If you have red the Congolese news
lately, you probably saw the articles on the hearing of the
deputy Minister of Finance at the Senate regarding dodgy transactions that
took place in a commercial bank…
One of the concerns raised by the
senator who has requested for that hearing was that the pricing offered to
these entities (Ministry of Finance (projects) and BCECO) was higher than
pricing offered to non-public (sector) organizations which seems weird if your
plan as a manager is to reduce the cost of running your company…
Well, there are several reasons that
can explain the higher pricing for public sector institutions.
One of them is the risk associated with
those institutions. As you need to factor in the risk in your pricing, interest
rates will tend to be higher for them than for other companies. Those
institutions are riskier because they generally have bad track record when it
comes to credit, poor (non-audited) financials, non-realizable collateral, the
lack of recourse in case of non-repayment, etc. As a result, commercial banks
have a low credit appetite for those institutions. Therefore, the few ones
ready to take that risk will charge a fee high enough to compensate the latter.
Now if you take other services such
as transfers and cash withdrawal for example. There is absolutely no reason, in
theory, that the latter be more expensive for the Public Sector as mentioned in
the senator complaint…
So, how one can explain this
difference in pricing? One can argue, the lack of knowledge of the banks
general pricing can explain this but it will demonstrate once again the poor
management of those companies or it could be something else…
It could be simply another form of
corruption. Indeed, to ensure they attract as much business as possible some
commercial banks are ‘buying’ deposits. The practice is very simple and takes
several forms. It can be payment of interests on current accounts/ term
deposits in cash instead of paying on the account. Sometimes the interest rates
or commission rates are simply higher because after taking its normal fees, the
commercial banks will ‘incentivize’ the managers in cash obviously…
All those transactions are recorded
in the company’s book as bank fees- ni vu ni connu. The only thing you will see
in the
The result is richer banks and
(public sector) managers while the companies they are managing continue to
perform poorly.
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