For many people studying in both Germany and France followed by working at firms such as the likes of Goldman Sachs, Standard Chartered, AXA Investments and Credit Suisse would seem like a delusion to many. But this is the incredible story of Victoire Djanhan the current director of strategic accounts at Fitch solutions. She is an exceptional example of the Cameroonian spirit and the African Pride. After all, “the impossible is not Cameroonian”. The extraordinary exploits of Victoire are a true inspiration the youth and a point of pride for older Cameroonians and yet her journey isn’t not even close to being over yet.
Inspire Afrika: As a director of strategic account at Fitch Solutions, what does that job entail ?
Victoire Djanhan: My job consists at building a strong and long lasting relationship with my clients, in order to pursue their commercial engagement with Fitch Solutions. It´s all about building trust and reliability so that my clients understand Fitch as their preferred source when it comes to financial and market data & analytics. We mainly act within the risk management and fixed income area and my client base are central banks, regulatory authorities and the biggest insurance companies which all represent strategic accounts due to the complexity of their roles and the huge impact their political and investment decisions have on the financial markets.
Inspire Afrika:Fitch Solutions focuses on credit risk analysis for strategic decision making , what is credit risk management ? How can it help investors or entrepreneurs in the financial management of their businesses ?
Victoire Djahan : Credit Risk Management constitutes all intelligence which aims at identifying, assessing and managing credit risk. It´s all about mitigating potential financial losses by understanding the adequacy of a bank’s capital and loan loss reserves at any given time. Within the banking and financial sector, managing credit risk means analyzing the probability of default (PD) and the amount of potential loss (EL) of a counterpart, evaluating them and making decisions based on them. This is the most important issue any entrepreneur or decision maker will have when it comes to choosing their business partners. They must assess their value and reliability by evaluating their capital strength in order to make the right investment and business decisions.
Inspire Afrika :How does access to reliable data improve African finance in regards to credit risk? Victoire :Having access to strong data quality would help a lender know about the previous financial behavior of the borrower. In other words he higher the exposure of a bank or business partner to credit risk, the higher the tendency of that bank or business partner to experience financial crisis. So accessing reliable data sources that would protect against fraud for example, would help millions of decision makers to proactively monitor risks and take the right investment decisions that would not put their business at risk and hence rather grow them.
IA: What are your observations in regards to credit risk management in the banking and finance sector in Africa ?
Victoire Djahan: First of all it´s important to raise the fact that the banking and financial sector in Africa is dominated by cooperative and commercial banks. These are the largest financial institutions in our economies with major branches and subsidiaries throughout the countries. Hence their major role in providing credits to households and corporates, while assuring payment operations as well.
So the main objective here while assessing credit risk will be for those banks to minimize risk of adjusted rate of return by maintaining credit risk exposure within acceptable boundary. They aim at mitigating the risk of default within the entire loan portfolio as well as the potential loss of each individual credit.
Studies have shown that credit risk in our countries is mainly mitigated by money supply. Meaning that the more credit is being allocated (both to households and corporates) and remittances increase, the more individuals and entrepreneurs can refund their debt. While NPL ratiosn are then being minimized, we can say that, credit growth tends to reduce credit risk. However exchange rate fluctuations have a high impact on credit risk especially for import oriented sectors (food, manufacturing, logistics, etc.) even though these sectors might acknowledge high credit concentration.
IA: Your job does require you to analyse reliable data and insightful research, what can you say is the African Financial Markets ratings compared to other continents ? Is there potential for growth ?
Victoire Djahan: My job is to provide my clients with data and analytics they need to be able to take profound investment decisions. I am mot an analyst. Nevertheless what I could observe with regards to credit ratings within African financial markets is that there is a huge issue with the availability of data as well as their consistency since many of the entities may seek one time ratings for a specific credit purpose only. This is one major reason why the “big three” only have a limited presence in African countries although S&P, Moody´s and Fitch cover over 90% of the debt credit rating agency market around the world. Also they is a numerous amount of small local credit rating agencies covering the local markets in Africa. Also for African countries to get a sovereign credit rating of the “big three” in order to access international funding is their adherence to international best practices of information disclosure, which can be a challenge.
IA: How do these ratings influence Foreign Direct Investment and bonds in Africa?
Victoire Djahan :With all what´s been said, downgrades of sovereign credit ratings by the “big three” shall have only short term impact on FDIs and borrowings from commercial banks and other private institutions. Therefore any change in the credit rating of most African countries shall have insignificant influence on their public portfolio bond flows, due to their limited history of borrowing from the international bond markets. South Africa remains an exception since its majority of banks and financial institutions are owned by foreign countries.
IA: What are your career aspiration as an expert in finance?
Victoire Djahan: As you might know I am a huge advocate of financial literacy, hence my platform “Femme et Finance” on Youtube and on my webpage www.femme-et-finance.net which was created to allow women and young ladies have access to basic education on financial topics. This platform offers education through short videos, seminars and e-learning on specific topics like how to save money, how to invest smartly, etc.
I am convinced that many African entrepreneurs would have a bigger chance to access credit if they had benefitted a strong education on finance which allows them to make their own assessment of their counterparts and easily gain access to credit. Pursuing that philanthropic purpose is beyond any further career aspiration to me.