. However, challenges include foreign exchange controls in CEMAC, requiring central bank approval for profit repatriation, which can impact liquidity management. To maximize fiscal benefits, Nigerian firms should establish local partnerships or subsidiaries.

What entry strategies should Nigerian FMCGs adopt to navigate CEMAC’s informal retail networks and CFA franc payment ecosystems? With consumer demand shifting in Francophone Africa, how can Nigerian brands position themselves against local and French multinationals?

Nigerian FMCGs entering CEMAC’s informal retail networks should adopt a micro-distribution model, leveraging small-scale wholesalers and market vendors, who account for over 70% of consumer goods sales in the region. For Cameroon, Anglophone Cameroon has a natural gate with Nigeria and they have an established system of shops, which is one of the ways Nigerian retailers can spread their goods.

Nigerian brands must focus on affordability and localisation, offering smaller product sizes and adapting packaging to local languages and cultural preferences. Strategic brand positioning is essential, with investments in digital marketing and social media. Additionally, forming joint ventures with local manufacturers can help Nigerian FMCGs reduce import duties, navigate regulatory barriers, and enhance distribution efficiency.