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Africa Emloyment Board: Post Your Resume for Free and Get Exposed to Global Corporations |
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| The North Africa Journal (Free Section - from 142nd issue) |
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FINANCIAL SECTOR Banking/Sport Sponsorship The Moroccan banking industry has decided to throw its full support to
the country's candidacy to host the football world cup event of 2010.
The banks' association Groupement Professionnel des Banques du Maroc or
GPBM is to give a DH 10 million grant to the committee in charge of competing
for the event. The money will be used to fund PR and marketing campaigns. Banking/People Bengelloun was one of the founders of Maghrebail, which was established in 1972 with investments from three of Morocco's main banks BCM, BMCE and Banque Populaire. Maghrebail entered the Casablanca Stock Exchange with a 1997 IPO and
became a subsidiary of the BMCE Bank, when this latter acquired in 1998
the Maghrebail shares owned BCM and BCP banks. Banks Waiting to Do Business in Algeria Various foreign banks are reportedly facing delays in starting business in Algeria. According to the Algerian information agency AAI, citing a source in the finance ministry, there is a long list of banks that have applied for to do business in Algeria. However, the delays are related to the slow process of nominating the members of the banking regulatory body, the Council on Currency and Credit. This organization's work has been frozen based on changes in the Algerian law following the growing number of scandals affecting private banks. For the council to resume activity, the president of the republic is required to make new appointments. In a recent debate in parliament, the finance minister Abdelatif Benachenhou
confirmed that the minimal capital required establishing a bank will soon
be raised from the current AD 500 million to AD 2 billion. Finance Tarik Sijilmassi, the CEO of Credit Agricole (CA) of Morocco, which has been largely operating in the farming sector, says his institution will expand in new core business defined as traditional banking activities. CA is to restructure its organization with new four targets. They are
the small and mid-sized agricultural entities, agribusiness enterprises,
an individual and professional grouping and a corporate business. The Financial Sector: The financial sector in general and the banking system in particular are Algeria's weakest points in the overall economic landscape. A long overdue reform has failed to propel the financial sector into an industry that should otherwise play a driving factor in growing the Algerian economy. The financial sector is not only sick but it is also the object of mockery in the public, the media and even among politicians. Often referred to as a "simple money collector," most in Algeria consider the financial sector as a "danger to the national economy," yet no one has been able to implement meaningful reforms. Bankers are often accused by corporate executives of being the cause of all the troubles facing the economy. While under attack from all sources, bankers have actually been working hard to keep their banks afloat and to make their institutions more attractive, while looking for ways to use the resources they have. Indeed the amount of consumer credit and auto loans released by domestic banks witnessed a substantial increase in 2003. But this effort is largely insufficient in light of structural imbalances, the low level of banking activity in Algeria and a succession of scandals that have hurt the industry in the past two years. The Khalifa Bank scandal remains current event in the national press, as most still wonder how this bank was able to grow so fast, suspecting a conspiracy at the highest level of government. Khalifa was not the only private bank to suffer from fraud. BCIA bank soon followed its steps and collapsed as the financial authorities decided to ban all of its activities. For Khalifa, the collapse was attributed to its misuse of money deposited by its clients to fund the bank's sister entities controlled by the Khalifa group of companies. The depositors were not only large state enterprises but also households and individual account holders who now appear to have lost their savings as a result of this mass embezzlement. For BCIA, the culprit was an inefficient control and audit system and a poor judgment about credit risk in financing international trade operations. In an effort to avoid the multiplication of such scandals, authorities made significant changes in the regulation, with two important implications. The first is the banning of bank shareholders or owners to finance their other businesses with bank loans. This measure aims at creating a distinction between bank shareholders with their various business activities so as to remove potential conflicts of interest and protect depositors. The second implication is the reduction of the independence of the central bank, Banque d'Algerie, which has been accused of complacency with the handling of the past year scandals. The truth is that the executive branch through its finance ministry never liked the idea of an independent financial sector and the collapse of the two largest private banks was a pretext to take over central bank prerogatives. But the banking sector is not the only one suffering from a lack of direction and weak performance. The insurance sector is also lagging behind other activities, in particular in face of fast growing small and mid-sized businesses. The most dismal insurance branches are those of real estate and individual coverage, as demonstrated by the outcome of the May 2003 earthquake. The bulk of current insurance activity focuses on auto insurance and some coverage in the industrial sector. The May 2003 earthquake resulted in a total loss of AD 144 billion, the bulk of which falls on the state to reimburse, rebuild or recoup. Insurance companies have virtually no role in the post-quake insurance activity. But the government seems to have learned a lesson and is now pushing
for a much bigger involvement of insurance companies. These latter should
consider recent legislation as a gift to them more than a risk. Indeed
for the first time ever, insurance on real estate is now mandatory in
response to the quake, a law that is likely to force property owners to
purchase insurance policies. The life insurance market for its part is
virtually non-existent while the national stock market, Bourse d'Alger,
has failed to emerge as a source of money for companies seeking to fund
their growth. The bourse has been facing record low volumes of activity
and no company volunteered to list since its establishment. The only listed
shares are those of state-owned firms Saidal, El-Aurassi Hotel and Eriad-Setif,
all of which could not attract interest from investors. With an absent
stock exchange, officials at the finance ministry are currently debating
on ways to turn the bourse into something useful, while the secondary
market is showing positive signs of growth as banks and other companies
have turn to in an effort to raise money to finance their growth. 2004, we do not expect any major changes, as it is an intense political period leading to a presidential election. But beyond April, the partial sale of Credit Populaire d'Algerie will certainly constitute a test for the government's willingness to reform the financial sector. |
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