The International Organization of Francophonie (OIF), the International Trade Centre (ITC) and Vietnam Chamber of Commerce and Industry (VCCI) organized a conference in order to develop banking and economic cooperation between the Francophone countries in the Mekong region (including Cambodia, Laos and Vietnam) and their partners in Central Africa and West Africa. More than 100 financial institutions and economic organisations from the three regions mentioned above participated in a conference to compare the mechanisms and practices of banking organizations and propose recommendations to facilitate banking cooperation, economic and trade relations between the Francophone countries in the Mekong region, the Economic and Monetary Community of Central Africa (CEMAC) and the West African Economic and Monetary Union (UEMOA).
According to a publication of the World Bank, Asian exports to Africa maintained a growth rate of 18 percent per year, while Asia received more than a quarter of imports from Africa, a three-fold increase compared to those in 1990. Besides, the market research conducted by OIF and ITC has shown significant potential in trade between the three the Francophonie economic spaces which are the Mekong region, Central Africa and West Africa. Other related areas are agricultural products, textiles, handicrafts and furniture.
The above studies have shown that the main obstacle for the harmonious development of trade is the absence of direct partnership between the commercial banks of the three regions, especially the banks operating in French Mekong region countries and banks based in the African region.
According to Pham Gia Tuc, VCCI Vice President, at present, there are many favorable factors for the development of trade in both areas in Western and Central Africa. If Africa is a huge market with abundant resources, abundant labor force, high demand for all types of goods, Vietnam is strong with these items, especially rice agricultural products, aquatic products, and processed goods.
Statistics show that in 2011, trade between Vietnam and UEMOA reached US$809 million, up 62 percent, of which Vietnam exported US$402.7 million and imported US$405.8 million. Trade between Vietnam and the six CEMAC member countries in 2011 reached US$266.7 million, up 53 percent, of which Vietnam's export turnover reached US$139.2 million, and imports from this market reached US$127.5 million.
However, due to the geographical distance between Vietnam and Africa, trade transactions between the two sides take a lot of time and cost too much money. In addition, Vietnamese enterprises have very little information and knowledge of the African market. The banking system of the African countries and Vietnam do not have the cooperation, which causes many difficulties in the payment process. In addition, the administrative procedures are complex and cumbersome; the language difference is one of the causes of barriers to two-way trade.
According to VCCI Vice President Pham Gia Tuc, to work well and efficiently in the African market, Vietnamese enterprises need to select the appropriate business methods in the African market to make good use of the opportunities and minimise risks from this market. New businesses accessing to markets in Africa should look for partners and consultants through international organizations such as ITC / OIF or VCCI and the Ministry of Trade and Industry (the Department for Africa, West Asia, and South Asia).
Through the experience of Vietnam, the workshop also mentioned solutions to provide capital for small and medium businesses. The goal of the workshop is to achieve two results: the establishment of partnerships between African and Mekong River region banks and create a forum for exchange of trade financing.
Mr Nguyen Van Chieu, Chairman and CEO of Long An Food Processing Export JSC (LAFOOCO)
The Vietnamese enterprises imports raw cashew nuts from Africa about 300,000 tonnes annually, import turnover of over US$300 million. However, the import of grain from Africa faces many difficulties because many African countries have not set up embassies in Vietnam, commercial counselors and vice versa. When applying for a visa, we have to involve in a third country.
However, the biggest obstacle is the issue of payment in trade. Most grain exporting countries in Africa do not have bank branches in Vietnam. Banks of Vietnam do not have relationships with these countries. Therefore, companies in Africa do not accept payment by L / C from Vietnam’s banks. In contrast, most Vietnam’s banks do not accept L / C from banks of African countries. Most African cashew exporters in small and medium scale, they choose the mode of payment by cash or payment before delivery, but Vietnamese enterprises failed to do this.
Due to the import of cashew nuts directly with the companies in Africa facing many difficulties, Vietnamese firms import through the intermediary trading companies in Singapore, India, Europe, etc. We would love to trade directly with the companies in Africa, so the two sides will be more beneficial especially when the two direct contact and cooperate to build the quality of goods, and other work in the trade. The purchase or sale of other goods also faces many difficulties in paying. So, we hope that bank Vietnam and African countries banks to establish relations, set up branch bank sides to create favorable conditions for the sale of the two businesses.
Mr Torek Farhadi, Technical and Financial Advisor for Vietnam’s SMEs, Int’l Trade Centre (ITC)
Central African countries can import food products (rice and spices); textile products, leather; electronic machinery; motorcycles, farm equipment; pharmaceutical products with commercial potential up to US$1 billion. Central Africa can export to Vietnam crude oil and refined oil; timber; cotton; minerals (iron, manganese, aluminum, etc.) with the commercial potential of US$1 billion.
West Africa may import from Vietnam milled rice white or semi-white; roasted coffee; denim or beef; fabric, cotton printed; shoes; bicycles and motorcycles; agricultural equipment with commercial potential of US$2 billion. West Africa can export to Vietnam cacao; cotton; natural or cultured pearls, precious stones; minerals; nuts with commercial potential of US$1 billion.
Strategy to promote inter-regional trade between Vietnam and the two African economic community should contribute to reducing the gap, building an atmosphere of trust and facilitating for the business enterprises and economic organizations. More specifically, it should form the basis of exchange of commercial information on the business opportunities available in each country; support the organization of a regular forum for business development between enterprises; facilitate for inter-bank cooperation for secure commerce transactions. Institutionally, it is necessary to legalize the partnership agreement and pay attention to the implementation; at least to make transport companies see business opportunities that exist between Africa and Vietnam, promote investment promotion, technology transfer and skills.
Mr Alain Le Noir, Club of Bank and Credit Institutions in Africa
The strength of banks in Western and Central Africa is a healthy structure and profitability; modern services and products. The banks are operating in accordance with the business environment, the monitoring and control activities close with good quality human resources.
The weaknesses are that banks operating in a political environment and social fragility and uncertainty; in a small and dispersed scale, it is difficult to penetrate the market (bank rate of about 6 to 8 percent). In addition, funding for the investments of small and medium enterprises is not enough to form the specialized institutions; payment security model is too dependent on other continents.
However, Africa is a continent of the future; the market is still untapped so it’s a potential market, structure and profitability of the current bank are good.
Quynh Anh
Vietnamese
