Mahamadou K. SAMAKE, Head of Finance and Accounting Department of SONAVIE
“The Government Securities Market offers us excellent investment opportunities with quite attractive rates.”
Halfway through the execution of its governement securities issuance program for 2021, which provides for XOF 1.7 billion in investments in Mali’s government securities this year, the Head of the Finance and Accounting Department of Société Nouvelle d’Assurance Vie (SONAVIE), a pioneer of life insurance in Mali, Mahamadou K. SAMAKE, answers our questions in this issue of your online magazine, la Tendance.
What role do institutional investors play in WAEMU’s financial sector?
Let me put this into context for Mali. Today, SONAVIE is one of the leading Malian institutional investors on the WAEMU Government Securities Market.
In 25 years, the company has been able to establish its reputation on the financial market. As a proof, all the Management and Intermediation Companies (SGI) that come to Mali approach to inquire about our appetite for the launched bonds. We have a total of more than XOF 8 billion of participation in government securities purchased to date. In the first half of 2021, we bought XOF 610 million. The company plans to invest XOF 1.7 billion before the end of 2021.
With more than 25 years of experience in the insurance sector in Mali, why should SONAVIE invest in the financial market?
The main reasons are twofold. The first is linked to our main activity, namely life insurance, i.e. the capitalization of collected savings. We promise a rate of return on these savings over a well-defined contractual period. So we have to make these collections as profitable as possible before the expiry of the contracts.
The second reason, as a professional and corporate citizen, is that the Government Securities Market offers us excellent investment opportunities with quite attractive rates.
What are your investment strategies in the market?
We have an investment policy validated by our Board of Directors. It sets the guidelines and decides on the choice of financial intermediaries as well as on the quality and allocation of assets with regard to diversification and dispersion requirements. In this document, we draw attention to the most profitable investments we have from one year to the next. While respecting, of course, the limits of participation set by our regulator, CIMA (Conférence Interafricaine des Marchés des Assurances).
SONAVIE, like other insurance companies, complies with these market regulations.
We participate in almost all bonds from countries that have some stability. We look at other characteristics of each issue, but we are more careful on this criterion because our West African countries have had chronic political instability for many years. Of course, these government securities are backed by sovereign guarantees, but in terms of repayment, there may be repercussions on the expected proceeds. Therefore, we have a preference for Mali Government Bonds.
How do institutional investors see the Government Securities Market evolving?
There are some positive points to remember. I have been lucky enough to witness the development of this financial market. It has become a reality thanks to a strong political will. The future is promising.
Ten, fifteen years ago, in order to get certain funding, countries had to go through major institutions. From the phases of feasibility study and project design documents, including the work of the committee that had to finance the project, it could take one to two years, depending on the type and size of the project. Today, however, the States, through loans launched directly on the WAEMU Government Securities Market, can finance small local projects without having to resort to these major international institutions.
However, there is also room for improvement, especially in terms of adaptation, because the financial market penetration rate, compared to some developing countries, is lagging behind. That said, I remain optimistic. Today, we have a growing middle class and a particularly young population. These assets can help strengthen our local economies.
How can we improve the attractiveness of the market to other institutional investors?
In order to ensure investment continuity, there are two points that I think need to be reviewed in our countries:
- Good management of funds raised. If there is always financial malpractice in our States, this may be an impediment for these securities. It is true that these are sovereign securities, however, it would always be good to see how the funds raised have served, thereby motivating institutional investors to invest even more.
- Maintaining a good communication policy aimed at making Government Securities Market part of our customs for both legal and natural persons.