Bureau de Recouvrement des Crédits du Burkina (BRCB)

In 1991, Burkina Faso entered into a Structural Adjustment Facility (SAF), which was supported by the IMF, World Bank, and other bilateral and multilateral creditors (IMF 1996). The IMF approved the SAF with special drawing rights (SDR) of 22.1 million on March 13, 1991, with a three-year term. The economic strategy had the goal to “reduce financial imbalances and promote growth by increasing the role of the private sector while reducing and refocusing that of the state” (IMF 1991).

As a part of its IMF arrangement, Burkina Faso embarked on an economic strategy that included restructuring and rehabilitating the banking system. There were five components of the banking system restructuring in Burkina Faso:

1. recapitalizing problem banks;
2. reducing the government’s share in banks to a non-controlling level;
3. creating the BRCB, a loan-recovery bureau for NPLs;
4. reorganizing and downsizing bank management; and
5. returning funds borrowed by the Treasury to the postal savings and checking banks (CNE/CCP) (IMF 1996).

On March 7, 1991, the government passed a law that established the BRCB.^FNThe legislation, in French, was “J.O./B.F. n° 10 du 07 mars 1991 (création du BRCB).” The government also published an ordinance that outlined provisions for the BRCB’s operations (BCEAO n.d.).^FNThe ordinance title was "Zatu n° An VIII-19 FP-PRES, portant dispositions particulières applicables au recouvrement des créances compromises des établissements de crédit cédées à l'Etat Burkinabé,” which translates to an ordinance “laying down specific provisions applicable to the recovery of compromised debts of credit institutions ceded to the Burkinabe State.”

Two years after establishing the BRCB, the Burkinabe government elevated the BRCB’s legal authority for debt recovery (IDA 1993). The 1993 legislation provided the BRCB with the same level of authority to seize assets as the Treasury. Only back taxes were senior to BRCB collection efforts. Despite the “powerful tools at its disposal,” the BRCB had recovered only 10% of the value of transferred assets by 1995 (IMF 1996).

According to the IMF, the BRCB had a mandate to “recover to the extent possible the portfolio of nonperforming loans it had inherited from banks undergoing liquidation or restructuring” (IMF 1996).

The BRCB was a government-owned entity (IMF 1998).

The BRCB was created in 1991 within Burkina Faso’s Ministry of Finance (IMF 1998). On June 6, 1991, the government passed legislation that appointed a director of the BRCB (BCEAO n.d.).^FNKiti n° An VIII-320 FP-MF, portant nomination d'un Directeur du Bureau de Recouvrement des Créances du Burkina (BRCB) / J.O./B.F. n° 23 du 6 juin 1991.

Prior to the rehabilitation of the banking system, the BCEAO founded the Commission Bancaire, the bank supervisory body for WAMU countries. It was established in 1990 with headquarters in Cote d’Ivoire (IMF 1996; BCEAO n.d.).^FNKiti n° An VIII-320 FP-MF, portant nomination d'un Directeur du Bureau de Recouvrement des Créances du Burkina (BRCB) / J.O./B.F. n° 23 du 6 juin 1991. The Commission Bancaire, which was chaired by the Governor of the BCEAO, conducted audits of the BRCB (IMF 1996).

It does not appear that the government set a maximum value of assets that the struggling banks could transfer to the BRCB. By 1996, the Burkinabe banks had transferred a total of CFAF 58.8 billion to the BRCB, and when the agency was dissolved in 2002, a total of CFAF 64.4 billion in NPLs had been transferred (IMF 1996; Tanga 2002).

The transfer of NPLs was one component of the financial system restructuring, and the IMF estimated that the total cost of bank restructuring in Burkina Faso was CFAF 48 billion. For the restructuring activities of the state development bank, the BND-B, the government borrowed CFAF 16 billion from the national social security fund (CNSS) under a six-year loan with 9 percent interest. The government also borrowed CFAF 3.3 billion from the investment bank, CAI, under a loan with a 15-year term carrying 3 percent interest. Furthermore, the government converted the BND-B’s CFAF 9 billion debt to the BCEAO to long-term government debt to the BCEAO with a 15-year maturity—including a three-year grace period—and 3 percent interest rate (IMF 1998).

For the BIB, BICIA-B, and BFCI-B, the government reimbursed the banks for the transfer of NPLs using government bonds with a value of CFAF 11.8 billion and a 15-year term, 21-month repayment holiday, and 3 percent interest. Two financial leasing companies, the SOBCA and SIEL, received financing of CFAF 1.5 billion in exchange for transferring their NPLs to the BRCB (IMF 1998).

In addition to issuing bonds, the government relied on CFAF 6 billion in budgetary allocation and CFAF 2 billion in foreign financing from the Caisse Française de Développement, the French Development Agency (CFD) (IMF 1998).

As of 1998, Burkinabe banks held CFAF 10.4 billion in government bonds that were offered in exchange for the transfer of nonperforming loans (IMF 1998).

The BRCB was one component of the Burkinabe financial system restructuring, and banks undergoing other restructuring activities transferred NPLs to the BRCB. There does not appear to be a limit on which of the eight Burkinabe banks were eligible to transfer nonperforming assets, though not all banks transferred assets to the BRCB. According to the IMF, the BICIA-B was in comparatively strong position in 1990, and it decided not to request support in order to maintain its “image of a quality bank” (IMF 1996).

Not all nonperforming assets were transferred from the BND-B to the BRCB, as some assets were transferred to the BND-B Liquidation Commission (IMF 1998).

Eligible banks transferred portfolios of nonperforming loans to the BRCB. It does not appear that there were restrictions on the types of nonperforming loans eligible for transfer. As of 1996, the IMF reported that the BRCB’s portfolio included:

• CFAF 13.1 billion in loans to government agencies and enterprises;
• CFAF 10.7 billion in loans to private enterprises that had ceased operations;
• CFAF 24.8 billion in loans to private enterprises still operating but experiencing financial difficulties; and
• CFAF 10.2 billion in loans to unidentified borrowers.

Loans secured by real estate were eligible for transfer, as the BRCB owned approximately CFAF 800 million in real estate collateral in 1996 (IMF 1996).

Audits from the BCEAO, and later from the Commission Bancaire, examined and determined the amount of NPLs on the Burkinabe bank balance sheets. Based on the audits and restructuring plan, the bank and restructuring authorities determined the amount of NPLs to be transferred to the BRCB (IMF 1996).

It does not appear that the BRCB published details regarding pricing or asset valuations. As a part of the audits of the Burkinabe bank balance sheets, the authorities and the banks would determine the amount of NPLs to be transferred to the BRCB. As a part of the determination of which loans to transfer, it is expected that the authorities and banks agreed upon the transfer price (IMF 1996).

By 1996, the BRCB had recovered CFAF 5.7 billion from its portfolio on NPLs, and it ultimately recovered CFAF 10.8 billion by the time of its dissolution (IMF 1996; Tanga 2002). The exact mechanism for recovery or disposal is unclear, the BRCB had special authority to seize assets from delinquent borrowers, and the BRCB published a list of delinquent borrowers in an official government publication in order to improve recovery efforts (IMF 1996).

It does not appear that the BRCB had a predefined sunset date. On November 12, 2002, the parliamentary body voted on a measure to dissolve the BRCB, with 79 of the 102 officials voting to dissolve the agency (Tanga 2002). The remainder of the BRCB’s portfolio of assets was transferred to the Treasury, specifically to the Department of Litigation and Collection (Tanga 2002).^FNDirection des affaires contentieuses et du recouvrement (DACR).