By Thierno Seydou Nourou Sy, Founder and President of Nourou Financial Consulting Dakar – Senegal.
The proposed sale of Société Générale France’s shares in Société Générale Senegal, as well as the potential decision of the Senegalese government to exercise its pre-emption right, must be rigorously analyzed beyond emotional reactions and strictly political readings. This operation is part of a global dynamic of restructuring the international banking sector and centrally raises the question of the financial sovereignty of African economies.
For a country like Senegal, the stakes go far beyond simply taking over a banking asset. It involves the structuring of the economy’s financing, the stability of the financial system, and the control of strategic levers essential for development. This opportunity, however structuring it may be, cannot be dissociated from a clear analysis of the risks it entails.
A global banking sector undergoing accelerated consolidation
The international banking system has been engaged in a deep movement of concentration and refocusing for over a decade. The strengthening of prudential standards from Basel III and the future requirements of Basel IV have profoundly changed the economic equation of international banking groups. Increased capital requirements, persistent pressure on profitability, and the rise of systemic risks lead large European banks to reevaluate their business portfolios.
Africa, despite its growth potential, is not immune to these shifts. The divestments of subsidiaries observed in several countries reflect a structural trend: European groups now prioritize consolidating their domestic positions and a few key strategic markets.
In the WAEMU space, the prudential framework reinforced by the BCEAO and the banking commission requires credit institutions to have a critical size, robust governance, and rigorous risk management. In this context, the issue of controlling the main banking players becomes a major economic challenge, provided that this restructuring does not weaken either the stability of the system or its regional integration.
Financial sovereignty as a lever for economic development
Financial sovereignty does not mean isolation or closing off to foreign capital. It refers to a state’s ability to attract, direct, and secure financial flows towards productive sectors, to effectively mobilize national savings, and to align banking intermediation with its economic priorities.
The acquisition of Société Générale Senegal by mostly national investors would notably allow for:
- better alignment of credit policy with the needs of the real economy and national priorities;
- increased retention of financial value added within the territory;
- reduced exposure to strategic decisions made outside the country;
- strengthening the resilience of the banking system against external shocks.
In a context of increasing financing needs for infrastructure, industrialization, and entrepreneurship, controlling a leading banking player is undoubtedly a strategic asset.
Risks to anticipate to preserve financial stability
However, this strategic ambition must be accompanied by rigorous risk management.
One risk concerns the concentration of credit risk and systemic instability. A strategic bank controlled by the state could be heavily relied upon to finance public projects or priority sectors, sometimes at the expense of a strictly financial risk analysis. In case of a macroeconomic shock, such concentration would not only weaken the concerned institution but also the entire banking system.
A specific prudential risk requires increased vigilance: excessive consumption of capital related to exposures to the public shareholder. If the Senegalese state is already a significant borrower from the bank, its entry as a majority shareholder could increase the risk of concentration on related parties. This situation could weigh on regulatory ratios, limit the financing capacity of the private economy, and attract increased scrutiny from regulators, with possible additional capital requirements.
Operational and governance risks also arise, linked to the transition from an international banking group to a predominantly national capital structure. Insufficiently independent governance, a loss of standards in risk management, information systems, or human capital could lead to a deterioration of asset quality and a loss of confidence from financial partners.
Finally, in a highly integrated WAEMU space, a perceived excessively national takeover could raise sub-regional tensions, affect financial cooperation, and in the short term, complicate access to international financing.
An essential public-private structure for financial credibility
Faced with these challenges, international experience shows that bank acquisitions solely driven by the state entail high risks, especially in terms of governance and credit allocation. Conversely, a complete disengagement of the public sector would weaken the strategic scope of the operation.
The most relevant approach lies in a structure that combines:
- a strategic state, ensuring stability and long-term vision;
- strong national private investors, bringing financial discipline, technical capabilities, and credibility;
- regional financial institutions, and if necessary, institutional investors and the diaspora.
Such a scheme would preserve the strategic interest while introducing safeguards against the risks of misallocation of credit and excessive concentration of exposures.
Strategic vision and governance: the real success factors
The question of financing the acquisition cannot be separated from that of the strategic vision. Successful banking restructurings rely on a clear project, independent governance, and measurable objectives.
The fundamental issue is not only to mobilize capital, but to precisely define:
- the strategic positioning of the bank;
- its role in financing the national and regional economy;
- demanding governance and risk management standards;
- the ability to preserve achievements in terms of service quality, products, information systems, and financial solidity.
In perspective: the national financial holding as a structuring framework
The consideration of creating a national financial holding could provide a relevant institutional framework to structure such an operation. By pooling the state’s financial instruments, strengthening strategic coordination, and improving consolidated risk management, such a structure could enhance the overall effectiveness of public action in the financial sector.
In this perspective, Société Générale Senegal could constitute a structuring asset, serving as a foundation for a national financial hub capable of sustainably supporting investment and economic transformation, subject to compliance with prudential requirements and regulatory approval.
Conclusion: financial sovereignty exercised with responsibility
The potential acquisition of Société Générale Senegal by predominantly national interests is a strategic economic decision before being political. It offers Senegal a real opportunity to strengthen its financial sovereignty and better direct the financing of its development.
However, this ambition will only yield results if it is part of a clear vision, supported by demanding governance, a balanced public-private structure, and rigorous risk management. In a context of profound restructuring of the African banking landscape, the real challenge is not to own a bank, but to build a strong, credible, and sustainable financial player, serving the national economy and regional integration.
