Afrikan Heroes

Multiple currencies, threat to AfCFTA —Simon Tiemtore

Mr. Simon Tiemtore is the Founder, Chairman and Chief Executive Officer of Lilium Capital, an Africa strategic investment company with targeted sectors of investment in Financial Services, Energy, Hospitality, Agro-processing and FCMG. In this interview with KELECHI DECA, he talks about the prospect of the AfCFTA, SMEs trade finance and the prospects of diaspora banking among others. Excerpts:

How would you describe the African banking landscape?
The banking landscape in Africa is quite interesting because there are lots of opportunities. We always talk about finance and infrastructure gaps and I think banks are seeing an opportunity and providing the required financing and tapping into the market. Banks can’t do it alone and I don’t think any African bank has the financial muscle to fund the gaps alone and so, we do it in partnership with other financial institutions and Afreximbank is one of them.

One of your key markets is SMEs. How risky is doing business with SMEs?
We love SMEs and it is our bread and butter because 95 percent of our economies in Africa are made up of SMEs. The remaining five percent, which are large corporate, predominantly operate in the extractive industry because we are heavily commoditised economies such as in oil and gas and mining. So, these large corporates typically come with their own finance, which is long-term and so, we focus on SMEs.
I do believe the future of Africa is in SMEs and we just have to find better ways to work around, restructure them and restructure their credit.

You recently launched Simon Bank, a digital bank targeted at migrants. Why?
The diaspora today is the single largest source of flow of funds into Africa with about $70billion. Globally, the remittance market is a $660billion market and about $220billion comes from the US and $60billion comes to Africa on a year-on-year basis. Regardless of the immigration policy of the West, it is growing. Our aim is to capture the diaspora market with Vista Bank in locations we operate as we currently do by providing them with products that they can tap into and capture the remittance that they are bringing home. So, Simon Bank is the first digital diaspora bank and it covers the diaspora community because we are also targeting Hispanics, Filipinos, and Asians.

How much of trade finance do you engage in and to what extent would the AfCFTA boost trade in the continent?
We are doing a lot of trade financing. All we are trying to do now, especially in those heavy commodity-trading countries, is by providing letters of credit, pre- and post-export finance, and working capital for transformation. Afreximbank has been an ally by providing us with a line of credit for Guinea and The Gambia.

With multiple non convertible currencies all across the continent, how would trade integration work smoothly?
I believe for any economic zone to be successful, it is must deal with the issue of multiple countries. It is hard if you have over 30 currencies. Trade between, say Guinea and Gambia, becomes difficult. Guinea has its own Franc and Gambia has its own Dalasi. Trade between buyers and sellers in these countries cannot be done in their currencies but the dollar or euro. So, if you look at the three countries from where you operate, trade is difficult despite them being in the same West African Monetary Zone. So, if you talk about a free trade agreement and you cannot trade from a currency standpoint, there is a flaw. So, it needs to be sorted out.  But I also believe there is the need to build infrastructure that supports exports. We have the right policy to support trade in the continent, but we need to focus on execution more.