Building a bank for entrepreneurs is crucial, says CEO of Bpifrance

Bpifrance made itself into a bank for entrepreneurs and sees its business model as a possible export to Africa. CEO Nicolas Dufourcq explains how Bpifrance works and details current operations in Africa in an interview with Hichem Ben Yaïche and Nicolas Bouchet.

You have led Bpifrance, an “entrepreneur bank”, since 2013. What is its business model?

Bpifrance has grown hugely through all components of our trade and through new activity. This growth will be exponential. Our bank invests in all aspects of entrepreneurs’ needs, starting from the idea born from the mind of an entrepreneur and up to its achievement.

Our various specialties match our raison d’etre: allowing entrepreneurs to dare and grow their business. Our activities include credit, and the business model for this is to bill an interest rate. For bringing in equity – we invest €4bn annually in the capital of French companies – the business model is the increase in value made from selling out and from dividends. Our third activity is more about subsidies as it supports business creation with public funds, this even as we bill a small interest rate to entrepreneurs.

We also have a very important innovation financing activity, using reimbursable advances, credit for innovation and seed funding and where we also bill a small interest but here the subsidy part is very important as this is a very risky activity. And we have an advisory specialty too that is growing in importance, for which we support entrepreneurs by deploying more than 400 consultants through on demand assignments. All in all, Bpifrance is a sizeable company, having €45bn in assets under management and another €45bn in loans under management. We have achieved a €1.7bn net result during the 2021 fiscal year.

From 2013, you have staged an opening to foreign markets, to Africa especially. How do you assess this experience?

We have made a lot of progress with Africa. For years, we have invested in African private equity funds who in turn have invested in about 150 companies. In total, our funding has enabled liquidity of about €1bn. In coming years, we want to greatly push this envelope together with financial partnerships we have made globally, to the benefit of Africa.

Bpifrance conducts a very important funding activity for French SME exports to Africa, representing about €300m in export credits annually. We also provide several million euros every year in funding to export companies, through loans that cover all non-physical aspects of export. As you can see, we have a well complete toolbox at our disposal.

Additionally, we believe the entrepreneur bank model is a good one for African countries. We offer African governments our know-how, our knowledge, and specialist staff to help them put together their own versions of BPI. This along with the projects we find especially in francophone countries.

Is your advice heard?

African countries have paid a lot of attention to BPI’s success in France and that has inspired them several ideas. We had no difficulty convincing them that their economy needs a one-stop-shop that makes the entrepreneur’s life simpler and comes with a major digital dimension.

How do you reconcile daily operations and long term vision?

We have the chance to do a job that allows us to bring together strategic thinking and very practical action daily. There is nothing better for strategic thinking than listening to entrepreneurs, researchers and scientists! Since we essentially are a super pragmatic, action-oriented bank, with great boxing footwork, we act very fast! Bpifrance very quickly implements measures and unrolls plans at the speed of light. Every new year bears more fruit.

Africa is a continent where everything remains to be done and where there are anglophone, lusophone and francophone countries. How can Bpifrance’s model be useful to Africa?

The new generations of Africans are very much ready to become entrepreneurs provided they are offered the means. We have an ethical duty to achieve that. This is not too difficult and is about granting small loans with affordable rates. And not, as can be seen today, six-month loans with 17% rates. If this goes on, we will not make it.

We should be able to offer 3-to-4 year loans with rates below 10% so that entrepreneurs can unroll projects. This comes with risks but I believe it is also the role of public funding to cover those risks. It is in any case necessary.

Still, Africa knows no shortage of mesofinance and microfinance institutions. What they offer is not so different from your model and operations…

That is right. Africa has many institutions but they have insufficient capacity to meet the needs. Moreover, they also come with very high interest rates. The neighborhood’s tailor who employs five and wants to hire ten more should be able to borrow a few thousand euro-equivalents over several years at a “non-punishing” rate. I believe we share this goal with governments.

In the context of this pandemic, how do you envision growth?

We are at a fascinating moment of technological outburst that allows the opening of important perspectives and opportunity everywhere. We simply need entrepreneurs who are well-equipped with training and funds. We have to capture these huge human energy resources that are currently emerging in every country, with fully digital new generations filled with projects and ideas. We must give them the means to succeed.

How do you see the relationship between France and Africa through the lens of economic fabric and common endeavours?

Things are moving in the right direction. Still, I am worried to see the situation of several countries where per capita GDP has not moved for twenty years, mainly because of population growth. We need extremely resolute measures to take on this challenge. Building entrepreneur oriented investment banks is one part of a catalogue of measures that are crucial and necessary in the short term. We do not have much time.

What will 2022 bring to your African projects?

Bpifrance will continue to offer credit directly to SMEs along with export credit and guarantees. We will continue to fund African private equity and to advise three African countries with whom we work on establishing their own BPI: Senegal, Cote d’Ivoire and Tunisia.

Coming back to the case of France, how does Bpifrance distribute its activity geographically?

We account for 50 local agencies, allowing us to reach most French entrepreneurs. We also have digital channels that are more and more important since Bpifrance has become a fintech. We offer digital credit only to the smallest businesses and we are very active at the local level, through physical communication campaigns that are designed as countrywide roadshows. They deal with industries, the cultural sector, innovation, and research. We are very much on the road and have trucks that travel all over France to meet people.

How do you stay agile and fast while being close to entrepreneurs?

It is all about the art of management and a decision I have made for us never to grow into a huge organisation. Today, we account for 3,500 employees who do everything I just explained. Our teams generate multiplier effects and we constantly work with partners. We are never alone and Bpifrance has no desire for vertical integration that would lead us to become an organisation of 10,000 and more. Having a 3,500-strong staff is a very good size that allows for a lot of reactivity, as was seen when it came to launching the Covid emergency plan on the same day that a lockdown was announced by the President of the Republic in March 2020.

The banking world is known to be very diverse. How do you stand apart and what gives you clout over business leaders?

Our main difference with the world of traditional banking is that we have very important equity activity that major banks poorly match, relative to their credit activity. We also have an exclusive innovation financing activity as we are entrusted by the Government and the European Union with funding innovation in France. Other banks do not have this activity.

We also have general interest missions to develop business creation in areas that are key to urban planning policies. We also provide public guarantees for exportation. This is also specific to us.